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Small change can cost big

A rigorous and regular scrutiny of change orders and the suppliers following a “gate check” procedure with their manufacturing facilities can ensure that orders arrive on site as per specification, argues Edward Eisermann.

| | Nov 19, 2010 | 10:48 am
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A rigorous and regular scrutiny of change orders and the suppliers following a “gate check” procedure with their manufacturing facilities can ensure that orders arrive on site as per specification, argues Edward Eisermann.

Ed Eisermann

Ed Eisermann

Communication, where a checklist is used to confirm key customer requirements, between the product manufacturing team and the sales organisation (company or manufacturers rep) can save a lot of time and money. The checklist consists of items, not specific to the product’s manufacturing operation that have, in the past, caused delivery problems.

It is common during the construction of any building to have changes that impact the HVAC equipment. Most built-to-order commercial equipment, chillers in particular, result in the need for one or more order fulfillment “Change Orders”, after the purchase contract has been negotiated and signed.

Getting the change orders communicated through the many groups involved in the remodelling or construction of a property can be difficult. But it should ultimately be the responsibility of the HVAC company’s sales representative to make sure the manufacturing plant knows of any changes to the design specifications submittals before production of the unit. The sales representatives’ focus is selling and supporting their customers, and this is where their communication line is the strongest.

Have any of these happened to you?

  1. Unit will not fit in the space provided, because the installation submittals did not provide the correct dimensions.
  2. Unit connections to the water lines, duct work, in-coming electric do not match the installation submittals. This can happen when the sales information is not transmitted properly, or there was an architect change order.
  3. Shipped unit did not include the IOM (Installation, Operation and Maintenance) manuals or auxiliary components, such as fan isolators.
  4. Unit was not built to the local codes and does not include the required certification label.

There are many more that could be added to the list of things that I have experienced in my career as director of Quality and Field Technical Support.

Who is impacted by an order problem found in the field?

  1. The building owner
  2. The person who will occupy the building, if it is not the owner
  3. The general contractor for the overall project
  4. The sub-contractors
  5. The sales office and sales person who sold the HVAC equipment
  6. The sales office’s service organisation that will be needed to address certain defects
  7. The sales office service organisation’s parts group that needs to order replacement parts when needed
  8. The Marketing, Service, Parts, Accounting, Quality, Engineering and Production teams

Rule of thumb:

  • Fixing a problem during the design phase will cost $1
  • Fixing it in the factory will cost $10
  • In the field it will cost $100

As is evident, the cost of field rework can be significant. Clearly, the earlier a potential problem is defined and corrected, the more the unnecessary costs can be avoided.

To help the sales person in the field organisation, there is a benefit to having a producing plant “gate check”. This is a communication initiated with the field selling organisation during the manufacturing process. The recommendation is, once about two weeks before production scheduling, to ensure that all change orders have been communicated, and a second check two weeks before release to production, to ensure that there are no last-minute changes to delay production. This process, when introduced, significantly reduces the number of errors experienced at the job site.

If your organisation experiences these types of non-function production sales order issues, consider the use of pre-manufacture gate checks. They work.

About the author:

Ed Eisermann is with GEA-Consulting. He has more than 35 years as a manager and consultant primarily in the manufacture of HVAC equipment at locations around the world. He can be contacted at EEisermann@geaconsulting.com.

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