Harbeth and ISO9001: what it means to you ...

[A.S.]

"One issue after another keeps catching us. No sooner do we sit to relax after fixing one issue we get another one! We seem to be in a constant fire-fighting mode. We are always/mostly in a reactive mode rather than a proactive one." (quote from an example of running a business pre-ISO9001).

As you may known we were granted IS09001 certification last year. Certification involves establishing, maintaining and developing internal procedures.

What is ISO9001 all about?

http://www.iso.org/iso/en/iso9000-14...1supchain.html

http://72.14.207.104/search?q=cache:neIlavJ0nAAJ:www.tcea.org.uk/Documents/TCEAISO9001-2000.ppt+what+does+IS)9001+do+for+my+business%3F&h l=en&gl=uk&ct=clnk&cd=3&client=firefox-a

Our sales order system is not processing orders as 'first come, first served' due to our overriding desire to be helpful and supportive. We have been guilty of taking onboard orders with impossibly short and unrealistic lead-times. This results in cash needlessly tied up in stock brought in too early, stress on staff who felt pressurised into working overtime, and time robbed from development and long range R&D.

Since 1991 we have used the same MPR system which completely manages the explosion of piece parts needed to turn sales orders into finished, packed sellable speakers. It is programmed with timescales and it knows exactly how much stock we have. It holds Bills of Material of the typically 60 lines of individual stock coded parts need for each speaker.

MPR tells us that on average since 1991, our lead-time from order in to speakers out is about 12 weeks. We order cabinets as and when we need them, plus a very small safety margin for damage or other unforeseen problems.

The ISO team have observed in Harbeth the global trend for Retailers and Distributors to push stockholding back up the chain to the manufacturer. The recent inspection has made it mandatory for us to redefine our role in the supply chain. In short, we at Harbeth UK are solely responsible for development and manufacturing.

Last week we turned the MRP system back to 'auto' mode and rescheduled production in line with our best calculation of actual production capacity. In the short/medium term we can not increase capacity, nor rush into employing more staff: we must retain QC standards as demanded by ISO9001. We are convinced that 'MRP on auto' is far more believable and reliable than 'Harbeth on manual'.

The reschedule has been sent in a simple graphical calendar format to all Distributors and has been revised three times in the past week as new orders have arrived and we have fine tuned the manufacturing cycle. We are at 100% production capacity until 3 July 2006; we have at least 16 weeks of orders in hand - and it is growing.

If your dealer or Distributor has orders in the pipeline, this will ensure deliveries to you as soon as the plan allows. That's the plus side. Second, if orders are not already logged with us, they will not be completed before July .... and that 16 weeks pipeline rolls forward daily. We have to demonstrate to the ISO inspectors that we are following their system to the letter.

It is a tribute to the great success of the Harbeth sound and the Harbeth sales network that at a time when the industry is in the doldrums we have a strong order book. But it is no surprise to us at Harbeth UK - we've been nursing this growing baby for years. All we can do is get on with managing our 1000 stock lines into the production of wonderful speakers for hungry customers.

[Mank]

So, Dear Alan,
My first and last question/remark on this increasing "HHH", which is High(ening) Harbeth Hunger, is if you will manage to have and forever keep the same quality standards. You yourself have commented in the past that you carry (by character and belief I interprete) the small scale qualitative approach as to designing-manufacturing-supplying of your goods. We bought this with our speakers. It is True. We adore it. We intend to pass this thoughtful approach to our children when choosing in the future. Ideally, there is no way back. No offend for big houses, like B & W etc.
But when (not if-just when) Harbeth will vastly increase in size, its your personal responsibility to teach your people to keep doing precisely the same... We don't ask for assurements. You'll get high, very high I think, but -please- stay the same. Just find a way to overcome growth without a single compromise. It is a deep wish, as well as certain expectation, and comes out naturally when everyone sees you standing on the side of each and everybody of your customers (=fans, people,mates). Carry on, in perfect health and spiritual freshness!
Best- best wishes for this,
Thanos

[A.S.]

ISO9001 - sales pipeline update

With effect from this morning, we are now sold out until 4 August 2006.

[Frihed89]

Did you underestimate demand?

Were you also reluctant to expand production capacity until you get more information about consumer demand (to reduce the risk of a mistake in projecting too high demand)?

Not increasing capacity also has risks as you will find out, but presumably you also looked at these "regrets" before you decided not to expand.

Your dealers could increase their prices in the short-run, while the main competition (Spendor, Proac?) could reduce their prices until August.

[A.S.]

Were you also reluctant to expand production capacity until you get more information about consumer demand ......

It's not really matter of having choice. Time after time we have proved that you just can not take people 'off the street' and expect them to eat, sleep and think the way we do at Harbeth. It's not even a matter of training (although there is precious little time available to do that) ... it's an attitude of mind we're looking for in any new recruits. Sadly the dross we've seen turn up (or more accurately not turn up) for interview are completely unsuitable.

As for competitors well, we here are in a very particular niche. Experience has shown that if you fall for the Harbeth midband (RADIAL cone) you are not going to wander off to another brand and if you do, like the Mounties say 'we'll get you in the end'. When you invest in Harbeth it is usually your final speaker purchase, so a few months waiting really isn't an issue is it?

[Frihed89]

Learning under pressure

is the best way to learn about supply chain performance.

If your biggest constraint to expanding production is on the labour input/training side then you may count yourself luckier than those who face capital constraints and need to purchase new plant and equipment.

You know, dealers and distributors have a tendency to "hoard" and over-order, right after shortages. This drives people with command and control supply chains crazy. But in a market dominated supply chain that relies on decentralised decision-making, hoarders can pay a heavy price by overstocking and the market punishes them automatically.

Anyway, good luck for the future. Business is good. Growing pains are a good sign, right?

[A.S.]

If your biggest constraint to expanding production is on the labour input/training side then you may count yourself luckier than those who face capital constraints and need to purchase new plant and equipment.?

Yes, this is true. Loudspeaker manufacture has low barriers to entry, which is both a blessing (it gives the little guy an equal opportunity to the big corporation) and a problem: you have lots of keenly priced competition.

The ISO inspection has only crystalysed what has been under our noses for years: we can not find the time undertake important long-range activities because we are running around like headless chicken trying to get product out of the door to hungry customer. We don't like to say 'no can do'. Sometimes it takes an outsider to see that and to question if this seemigly helpful customer-oriented attitude will ultimately strangle the business. We simply have to break out of this cycle, painful and disappointing it may be for those who still don't belive our change of attitude.

If we have calculated correctly, after this long adjustment phase we will have increased our turnover substantially (in line with the underlying demand) through efficiency increases alone - perhaps by as much as an astonishing 40% - simply by better planning. Think of the benefits to the entire Harbeth network ....

The next step is to turn on new distributors who are waiting in the wings and to bring to market the products of ongoing R&D.

[Thanos]

Good Morning/afternoon everybody, wherever you are...
Growth within such a global market war is not so "linear" as someone might expect. It's tricky, I assure you... Competetion is sometimes fatal. A big brand might -in time- introduce a "Harbeth killer" product. Everybody who has a strong scientific/designing team may (potentially) hit this goal. And Alan has to have 4 eyes, 4 ears, also (sometimes) his mind and forecasting ability exceeding his head size. He must be ready any moment to regain his place in the race, if left behind. He has to keep up with the pace, yet to be Harbeth, be himself. Better to be reluctant to super growth (= establish new facilities/people), than retreating after any mid-long term crisis. Conservatively British? Might, but safer than a comet. Once I asked my 94 year old grandfather (survived/fought two world wars), "Grandpa, we have changes every day, don't you want some new things (digital telephone, new TV, dish washing machine etc...)?"
He replied: "What I see, is that changes are being more often than being essential"... "And I know where I sit. I'll change my chair for a new, safer, more stable one. And after careful inspection, ok youngie?".
And, my friends, is it a fight with Growth/dare Vs Stability/conservatisme? Not really... It just takes some time and much cautiousness to link them. That's how Alan thinks, I feel. Or am I wrong?
Cheers,
Thanos

[Frihed89]

My personal feeling

Is that Alan is right to play it safe. Harbeth is holding the cards for now. Name recognition is low, but growing fast and it will be a long time before sales stop growing at increasing annual rates. Just a guess.

[A.S.]

Better planning - 10 days on ...

Is that Alan is right to play it safe ... it will be a long time before sales stop growing at increasing annual rates

Well, let me update you on the situation some ten days after we actioned the 'Harbeth grows up' plan to balance sales orders against our realistic production capabilities.

Of course, the BBC continue to place orders for delivery the same day (yes, its true) and we hadn't really factored-in that, but across the general sales network, after little further explanation, there is universal recognition of the benefits of our improved efficiency. Why shouldn't there be? Everyone involved in Harbeth sales knows what product they can expect from us and on what date. That translates into their own sales and cash planning, better customer service and controlled growth all round.

There are some expected and unexpected benefits. We expected to be able to work towards Just In Time (JIT) deliveries, and we now can: since we have a production plan, we have a material plan, and the two are dovetailed. It will significantly reduce our stockholding and release cash tied up in materials. That's all the boring hard factual stuff. What's much more important and revealing of the rightness of our new system is the unexpected benefit . . .

The boost in moral and efficency, the reduction in stress has been astonishing. Really amazing. Colleagues have a smile on their face. They are enjoying what they do. They go home at night knowing exactly what is expected of them tomorow, next week, next month, three months away. They know that I won't be leaning on them in response to a last minute call hustling for delivery. It is a win-win all round. Working to a plan is comforting.

Great products take time to plan and manufacture. Our energy level have been restored and great things will flow from this. I guess that some critic somewhere will try and turn progress into regress, but they are utterly misguided. It goes without saying that all major distributors have orders in the pipeline and/or stocks on hand to serve our customers.

[Peter Jacobsen]

wait times

I think this is all very useful and interesting information. Full order book until August 2006.......that's a long wait! But perhaps it doesn't have to be that long for every buyer. I ordered my Harbeth C7ES-ll's on the 10th of February this year and received them less than two weeks later. I didn't mind that at all, it just increased the excitement. I guess the distributer (Garner company in Hong Kong) must have had lots in stock. Having to wait until August would have been quite a disappointment.

By the way, I'm very happy with my purchase, it was worth the wait and every 'Yuan'.

Next up would be M40..........maybe in 5-10 years? Gotta buy that apartment first, bugger!!

[A.S.]

that's a long wait! But perhaps it doesn't have to be that long for every buyer. I ordered my Harbeth C7ES-ll's ... and received them less than two weeks later.

Actually that date has now moved forward.

No, no distributor can afford to hold lots of stock these days, nor do we have the luxury of dedicating our production to one distributor to build a stockpile for them whilst we keep others waiting: can't be done.

The secret of professional distribution is the intimacy with and reading of a local market, analysing seasonal and other variables and placing orders on the manufacturer well in advance to allow for production, shipping (seafreight takes 6 weeks typically), customs clearance, delays at the port etc. etc.. That way, a distributor gets a continuous JIT delivery from Harbeth and can optimise local stockholding - far more cost effective than hoarding stock. Keeps prices down too. It adds up to the end user getting his new Harbeth in a reasonable time scale and at the lowest possible cost and least inconvenience and stress.

Your local distributor, Harbeth Hong Kong, are a model of 'how to do it', and hardly surprising, you benefit from the good service they get from Harbeth UK. They'd need to be with the vastness of the China market under their care and control.

[A.S.]

"Sustainability". A business essential. Alternative? What alternative?

No, no distributor can afford to hold lots of stock these days... It adds up to the end user getting his new Harbeth in a reasonable time scale and at the lowest possible cost and least inconvenience and stress ...

"Even" loudspeaker manufacture must conform to modern, efficient business management. The key word is Sustainability in world of turbulence and instability: http://www.govanonline.com/businessfaq.aspx

Most manufacturing issues can be solved by throwing money at them. Ultimately, either the shareholders or the customers, or both end up footing the bill for failure because better planning was what was actually required. Surely most (all?) Harbeth buyers would trade a reasonable lead time for the lowest possible cost?

[A.S.]

Re: Clarification of the order pipeline

I've been asked by two prospective end customers 'will we have to wait until many months - perhaps until late summer - to be able to purchase Harbeth speakers?'.

The honest answer is maybe - or maybe not. It entirely depends upon what is in the order pipeline for the import channel into your country. If your distributor/importer has either a) Harbeth inventory in his warehouse b) stock on order with Harbeth factory c) stock in transit by sea or air and d) unsold inventory in the distribution network in your country then there should not be an abnormal wait.

If conversely, some or none of the above apply (and there are, unfortunately, examples of that) then your point of contact is with your Harbeth dealer, not with the factory. All we can do in the factory is work to bulk sales orders build plan, first in, first out. We are working to plan, on plan, steadily chomping our way through the sales order pipeline that takes us out to September. It is, of course, being topped up weekly with new orders on the back end.

The efficiency gains here and throughout our supply base are already tremendous. If anyone is interested I have made a screen cam video of how we operate our MRP system and how production is planned so that you can look over our shoulder. You can see for yourself the complexities of production planning and the horrendous consequences of adding "just one more pair".

[A.S.]

Re: Clarification of the order pipeline

... The efficiency gains here and throughout our supply base are already tremendous...

For the one or two doubting Thomases who have used our ISO efficiency drive to read all sorts of nonsense into our motives and reasoning, I can tell you that now we have a thorough top-to-bottom grip on the manufacturing fundamentals and we are now ready to make our move to the next stage of our plan. We have created an immediate vacancy for an additional pair of hands in the Harbeth/KEF drive unit production area, that being one of the identified bottlenecks. Other incremental steps are planned but we must walk before we can run.

Perhaps best of all, more R&D ground has been covered in the time freed-up from runing around in ever decreasing circles in the past month by me than in the previous year. There are lots of exciting new projects bubbling away.