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M & M ELECTRIC COMPANY M & M Electric Company is located in Atlanta

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M & M ELECTRIC COMPANY M & M Electric Company is located in Atlanta. It is a maker of high voltage interruption equipment, which includes switchgear used by utilities, factories, and.institutions for the supply and distribution of their electric power. Since its founding in 1910, M & M has expanded several times. The president, John Murphy, recently moved the company to a new plant with a railroad siding for receipt and shipment of large, heavy equipment. Most employees lived close to this new location, a semi-residential area of Atlanta. Since the move to the new plant, the company has grown at a faster rate, largely because of the additional capacity of the new location. Sales over the last two and a half years have averaged approximately $45 million per year. Periodically backlogs of orders have accumulated, but up until about a year ago, these backlogs were dissipated within two months. Since that time, however, a backlog of $9 million in accepted orders has continuously been on the books. M & M products require a high degree of accuracy and dependability, and they must be durable since they are typically housed outside. The Company's primary function is to serve as a custom assembler of electrical switchgear and transmission gear. It does very little original equipment manufacturing per se. The firm has been long established as a medium-sized company with the highest quality product. Its prices for heavy equipment are high by industry staédards, although these prices do not reflect changes in industry prices due to upsWin$ or downswings in the construction or utility business, due to the high quality, Mr. Murphy owns 70 percent of the stock of M & M, and there is Ho public ownership. He is 55 years old, lives three blocks from the plant, and Works 60—70 hours per week. His wife has worked as an executive secretary at M & M for 15 years, and she is intimately familiar with company operations and serves as a frequent consultant. She is 48 years old. Mrs. Murphy is regarded by many of the office employees as being loud, brash, and "taken" with her grandeur as Executive Secretary. She makes it a point to informally interview each new office employee and to openly voice her interpretation of the M & M code of conduct for employees. It is commonly thought that Mrs. Murphy "compensates" for Mr. Murphfs generally friendly, nonregulatory manner. The various departments of M & M include accounting with the control-ler as its head; engineering and research with a vice-president for research, and a vicepresident for engineering; manufacturing, with its department head also serving as the executive vice-president of the firm; purchasing, whose vice-president also serves as vice-president of public relations; sales, whose vice-president serves as head of the sales, personnel, market planning, and services department. THE MRNUFRCTIIRING The manufacturing and purchasing departments are of special interest. Prior to the move to the new plant, the functions of purchasing and production control (manufacturing) were considered one department with a single vice-president. Each is now a separate department. Source: Adapted from a course assignment by John C. Ferguson for Professor J. G. Hunt, Southern Illinois University—Carbondale. Used with permission ofProfessor Hunt. When the two departments were separated, an additional vice-presidential opening was filled with a subordinate who had worked for the firm for 15 years, and had "come up through the ranks." The other vice-president, however, had been with the company for over 25 years. Both of these men were well qualified for their positions, although their personal philosophies Of manage ment differed greatly. Both departments, although now separated, must still work together closely. The manufacturing department is run by Mr. C. C. Franke, 47, who is the vice-president. Mr. Franke is also executive vice-president Of the firm and a long standing friend Of John Murphy. Because of the scope of thiå department, Mr. Franke has an assistant who is the director of manufacturing adlfiinistration, Mr. M. J. Paul, 43. Both Franke and Paul are college graduates. Under Mr. Paul are the five managers of the various operations of the depart ment. They are: Manager, Fabrication and Tooling—F. Franklin Manager, Plant Engineering—C. K. Jefferson Manager, Maintenance—G. J. Klause Superintendent, Material Services—J. R. May Manager, Metal-Enclosed Gear—L. R. Worth The function of the manufacturing department is to combine the purchased component parts and the M & M manufactured parts into the final product for job order electrical systems, send it to the construction site, and if stipulated in the contract, supervise its installation. Mr. Paul is mainly concerned with the output function of his department. He is, in effect, an assistant to the vice-president in the area of fabrication, inventory, and metal-enclosed gear output. Paul and Franke work closely together and share the same philosophy that a day's work is worth a day's pay. Both, however, seem to consider a day's work as a measured amount without regard for the employee time required to complete these assigned tasks. Although the switchboard and offices are not officially open on Saturday, the plant is operative all day Saturday, and it is considered standard procedure for manufacturing offce employees (not secretaries or staff help) to work at least part of a day on Saturday. Work loads are adjusted to make this mandatory for the job executives to keep up with assignments. These executives are paid a straight weekly salary. The atmosphere in the department has been likened to that of the military because all desks are arranged in a row, with all desk equipment located in the same place on each desk. Job executives are specifically assigned to jobs in progress and are required to directly supervise the collection Of inventory items and record work progress in relation to shipping deadlines. They are not permitted to leave the manufacturing office without first checking out with the head secretary and must return immediately after tending to their out-of-offce business. The turnover rate in this department for executives and for secretarial help is the highest in the entire company. Mr. Franke is rarely seen in the office, and Mr. Paul seems to be the implementor of Mr. Franke's policies. Mr. Paul is an ex—Marine and frequently displays his temper when delays on shipments arise. This pressure on the job executives has led to such practices as inventory shifting from one person to another, faked reports, falsified delivery time reports from purchasing, and other such activities to avoid conflicts with Mr. Paul. Paul has, on occasion, fired job executives and secretaries on the spot, contrary to the overall M & M policy of a two-week notice. 3 This management philosophy seems acceptable to Mr. Franke, and is allowed to continue since this unit is the "crucial" link in the output chain, with its direct control of the productivity Of the company plant. Apparently this philosophy is also acceptable to Mrs. Murphy; her office is located adjacent to this department. Both Mr. Franke and Mr. Paul account for this philosophy by explaining to the rest of the job executives how the problem of the backlog is being placed directly on their shoulders, and that any mistakes during this crucial time will only magnify the backlog problem. THE DEPRRTMENT Purchasing contributes to productivity in just one area—procurement. Yet this area of procurement has within it many problematic operations and a diversity Of conditions just as sweeping as those of the manufacturing department. This department has as its vice-president Mr. Alfred A. Anderson, 62. As purchasing agent—and second in command for the purchasing department— Mr. George Geoff, 58, supervises the actual buyers in the department. Mr. Geoff has been with M & M for two weeks longer than Mr. Anderson, both having started with the firm 22 years ago after military service. Mr. Anderson owns some share of the company stock, has a liberal arts college degree, and is also a personal friend of John Murphy. The buyers in purchasing each handle one group Of materials as follows: George Geoff—Castings, office equipment, scrap sales, steel structures. W. J. Wallace—insulating materials, metals, paint, stationery, and office supplies. L. J. Morehouse—Forgings, glass, turned parts, contactst •springs, stampings, and fastenings. G. W. Waters—Connectors, insulators, nameplates, molded plastics, and shipping supplies. B. J. Black—Metal-encIosed switchgear components, mels, maintenance materials for buildings and equipment, outside proces$ng, tools, manufacturing and plant engineering supplies. The turnover in purchasing is very low, and even the secretaries have stayed with the department amid offers of a higher salary to change to manufacturing. The buyers have been with the company eight, five, sixteen, and two years, respectively. Each aids the other during vacation periods.' The function of the purchasing department is to procure components and other non-productive supplies that are to be charged to the respective departments. Prices of items purchased are therefore a consideration when approving purchase orders for other departments. Lead time and availability of productive goods is an area in which the manufacturing and purchasing departments must communicaté. Changes in the dates for delivery (especially when required earlier than originally estimated) is a problem for purchasing. Inventory space for large items such as transformers, which make up the largest proportion of component items, is not sumcient for orders scheduled more than one week ahead Of assembly. The major suppliers of a couple of key components are Westinghouse And General Electric. Both of these vendors are highly independent and difficult to work with. Neither is dependable for original delivery estimates, and shipment ofM & M products without these components is out of the questipn. Many departmental conflicts arise because of late delivery from these two vendors. Occasionally substitute products are available, although many contracts specify Westinghouse or GE components. Mr. Anderson and Mr. Geoff both agree that their department is not to be run with tension or fear. Accuracy is required and no detail is too small to be overlooked. Saturday work for buyers is not required, for most vendors do not accept orders on Saturdays. Some buyers prefer to use Saturdays to maintain their paperwork while others work this into their five-day routine. The purchasing department is small, and for this reason unity, friendship, and cohesion are emphasized by Anderson and Geoff. Buyer assistance is readily available from Mr. Geoff, who has had experience ordering all of M & M's product needs. Mr. Anderson largely handles his upper-management affairs through Mr. Geoff; he is out of the office several hours a day as his duties of public relations vibepresident demand his presence at many community functions. Purchasing keeps very complete records Of orders and material requisitions from manufacturing. This file system has revealed the actual cause for assembly and inventory readiness delays in many cases, and is often used by the job executives of the manufacturing department since their overall department files are not adequate for them to use effectively. Cases of record and time falsifications from manufacturing have been discovered this way. Purchasing has been "blamed" for many production delays by Mr. Murphy through Mr. Franke. This filing system was instituted to refute or substantiate these statements. 'Ihe purchasing function is subject to delays from outside economic effects and labor strikes. For example, ceramic insulator lead time for ordering stands at one year. With this in mind, the buyer must anticipate likely needs and order these items without specific manufacturing requests. Castings for some of the M & M manufactured parts are custom-order jobs from vendors. When a casting breaks on a machine, it may be several months before a similar casting can be received. In this case, duplicates are ordered for frequently used castings, although inventory costs for idle castings and duplicates is carefully controlled by accounting. Thus, purchasing also faces the task of judgmental ordering—a system that has only intuition and past performance as justifications. THE PRESENT John Murphy has expressed his displeasure with the continuing backlog Of sales to manufacturing output. He is concerned about increasing output with the present facilities. The plant now operates three shifts but is not assumed to be at maximum efficiency. The solution appears to Mr. Murphy to have to come from the manufacturing and purchasing departments, either with a speedup of assembly and inventory readiness, or a shortening of delay figures. The relationships between the two departments become even more critical as each tries to shift responsibility for delays to the other. Upper management has not yet agreed to step in and reorganize, yet the hint of combining the departments has been spread. A further hint of computerization for the long- run operation of the firm seems inevitable, although as yet •unapplied to purchasing. At the very least, a short-term solution is necessary as soon as possible, for sales are continuing to be made at a high rate and the rates of cancellation for orders on "hold" have also started to rise.