Out of the Crisis.Org

[Louis Altazan]

Many years ago there was a farmer repair shop owner who was very much like all the other small farmers shop owners in his area. He worked hard all day, but just didn't seem to make much money. He was afraid to raise his prices, because the buyers customers might quit buying his crops services. Then he would be worse off than he was now. It was also hard to find and keep good farm hands techs. Many had left the area to take higher paying jobs doing other things. The situation looked pretty grim.

One day after work the farmer shop owner was sitting on the porch thinking. He thought, perhaps, if I could increase production, reduce waste and grow a better crop perform higher quality service, I could raise my profit, and make my crop service a better value to the buyers clients. Now this was hardly a novel idea. In fact it was the goal of all the farmers shops.

They had tried lots of things. They paid their workers a flat rate so the more production the more they could make. Many even had a bonus system, that would allow workers to make more if the farms shop’s profit increased. Any worker that was found wasteful was chastised. If that didn't work they were fired. There were even signs posted saying things like, “More crops production equals more pay,” and “Quality is your job,” but these just didn't seem to help.

The farmer shop owner wondered, since the problem was almost universal if the way they were farming running the shops might not be the problem? The next day the farmer shop owner drove into town and over to the university. He spoke with the Dean, who referred him to a professor of management. He met with the professor, told him of his dilemma and enrolled in classes that very day.

In his classes he learned that his farm shop was a system. To improve the output, the entire system would have to be improved. He learned that the workers were a part of the system, but not responsible for it. That was his responsibility.

With the new knowledge, he began looking at his farm shop and found many things he could improve. Instead of buying seeds parts based on cost or brand, he tested to find which seeds parts produced the best results. He did the same with fertilizer supplies and also experimented to find what quantity and application method of fertilizer supplies produced the best result.

He worked to improve his soil efficiency and the method he used to irrigate service vehicles. By changing the nozzles and decreasing the flow rate, he found he could get better results with 40% less water his diagnostic procedures, adding equipment and improving training, he found he could get the better results 40% faster. He cleaned his barns shop thoroughly and changed his methods of seed handling and storage inventory management. He found ways to reduce damage to seeds vehicles, keep them fresher and cut the need for fertilizer repair them right the first time and cut the need for inspection and rework.

Production began to increase, cost began to go down and the farmer shop owner was making a lot more money. He also studied the crops services in the market place. Most of the farmers shops grew performed the same crops services, because they were easy to grow perform. Unfortunately this also made them quite plentiful and drove the price down. They also ran specials on the crops services that were most profitable, reducing their profit further.

Instead, the farmer shop owner found crops services for which there was demand, but others could not grow perform efficiently. He applied his same methods and training to find ways to make growing performing the difficult crops services profitable. Now his reputation for being able to grow repair difficult crops problems started to spread and buyers clients started to seek him out.

The farmer shop owner based his prices on his cost and the profit he desired, rather than what others charged, like the other farmers shops. He then worked to build value into the crop service at the price that produced profit. Since the quality of his produce service was very high and because he could easily grow repair crops vehicles that other farmers shops found unprofitable, he found a ready market. He advertised to this market about the benefits of his crops services. He demonstrated to the buyers clients how his crops services, though in some cases priced higher, were actually less expensive, due to the quality and high
yields long life.

The farmer shop owner found by paying his workers more money, in the form of a salary, he could attract the best and brightest in the area. He sent them for training so they could also
help improve things on the farm in the shop. He bought air conditioned tractors air conditioned their work area, to make the working conditions better so that his well trained workers would not leave his farm shop for other work.

Now some of the other farmers shop owners were starting to take notice. They looked at his farm shop closely, saw the very clean surroundings, the happy workers, with high morale and the air conditioned tractors work area. They asked the farmer shop owner how he could be making more money, when obviously he was spending a lot more on his farm shop than they were.

The farmer shop owner explained that by using better farm shop management philosophy he had greatly increased his production and lowered his cost. He then showed them the books he had read on the topic. Also he explained how each improvement was made for sound business reasons and increased profit rather than raising cost.

Mumbo jumbo and double talk they thought. “We want nuts and bolts answers, not useless theory.” This guy has been lucky, plain and simple. The farmer's shop owner’s “luck” seemed to hold out because his farm shop continued to grow and profit, year after year.

In time other “lucky” farmers shop owners came along and it became much harder for the original farmers shops to make a living. Many downsized or left farming the trade and moved away. They reasoned their trade must be dying. The unreasonable buyers clients just didn't understand. They wouldn't pay a fair price, and the big guys were taking over. Besides who wants to do this kind of work anyway . . .

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Louis Altazan
Owner/Manager AGCO Automotive Corporation
Baton Rouge, LA

[Bud]

Thanks for the laugh this morning, Louis. Of course, you were the shop owner, actually owner of 2 shops, 25 years ago, if memory serves me right. Didn't you say you worked like a slave, had a repair shop and a busy body shop, hired great techs but couldn't keep them, had continual problems with comebacks, sloppy work, bad attitudes from the techs and customers, and despite all the sales you had, still didn't make any money?

Well, shoot, that's what shop owners are saying these days, especially since 9-11-01.

I think the funny part is that you went to hear Deming lecture in Baton Rouge, then folowed him to more lectures in New Orleans. In an audience of high-level executives from the oil and gas, banking and insurance industries you must have been the only mechanic.