Monitoring Business Performance before the onset of Desktop PCs – 1 Basic Efficiency

*When I started work, I began as a Work Study Assistant. My first task was the computation of machine efficiencies. I worked in a textile factory and the machines that I measured were known as looms.

That measurement was accomplished with the help of a calculator that now, would be considered antediluvian. It occupied the desk space of a scanner and in addition had staggered levels, which accommodated a keypad and an electronic display. At its highest point, it was little lower than a coffee mug. It was the only calculator in the office and so was shared.

In those times, the electronic calculator was still to begin to come down in price and cost around £100 for very basic functionality. This one was little smaller than an adding machine. Talking of adding machines, the Company Secretary still enjoyed the use of one – it was noisy and required a significant amount of concentration to use effectively; he often locked his office door when budgets and forecasts were pressing – it rarely saw the light of day otherwise.

Given that I was fresh from college, I took to the calculator like a duck to water. Soon the monstrosity was semi-permanently on my desk – my boss, who was the other main user, sensibly delegated number crunching to me, while he concentrated his energies on thinking which often required the well-known therapeutic properties of preparing and smoking his pipe (smoking was not then banned in offices).

Going back to calculating machine efficiencies, this work was important as it tied in to the works bonus. The Managing Director of ten years standing was sales and marketing led, yet he knew a thing or two about other aspects of business. The limiting factor in this particular business was loom time; virtually every other function was flexible and could be ramped up or tuned down at will. If a loom was stood idle, the time was lost… looms ran three shifts, twenty-four hours per day, five days per week.

A stopped loom meant either a bottleneck i.e. a hold up to orders in progress, or no work available. Remedies for the former involved a call to the relevant department head, to shake things up. Instances of the latter were rare; however if I reported it, pressure was directed to the salesmen, who were of course commission driven. The system was efficient. As my role developed, I modified the process in order to code loom stoppages by cause… however, this is jumping ahead.

The business was stable and there was some flexibility in my department – the Work Study Department. It had a remit to examine working practises throughout the business and recommend improvements to the Managing Director. My first assignment crept up on me unawares; not Work Study but the re-education of managers on how to interpret facts – as the office junior.

In the course of my duties, it soon became apparent that, in order to understand the business better, a distinction needed to be made between the statistic used to determine bonus entitlement and the figure that showed the level of capacity utilised. For the purposes of comparing efficiencies, allowances for loom stoppages outside the control of the operative were often made. This was a standard practise adopted from Work Study (there was an approval regime for this). This not only ensured the continued motivation of weavers (weaving operatives) but also a fair and reasonable computation of efficiency under the prevailing circumstances.

In summary, the application of such allowances is demonstrated as:

Production term example formula
Efficiency from capacity utilised 78% C
Allowances made 5% A
Enhanced efficiency 83% E

Here’s a GIF version for those who hate typing stuff out:

Terms used.

Terms used.

As can be seen, the application of these allowances results in an enhancement to the reported efficiency in accordance with the formula: C + A = E. In practise, the considerations involved in the process were a good deal more involved than the above computation suggests.

The figure at E was important as it had the joint purpose of determining the company wide bonus scheme and was the basis of incentivising weaving staff. As a rule the figures at C and E remained pretty much in step but these figures were unlikely to ever be identical. In practise, C wasn’t calculated. My investigations showed that it had never actually been calculated. However, as demand for goods was high and production administration was efficient, C and E tended to map closely to one another, a situation that would hold while demand for goods was high….

The distinction was meaningless to the key participants: Weavers, Production Manager, Production Director and Managing Director; their understanding was that there weren’t two measures, only one. According to their thinking, the enhanced efficiency at E was identical with the utilisation of capacity. This was plainly wrong and evolved to become my first challenge; education of the users.

My first channel of attack was to point out that custom and practise had conflated the two measures; the only reason this didn’t seriously distort the view they held of the business was that the level of allowances awarded was low. For this purpose, low meant no greater than that planned level; i.e in accordance with planned maintenance, including the loom refurbish programme. A spate of mechanical breakdowns of looms gave me the opportunity to demonstrate this. There were hold-outs; the Production Manager, for example, preferred a the conflated view as it seemed simpler.

My other argument was that should the demand for goods drop, the looms would become idle. Yet according to the rules, a bonus could well be payable… even if sales dropped through the floor – because the enhanced figure, E would camouflage the facts. My arguments won out and I redesigned the daily production reports to reflect this. The recession of 1980 – 1981 was to prove the testing ground for this education. Directors and Managers had by then become attuned my thinking.

Form design wasn’t taught in Work Study, so I learned in accordance with need. In an age before desktop PCs and laser printers, I re-mastered the production forms via a spirit duplicator. These were filled in by hand, each day. New columns were inserted to accommodate this Efficiency from Capacity Utilised; however the title didn’t fit easily onto the form. Using algebra on a report was a big no-no. In a fit of inventiveness, it was named ‘Basic Efficiency’. The recession saw Basic Efficiency stumble from 75% to 55%. In such straightened circumstances, the company could clearly pay little or no bonus. This proved to be the case; it was suspended.

The direct relationship between Basic Efficiency and Sales was already proven, suddenly the Basic Efficiency became an important topic of company conversation. It was predictive of sales and thus receipts. I maintained an A0 chart in the Managing Directors’ Office that showed daily and weekly Basic Efficiency and Enhanced Efficiency.

I had a daily regime of validating stopped times which involved me touring the shop floor and talking to weavers, foremen, engineers and other, more specialised personnel. I was repeatedly asked outright: When will the company reinstate the bonus scheme? Could it afford one now?

The Company Secretary made his assessment. Staff were laid off and the business became a beneficiary of the Temporary Short Time Working Compensation Scheme – a scheme which I also monitored, along with other duties. Plainly no bonus would be forthcoming, but would the company survive?

* This article first appeared in Linkedin under my profile as Monitoring Business Performance before the onset of Desktop PCs – 1 Basic Efficiency


About Terence Park

Collections: vinyl records, comic books, paperbacks; I've plenty of them all. I also do spreadsheets.
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