Engineers and accountants

As engineer professionals we can pretty much say that accountants are our "mortal enemies" always putting restraints on well laid plans. I guess I should be careful what I say, we have several accountants in the family, eheheh. The article below is a thoughtful piece that came across my desktop.


Curse of the accountants
11 May 2007 Lloyds List

Time was when every manufacturer, every wholesaler and every retailer would maintain stocks, so that the manufacturing process was not interrupted by a lack of components and supply would not disappoint demand.

It was, in its way, an acknowledgment of uncertainty, that “stuff happens”. Ships and trucks get delayed for all manner of reasons and sensible precautions were deemed necessary.

For their part, shipping companies operating liner services always had their contingency plans ready to maintain the product flow against the possibility of marine emergencies or breakdowns.

Ports, too, would have spare berths available, craneage that could be pressed into service to provide a little leeway if more ships turned up than had been expected.

A well-run ferry company would very often hang on to an older ship, keep it laid up in working order, so that should a ship break down or go for survey the service would not suffer. Ships themselves would carry a wide range of spares, so that if there was a breakdown it would be of short duration.

There was a price for all these things, but it was one which all thought worth while paying because experience suggested it was necessary.

Accountants, in more modern times, have put a stop to all of this. They have identified the stocks which people carried as unnecessary costs and demanded that such waste is eliminated.

Spares are shared between ships or ruthlessly reduced, while a pseudo-religion has evolved around utilization, with every item of equipment having to justify itself as being in current use and “earning”. “Sweating the assets” is an unattractive term which explains the situation perfectly. Port equipment is not even ordered until a customer is signed up who will use it, and the “spare” ferry has long gone.

Partly this has been justified by the greater reliability of modern machinery, but increasingly there is a demand for greater generosity in provision. Ships have been delayed for weeks, even months, because a replacement part actually had to be manufactured, not merely shipped from some other part of the world.

There is chaos and legal redress sought when the supply lines are interrupted because of some marine misadventure. There are gigantic queues of ships outside bulk ports where there is no spare capacity that can accommodate a surge in demand.

Ferry services abruptly cease when the ship delivering them goes in for a refit, and the enraged customers are forced to make alternative arrangements. What has become something of a “classic” of our times in illustrating this problem is the supply problems which were caused by the interruption of the voyage of the MSC Napoli. Within a few days of the incident a vehicle production line in South Africa, it was reported, had gone on to short time.

Things really do happen, and common sense suggests that the accountants row back their expectation and permit a little leeway to be restored to their financial models.