Chapter 11: Threshold management

Chapter 11: Threshold management

Chapter 11 bankruptcy has a legal way of tuning around companies and offering a restart opportunity. If you have not gone through one, it is an experience that one should focus on the positive outcome and not use it as an excuse to slide away from the business.

Chapter 11 is a structure, as explained to me, as a company’s chance to start over. I am not so sure I agree, because most companies lose money in the process, but there are some personal values lessons to take away from the process. For example, the company that files Chapter 11 sheds the debt and the creditors have to take it on the chin. This does not sound fair to me. I was once involved with a company that was coming out of a chapter 11 filing. The company, as directed by the courts, had to make some tough decisions to “reorganize”. Their structure, as approved by the system, was clear: The creditors had the option of being paid 20 cents on a dollars owed or 100% plus interest over five years upon exiting the filing.

Some debt-owed companies chose the path of taking the 20 cents and getting extremely mad, while most took the five-year plan with the belief that they would get all their money, accepted being a bank and prayed for the company’s survival. Each got all of their monies in the way that they chose: The company sold off some assets, regrouped and came out much stronger and paid all of their debt plus interest. They lived up to the challenge and their word, as they were a privately held corporation.

Now, why is this subject important to talk about and what does that have to do with good fleet maintenance management? The wise owner of that $2 billion dollar company told me, “Operate each day as if Chapter 11 was on your doorstep.” It’s a lesson well learned and not forgotten.

As good managers, we need to watch every penny: Pennies of parts; Pennies of labor; and Pennies of waste. When you go through Chapter 11, you are forced by survival to manage. For any company, a tactic of managing I would suggest is managing every day, every minute, as if you were trying to climb out of Chapter 11 and coach each supervisor, technician, mechanic, office worker and parts personnel–everyone under your structure. Not with the fear of going out of business, but with the focus on controlling the checkbook. Finance people force their controls thru “The Budget.” It is the only way they can push down the financial protection for the company; they should do so, just differently.

Too often, so called “managers” just spend, spend and spend; making or not making decisions that are easier than saying, “No.” It is like telling a friend that tickets in the 40th row are as good as ones in the 5th row for an event. Yet, we also do not have control of the techs who request part. Being that they’re parts changers, that was their job process culture, but it adds up to making inexperienced decisions. Now, not that I do not think that a tech knows what he or she is talking about, but many do not understand the quest to be the low cost maintenance provider.

Examples

  • Electric window regulator on a young truck had a motor that the tech told me was burned out. The new self-contained part had the motor attached to the regulator and you could not buy the motor separately. He vividly told me a few choice words upon my simple question, “Is the motor burned out?” He replied, “Why would I change it then?” That was my question. Nevertheless, we tested the $380 part and … voila! It was just jammed. We removed the motor and tested it. It worked fine and we reused the regulator.
  • A shop wanted to retrofit the entire fleet with those nice looking, bright colored wheel nut indicators so that loose nuts could visibly identified. However, if a wheel is torqued and maintained, it will not come off. A simple procedure will correct this problem. Approximately five degrees of pointing is 100-plus lbs. of torque. It’s tough to see five degrees.
  • In buying decals, we want to buy 5,000 when we need 3,000. The price is cheaper when you buy 5,000; so, the excess sits there for five years and then they’re too dry to use in the future, but are carried in inventory.
  • An example of wastefulness: Gallons and gallons of unused sprays and additives were hidden on the floor in the dark storage area.
  • Copy paper: When Strategic Sourcing makes a deal for copy paper, the shop uses four reams each month, but the minimum to order is 12 cases. Not an issue because everyone need copy paper.
  • A new shop Forman in charge believes he has to change all the rear ends synthetic lube each year because he just wants to and that is what he did at his last defunct fleet as a lead mechanic. He only had 35 trucks then and now 400 trucks…
  • More waste: Air filters when the tech wants to change them; $75 DEF filters that can be washed out are replaced; and $26 washable cab air filters thrown away, not to mention slack adjusted replacements caused by constant adjusting.

Credit where it’s due, I did see a sharp tech move a bent step he had straighten out to the right side of the vehicle. There is hope, but that has to be coached.

My suggestion would be to manage and coach every day as if as if the threat of going out of business is on your doorstep. That does not mean you stop spending or procrastinate on repairs. It means make the right decisions, maintain low inventories, manage time and control the check book; all will be better employees and managers because of it.

For more information, visit www.darrystuart.com or email comments or questions requests to Darry at [email protected].

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