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We've got mail and are happy to share it with you. A longtime IISE member writes in taking another look at the June issue and the growth equation with an interesting firearms comparison. 

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Rifling through 'kaizen in the greenhouse'

When "Kaizen in the Greenhouse" appeared in June's ISE magazine, a local nursery and garden center in metro Kansas City was for sale after nearly 100 years of operation. Sales are down from nearly $4 million to $849,000 per year. It sold as a real estate investment, even though the new owners will keep operating it as a nursery and greenhouse.

I shop there and know the owner. To say that the operations are labor intensive is an understatement. Imagine planting, growing and selling 12,000 poinsettias annually.

When this garden center produced its first skid (4 feet by 4 feet), there had to be some inefficiencies and/or industrial engineering practices violated. As those skid numbers grew, these defects grew like barnacles on a ship.

Now the operation may handle more than 21,000 skids a year. Let us theorize that the first skid produced $100 worth of veggies. And that the poor practices in production equaled a sunk cost of $10 or 10 percent. The question is, "At what rate do the inefficiencies increase, or do they remain constant?" My inclination is that they increase exponentially. If so, what is the rate of increase in poor production practices?

I read an article about improving the accuracy of rifles. The author was a 40-year expert in that craft. A rifle off the shelf may shoot 2-inch groups at 100 yards. Some shooters aim to reduce that error to 1-inch groups. A select group of purists try to improve that accuracy to less than 1 minute of angle, or roughly 1.05 inches at 100 yards. The author's best group of five shots is 0.052 inches.

The shooter's summary statement is that accuracy improvements are incremental and rarely exponential. The reason improvements are not exponential is simply if they were, a shooter eventually would shoot all five bullets into the same hole, which is impossible.

Back to the nursery – if the ISE improvements discovered on skid one of the veggies improved exponentially, by the time you reached skid number 21,000 there would be no room for improvement. However, if the improvements were incremental, changes could occur as techniques improved.

Growth is a similar example. A business forecasted to grow exponentially at 3 percent annually would eventually have profits that exceed the size of the government.

Best to have an industrial and systems engineer on board early to salvage the losses of growing the bad with the good.

R. Wayne Moorhead
Moorhead Business Brokerage LLC
Leawood, Kansas

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