Always almost ready: how we turned production delays into our business model
We manufacture industrial equipment. In theory, this means taking an order, buying the materials, reserving production capacity, building the machine, testing it and delivering it on the date we promised. In practice, we prefer a more exciting model: sell first, discover the constraints later.
Our production dates are often not the result of confirmed material availability, supplier lead times or actual factory capacity. They are the dates that sounded useful when we wanted the order. Once the contract is signed, production, procurement and finance receive the opportunity to discover how exactly that promise is supposed to become reality.
When something is missing, we improvise. When money is tight, we wait. When several orders are late, we make all of them Priority One. And when the customer asks for an update, the machine is usually approximately 90% complete. It has been 90% complete for some time.
WE MANUFACTURE TO PANIC. Our most developed production tool is urgency.
We sell dates before we know if they exist
We know how proper manufacturers calculate delivery dates. They check production capacity, confirm supplier lead times, verify materials and reserve resources before committing to the customer. We could do that too, but there is one obvious disadvantage: sometimes the real delivery date would make the customer buy from somebody else.
So we start with the commercially attractive date. Production receives the challenge afterward. If the factory is already full, we rearrange priorities. If parts have not been ordered, procurement gets creative. If the schedule was impossible from the beginning, we prefer not to spoil the sales process with negativity.
Production discovers the date.
The customer eventually discovers the truth.
Sometimes the missing component is cash
Manufacturing needs working capital. Parts have to be purchased before the finished machine generates the final customer payment. Suppliers want money, employees enjoy receiving salaries and subcontractors remain strangely attached to invoices.
When cash becomes tight, our production schedule begins following the bank account instead of the project plan. Components that should already be on the shelf remain at the supplier. Purchase orders wait. Production completes whatever it can and the unfinished machine sits patiently waiting for financial progress.
From the customer’s perspective, this looks like another production delay. From ours, it is simply a product waiting for liquidity.
THE MONEY IS NOT.
Yesterday’s problem, tomorrow’s deposit
The elegant solution to insufficient cash is obvious: sell another machine. A fresh advance payment enters the company and suddenly several old problems become financially solvable. Missing components can be purchased, suppliers become friendlier and an overdue project starts moving again.
Unfortunately, the new customer has also ordered a machine. Eventually their project needs materials too. By that point we are already searching enthusiastically for the next sale. We call this cross-project financial synergy because the alternative terminology sounds much worse.
Just not necessarily to you.
We don’t need processes. We know a guy.
Formal production systems are expensive and boring. Somebody has to maintain ERP data, control document revisions, track purchasing, reserve production capacity and make sure every project has one responsible owner. We prefer organisational memory.
Need the project status? Ask production. Then ask sales. Then ask procurement. If you receive three different answers, congratulations: you now understand our matrix-management structure.
When something becomes genuinely urgent, the process becomes even simpler. Everybody stops what they were doing and starts fixing the customer who is currently the angriest. Naturally, the projects we interrupted become tomorrow’s emergencies.
“Two more weeks” is our most reliable product
The hardest part of a delayed project is not manufacturing the machine. It is producing a new delivery date that sounds close enough to calm the customer without being far enough away to lose them.
So we rarely announce a frightening delay all at once. We prefer smaller, friendlier portions. One missing component. A few more days for testing. Final documentation. One last technical issue. Logistics. Suddenly three months have passed through a sequence of perfectly manageable two-week delays.
This also allows us to remain optimistic throughout the entire project. The customer never receives bad news about the whole delay. They simply receive good news about next week several times.
TWO MORE WEEKS. Automatically renews every fourteen days.
The previous delivery date has simply expired.
Frequently
Delayed Questions
Why is our equipment always 90% complete?
Because 90% sounds reassuring. It suggests that almost everything is done while leaving enough mathematical space for several weeks of procurement, assembly, testing, corrections and panic.
At CDR, 90% is not a measurement. It is customer communication.
Why do we keep accepting new orders when old ones are late?
Because refusing new business would reduce cash inflow, and cash inflow is one of the tools we use to solve old business.
Also, Sales gets nervous when we suggest selling less.
Do we have a production-management problem?
Absolutely not. We have supplier problems, customer-change problems, holiday problems, logistics problems, component problems, cash-flow problems and occasionally weather.
Fortunately, having many different problems prevents us from having one systemic problem.
Our model is surprisingly simple. We promise aggressively, procure reactively, finance selectively and manage production according to whichever fire is currently hottest. Every late project steals attention from the next one, and every new sale gives us just enough optimism to keep the machine moving.
Could we fix it? Of course. We could quote realistic lead times, maintain enough working capital, order materials on schedule, control production capacity and build boring repeatable processes.
But then we would have to admit that the problem was never one supplier, one component or one unlucky project.
It was us.
PRODUCTION PROBLEMS.
WE ARE THE PRODUCTION PROBLEM.