Budgeting Your Finances By Priorities

If you value living debt free, but have too much month at the end of your money, a budget is a great way to live, and prosper, on what you earn. Out of control finances is a powerful source of stress. But getting your finances under control brings peace of mind.

Let’s build a budget based upon priorities. What is most important to you? Fun or Future?

If you aren’t living at home with Mom (or don’t want to end up going back there), then your home is probably your first priority. And, the utilities are part of that priority, unless you want to use candles for light and a wood fire for cooking!

Next might be your expenses related to employment. Why is this a priority? If you don’t keep your job, then your budget will be easy: nothing divided by priorities still leaves nothing! What does it cost to go to work? Gas and tolls to get to work and return home are work expenses. Clothing and care of clothing are also work expenses. A secondary expense for employment includes car payment and maintenance.

Let’s see what we have so far:

1. Mortgage or rent
2. Utilities (electric, gas, water, etc.)
3. Gasoline and tolls
4. Vocational clothing and care expenses
5. Auto payment and maintenance

Next we need to protect these investments with insurance. Protecting the investment of your health (so you can work) means health insurance. Protect the investment in your home with home or renter’s insurance. And, protect your investment in your automobile with car insurance.

6. Insurances (health, home and auto)

Food. Budget for eating at home and at work.

7. Food

By now you may be starting to realize that failing to manage your money has put you into debt, and you can’t spend just whatever you want whenever you want and still have money for necessary expenses. It is an adult reality of life that we have to live within our means. (That means “if you ain’t got it, don’t spend it”.) Otherwise we end up in the sticky pit of debt, debt and more debt.

It is time to plan to invest in your future. This includes life insurance and savings. Putting money in a savings account is a way to pay yourself and prepare for future emergencies. If you value being self-sufficient, then you will prepare for your future. Failing to plan is planning to fail.

8. Life insurance

9. Savings

Now, here is the problem. Most people put their entertainment and personal interests ahead of essentials. We haven’t even discussed those in this budget, because we are budgeting by priorities.

Is there anything left over after going through this budget? If so, enjoy! If not, then if you want to play, you will have to find ways to cut back on the essentials. Financial management requires that we live in a home that we can afford. If your mortgage or rent is too high for your income, you probably need to take a heavy dose of reality and downsize.

Are you paying too much for utilities? Manage your use of electricity. Turn electrical devices off when you aren’t using them. Shop for a better electricity rate. Change the settings for air conditioning and heat. Get your utilities within your budget.

Your car payment is a possible variable. If your payment is too high, then consider trading cars. You can trade down and get a lesser payment. Do you need the vehicle you drive, or are you driving your car or truck for show and prestige? Get your values straight and drive a car you can afford that will get you where you need to go until you increase your income and can afford a luxury auto.

One other thing: children. If you have children and can’t feed them and pay school expenses because your house and car are for show, ask yourself if you really love your kids, or yourself, more. Get honest about what your real priorities are, and think about whether you need to change your priorities.

The 9 Biggest Challenges to Scheduling Your Machine Shop and Why Most Schedules Are Dead on Arrival!

I recently surveyed 1,500 NTMA (National Tooling and Machining Association) machine shop owners about the biggest challenges they face when trying to schedule their shop. And then I spent countless hours going through the data.

I learned a lot and I really felt your pain. But by sharing my findings with you, my hope, is that you will learn a lot as well and maybe we can ease some of that pain.

The 9 Biggest Challenges …

Based on my survey (and from many of my clients and those I meet while Dr. Eliyahu Goldratt’s Global Marketing Director) I can say this… you are not alone. With all the responses I received, I could categorize ALL of them into 9 challenges. So let’s go through each category …

1. Clients change their mind

Customers often want to make changes after they have placed their order. They want to change their quantity, change the scope, change the design, cancel, or ask you to give priority to another one of the jobs.

In addition, customers often have emergency needs. And big or important customers always seem to pick the time when you’re booked solid for 3 weeks to call and request that you slip their job in this week so that they can meet a commitment to their customer.

So, we break a setup, we jump through hoops and do what we need to do to keep the customer happy. But we are now late on another customer’s job. And now the schedule is out of date.

And sometimes, they don’t want to make a change, but they want to check in with you to make sure your going to finish their job on-time.

And, we hate answering the phone.

2. Vendors are not always reliable

Raw material suppliers, particularly for less common materials, can extend or vary their lead-times and then still don’t always deliver when promised.

In addition, outside process vendors like platers, heat-treaters, welders, and the like also have a hard time meeting their original commitment. And the amount of time they end up taking varies based on the load on their facility so you can’t even begin to predict.

So as soon as one of our vendors misses their commitment, our schedule is out of date, and we now may be late. And when it finally shows up, we find ourselves breaking a setup and expediting because THAT customer just called.

And, these guys seem to schedule based on who’s screaming the loudest, so we need to call and scream on a regular basis for any important jobs. This isn’t very productive work, but it’s necessary.

3. Our mix can vary wildly and so our constraint moves

It seems that the nature of a machine shop is that your mix is going to change, and due to that your constraint (your Herbie) is going to move. And, it’s hard to improve a moving target and improving everywhere is just plain unaffordable.

Machine shops can range in the amount of repeat work they do. And the more custom work they do, the more the mix can change day-to-day or week-to-week. And sometimes “the mix gods” are good to us, but sometimes they’re not and we don’t ship on-time.

But shops that do a large amount of repeat or make to stock work don’t have it any easier — they are trying to balance against an unknown and ever changing forecast. And when the forecast is wrong, we need to break setups and expedite.

4. My employees do not always have the right skill and their discipline is lacking

Machine shops universally seem to lack skills amongst their employees. Certain people have to run certain jobs. Not everyone can do a setup, or not everyone can do certain setups. I’ve heard some owners refer to their less skilled labor as button pushers or part changers.

This means that the skilled people always have a backlog of work while we chase around and find something the button pushers can’t screw up. And finding the time to cross train is difficult.

And in addition to these skill issues, people don’t always show up on time or at all. Or they show up, but you wish their attitude would have stayed home…getting buy-in is difficult at best.

5. My processes are not reliable

Even jobs that repeat can have large differences in set up and run times depending on who is running it or what machine it runs on. But even if we can get the same guy and the same machine each time, stuff happens — tools break, fixtures don’t work, machines or tools aren’t calibrated, etc.

And then we win a new job, one we have not run before. And, of course, it doesn’t run anything like what we planned or based our pricing on. Stuff happens.

Our front office or pre-manufacturing processes are not much better. This means that some of the time we don’t always have what we need to run the job — the raw material, the design, the order into the system, the programming done, etc.

And when stuff happens (or more correctly when variability happens) we are in jeopardy of delivering late, which causes us to expedite, which means our schedule is out of date.

6. Machines break down

Of course, on occasion, machines break down. It’s difficult to schedule maintenance when you’re always behind schedule. And it seems to happen when we’re slammed. And then our schedule is out of date, we are in jeopardy of delivering later, and so we again expedite. (We’re getting pretty good at this fire fighting and expediting.)

7. Quality is not near perfect

Quality isn’t always perfect. Sometimes we struggle to make it right the first time or don’t catch a mistake until further processing has been done. Regardless of whether we spend time doing rework due to an unpredictable downstream activity or an unsuccessful tool tryout the result is we are in jeopardy of missing our due date, which causes us to expedite, and now the schedule is out of date.

8. Our data is not readily available nor accurate nor communicated

It is difficult to predict the load on our facility relative to our capacity — our reports and existing software don’t help or they are more trouble than they are worth. Our estimates for set-up and job run times are not accurate. This combined with all the items above make it difficult to provide due dates that we can hit 99+% of the time.

And because so many things can go wrong at any time, and we don’t have good feedback data or communication within the shop — we can’t predict. We can’t predict when we are going to complete a job, if we’re going to be late, so we end up breaking set-ups and expediting when we really need to.

And if we try to improve our due-date performance (DDP) by extending lead-times, we start to lose work to the competition. And if we miss too many due-dates or by too much, we are in danger of losing the client anyway.

So we do what we can. We use the reports we have which are based on less than perfect data. We create a detailed shop schedule, and then we update it, and update it, and update it …

9. Communication between silos is difficult

When something goes wrong within our company or with one of our vendors we don’t always know right way. Real-time feedback is non-existent. And customers don’t always get back to us in a timely fashion.

We don’t always communicate with our sales people and they don’t always communicate with operations/scheduling. There is usually just a lot of finger pointing back and forth. And a number of people want the ability to change shop priorities.

It’s not that we don’t want to communicate, it’s just that everyone is so busy dealing with all of the stuff above, there’s no time to do yet one more thing. And, who needs the conflict that is likely to occur?

We don’t have a quick snapshot of what we should be focusing on at any particular time. We don’t know what’s in jeopardy of being late, and it’s tough to get a sense of how we’re doing.

The Schedule is DOA …

So now we know why our schedule is Dead On Arrival. Actually when you list out all these challenges it’s really amazing that we do as well as we do.

So it’s no wonder it’s so hard for you to maximize your productivity, achieve 99+% on-time performance and reduce lead-times. But nevertheless, we do try to improve. The problem is that we focus on improving one or a couple of the above challenges and we diminish them some — but we don’t have any substantial impact on our on-time delivery performance or reducing our lead-times.

What if we had a Paradise Plant?

If we have correctly identified all the major causes for the difficulty in managing production, then it means that if we could address each one that the shop would be relatively easy to manage. The schedule would not change, we would not need to expedite, and we could be on-time, all the time.

Do you agree that, if:

1. clients never change their mind, 2. and vendors always supply whatever we ask for, on time, 3. and our mix stayed constant and our constraint did not move, 4. and people are excellently trained and disciplined, 5. and all processes are reliable, 6. and machines never break down, 7. and quality is superb, 8. and data is readily available, accurate, and communicated, 9. and communication is good,

Then:

ยท Managing production would be a piece of cake?

This seems logical. So I tried it. Now, I could not find a real Paradise Plant, but I did find a simulated one. And I gave the simulator to some very good schedulers. The simulator didn’t think for them, it didn’t make any decisions, it only executed the decisions they made.

The simulator presents a relatively simple operation — considerably fewer resources and products than what you have to manage in your real operation. And there is NO variability or skill issues. All of the challenges listed above are gone.

We went over how the simulator works – how to order material, how to set up a machine, what the orders are, the exact routing’s for each product, exactly how long each process is, etc.

The simulator could be frozen and the participants had as much time as they wanted to carefully plan and execute. They also did a short trial to make sure that they weren’t hindered by the software. This should be a piece of cake right?

What Happened in Paradise?

We asked each participate how they did and what their results were. NONE of the participants shipped all their orders — meaning they were NOT 100% on-time. And it wasn’t because of lack of capacity.

In addition, they reported that their well planned, detailed schedule was only good for about the first 2 days. After that they were running by the seat of their pants making a lot of course corrections.

How can it be that when all the challenges are removed, we are still left with the same 3 undesirable effects /problems?

1. Not all customers’ orders are shipped on time.

2. Original plans have a very limited life or are dead on arrival.

3. There are a lot of course corrections and expediting

This means that the list of challenges we collected are not THE major cause of the above three items because they occurred even after we removed these challenges. So it must be that we have not yet identified the true cause for these negative effects.

SUMMARY

So a better ERP, customers who don’t change their mind, higher skilled labor, a constant constraint, a constant mix, and so on wouldn’t completely solve the 3 problems.

But working on one or a few of these challenges is typically what we do. We hire a Lean consultant to help reduce our set-ups or to better organize our work space — and we do reduce our set-up time and we are better organized, but did we substantially improve our DDP, reduce the number of times we need to break setups or reduce our lead-times? The answer is typically no, not substantially.

My Husband Won’t Make Me a Priority! How to Shift His Attitude

Your husband has a very full life. Most men do. He likely juggles a full-time career, his responsibilities as a father and his commitment to you. You do the same in your life but you feel that you’ve always made your husband a priority, even though he hasn’t done the same for you. You’re frustrated, disappointed and perhaps even a bit confused. You never imagined your life would end up in this place, did you? You feel unappreciated, taken for granted and unloved. Obviously, this situation has to change. You’re not going to accomplish that by making subtle comments about how your best friend’s husband loves and adores her. It’s also not going to make any difference if you nag your husband in an effort to get him to move you to the top of his priority list. You have to address this issue in a way that makes your husband come to his own realization that you’re the most important person in his life. Understanding the direction you need to take to accomplish that begins with gaining more insight into why he’s acting the way he is.

On the day you and your husband married you promised many things to one another both verbally and silently. To most women one of the major, silent vows is to always put one another at the top of life’s priority list. We, as women, almost always do that with our spouses. We may falter a bit when we become mothers primarily because our parental nature kicks in and we focus all of our attention on our little ones. However, with men it tends to be a bit different story. Men sometimes allow their work or their friends to take top billing. If you’re a wife who is beginning to notice that shift in her husband’s life, it’s ultimately going to hurt.

Shifting your husband’s attitude so that you become the focal point of his life isn’t nearly as hard as you may believe that it is. You’ve likely already tried speaking to him about the problem. In most cases when a husband is confronted with a wife who says that she feels neglected, he’ll take a defensive stance and go on the attack. He may say things about how he works so hard for her or how he can’t ever do anything that makes her happy. This is to be expected and any woman who has had this conversation with her husband more than once, knows that it’s a normal reaction so she doesn’t take it personally.

You absolutely must take a more subtle approach. Your husband reacts better to action than words. Most men do. They will make a change in themselves if they feel something internally as opposed to being told something. That’s why it can be incredibly helpful if you temporarily stop paying your husband as much attention as you have been. You shouldn’t take the stance of pushing him to the back of your priority list, but instead view it as moving other things ahead of him for a time and for a very defined purpose.

The simpler and less meaningful things are the best. That’s to say that if your husband is expecting you to have dinner cooked when he comes home from the office, he should be greeted with a frozen dinner and a note saying you had a yearning to go see a movie with a girlfriend. Another great way to get your point across is to stop doing as much around the house. If you neglect your husband’s laundry because you’re so busy shopping online for a new handbag, he’s going to feel the pinch of your neglect.

This may be viewed by many women as game playing with their spouse but sometimes the way to a man’s heart is through sports. It’s doubtful that your husband has made a conscious effort to push you off his priority list. It’s more likely that he’s mindlessly allowed other things to take precedence. By showing him how that feels, you’ll be pushing him into seeing that there’s a better and more respectful way to be a loving and attentive partner.