2006. Shenzhen. A small bar after work. I turn the bottle and look at the neck: bottled 36 hours ago. Tsingtao has its own brewery here in Shenzhen, a few kilometres from this bar. The beer is, quite literally, fresh from around the corner.
I am not here for fun - our Shenzhen plant is one of two I am responsible for. But the other one is on my mind right now: Beijing. At our customer Nokia: four weeks of finished goods. Five million euros. Chargers sitting in the consignment warehouse - physically at Nokia, financially on my books.
My warehouse on someone else's ground
I am Vice President of Operations at FRIWO, responsible for the two plants in Shenzhen and Beijing. Main customer: Nokia. In Beijing, our hall is three hundred metres from Nokia's plant - but our chargers sit at Nokia's site in consignment. Four weeks of safety stock. Routine. Nobody asks, because nobody complains.
Until I read the date on this bottle. Thirty-six hours from the brewing kettle to my table. Four weeks for my chargers to travel three hundred metres. The question is no longer whether this can be different. The question is why it is the way it is.
The variant matrix
In 2006, the mobile phone world still looks different. Every phone has its own charger plug - each model family with its own geometry and pinout. And that is only one end of the cable. At the other end sits the country plug: USA, UK/Hong Kong, EU, Australia, China. Multiplied, that is a variant matrix nobody can steer with a monthly forecast.
Who knows what Nokia will need tomorrow? This complexity is exactly what we have to absorb - and this is where I dig in.
Inventory is mistrust
Back in Beijing I look at the warehouse with different eyes. Four weeks of buffer is not safety. It is mistrust, stacked in cardboard boxes. Mistrust of the customer who changes his planning. Of the lines that are supposed to deliver X units but make Y. Of suppliers that arrive late.
Mistrust is expensive. Trust has to be built.
The call to Nokia
I pick up the phone. Not the sales contact - Operations. The request is simple and uncomfortable at the same time: give me your rolling plan for the next forty-eight hours. Not the monthly forecast. What will actually run on your line on day X.
They say yes. Three hundred metres of distance make trust easier. And they have something to gain themselves.
Rewiring the plant
The first weeks are not heroic. They are hard work. Three levers, in parallel:
- Plastic housing suppliers: Parts stay with you, I call them off, you deliver just in time to the line. First reactions are politely sceptical. Some are not even polite.
- Our own assembly: We keep producing to stock - but not the finished charger. Instead, the generic board with the plugs that go into every charger.
- Final assembly: Plug type, label, country code, packaging are decided at the end. Late. As late as possible. Postponement, late differentiation - the terms have been around for a long time. In this hall they finally get a job to do.
I had had this conversation with the previous plant manager already - without a breakthrough. Now a new one is in the chair: coming from Motorola, with a lean mindset in his head. I do not need to convince him - I can light him up right away.
And elsewhere too, allies show up in unexpected places: a shift leader who gets the idea before I have finished explaining it. A planner who buries the Excel sheet and starts reading Nokia by the hour.
The punchline
Weeks later, Nokia's Finnish buyer is standing in my office. A bit hesitant. He asks:
"Stefan, do we have a problem? The warehouse is so empty."
He is serious. The full warehouse had become so normal to him that empty was a fault report - not the solution we had been working on for months.
That was the moment I knew we had made it.
What I take with me
Three things I have carried into every mandate since then:
Inventory is the place where we stopped solving a problem. Anyone who wants to reduce inventory has to fix the problem underneath - not just thin the cushion and hope for the best.
Distance is negotiation, not geography. I was three hundred metres from the customer - but four weeks away mentally. The reduction was a conversation, not a re-layout.
Late differentiation beats early commitment. Generic early, specific late. That holds for chargers, for software, for strategy.
And a fourth, softer point: when the customer's buyer calls because the warehouse is empty, you have not just changed operations. You have changed the standard against which you are measured. That is rarer than people think - and it is worth it.
Stefan Sack was Vice President of Operations at FRIWO in 2006, with plants in Shenzhen and Beijing, main customer Nokia. Today, with SinEuSyn, he advises German and Chinese companies on operations, lean and China strategy.