Saturday, June 28, 2008 Batuhan: Band-aid waiting for a cut (Part 2) By Allan S.B. Batuhan Foreign Exchange
LAST week I wrote about the scottish factory of my former company, during the time it was imple-menting BS 5750. This is the United Kingdom quality standard that subsequently became world-renowned as the ISO 9000+ series—the quality mark that many organizations are now being judged by.
It was a very good factory, to be sure. Years of Scotland’s leadership in the world textile scene made sure of that.
Although the factory was built at the turn of the last century, it already contained a lot of modern and “modernized” features. Materials handling and packaging, for example, were fully automated. Water treatment was first rate, and the factory even had trout ponds at the back of the premises.
As fishing enthusiasts know, trout thrives only in the purest of mountain streams, and to be able to farm the fish using the factory’s treated effluent discharge was a testament to the effectiveness of their water treatment facilities.
Management processes and control systems were also first-rate. Cost accounting in any manufacturing setting is complicated enough to begin with, for sure. However, thread manufacturing was not just any other manufacturing operation.
In a typical assembly-line operation, there are usually any number of components that go into making a final product. A television is a good example. To make one requires a number of circuit boards, electronic components, switches, etc. Calculating the cost of a unit, therefore, is almost just like adding the costs of all the parts. Fairly simple, really.
In making sewing thread, the reverse relationship is true. From one main ingredient—cotton, for example -—comes any number of end products, in various sizes, lengths and colors.
Furthermore, making the product not only requires assembly, but also processing. Components undergo both shrinkage (such as when cotton physically shrinks when first subjected to moisture) and expansion (like when cotton is mercerized, and gains some additional bulk. Keeping track of the cost implications is fairly complex, such that the place was probably the best training ground for cost accountants really looking for an intellectual challenge in their careers.
In a sense, therefore, the factory was proud of its accomplishments—too proud perhaps, to know that it also had weaknesses. This was the context in which it was implementing the new quality standard.
This was almost 20 years ago. And can you guess how the factory is doing now?
Not very well, I’m afraid. More to the point, it isn’t there anymore.
Whilst the exterior is still intact (the UK is very zealous in trying to preserve the historical character of its buildings, and most historical structures are never allowed to be demolished), inside the factory is now a huge, modern shopping mall.
Where farmed trout used to swim are now modern landscaped ponds and gardens surrounding the bustling shopping center.
What, you may ask, happened? What about the quality standards that they implemented? Did these not help them at all in preserving their edge over their competition?
What was the use, then, in implementing BS 5750, if doing so did not guarantee the factory its survival?
