Whether to Take a "Hot Job"

Shop owners discuss the temptations and risks inherent in that one big-money, high-profile job that could put some fat loot in your pocket (but could also disrupt your whole business). April 21, 2011

Question
Paul Downs has written another great article in the NY Times. It talks about the criteria for evaluating one type of customer relative to another.

Forum Responses
(Business and Management Forum)
From contributor L:
This is more of a case of controlling schedule than which customer. They can scream and shout about "having it now" but when push comes to shove they will usually find a way to survive without for another week or two. They just need to know the time frame up front and then decide.



From contributor P:
Guys, these projects aren't suburban kitchen remodels. You are talking multimillion dollar projects, with enormous firms moving from one location to another in Midtown Manhattan. Without a certificate of occupancy, which can only be issued when the wiring is complete, which can only happen when the tables are delivered, you might end up with 3500 lawyers and support staff with no place to work. If you think that the people who fund these things give a care about my schedule, and wouldn't extract instant, painful, and expensive revenge for any deviation from their schedule by me, you are dreaming. Those jobs are a whole different universe from most of what is discussed here. The prices paid for those is mighty attractive, but the performance demands are unbelievable. If the only choice is taking that work or laying off your staff, you might also be tempted.


From contributor V:
This thread inspires me to express my views on issues related to hot jobs. If a busy custom manufacturer wants to accept a hot job, he needs to consider work requirements, due date, and price of the job and possible trade-off between due date and price.

Acceptance of a hot job normally fetches good margin but creates stress on resources which try to meet the due dates of the existing jobs. In the context of a new hot job with a stringent due date, the problem is how to figure out in advance the minimal and cost-optimal capacity enhancement (like worker overtime) for resources over different time intervals and how much of the work can be outsourced to nearby shops or individuals, if possible. An accurate decision on hot job based on the analysis of workflow and resource capacities will reduce two types of risks; greedy and unreasonable acceptance of the job and unnecessary rejection when the job can be accommodated with proper dynamic capacity planning.

If several diverse jobs/projects are in progress simultaneously, needing many shared resources, then simple arithmetic calculations involving available hours and required hours of resources may not help much due to the precedence relations among operations of each job/project. The calculations could become messier when workers have different skill sets and machines are multi-functional. In such cases, the calculations based on scientific scheduling logic can give more confidence in the analysis and decision making. The decision maker can get good help from a production analysis tool that can offer fast and extensive what-if analysis of production schedules and facilitate dynamic capacity planning. The tool can instantaneously do all the necessary number crunching in the evaluation of the merit of each possible decision in production planning. Many people accept hot jobs by experience and gut feeling.



From contributor C:
Many of our customers take on additional projects or products outside their normal expertise by subcontracting some or all of the work to us. Over the years we have worked with shops in the NYC area as well as large office furniture manufacturers across the country to increase capacity or relieve them from complex detail work. Outsourcing goes on at all levels of manufacturing for just that reason. If you find yourself in a situation as described in the article, it may be worth developing a relationship with such a company. Of course, you need to be sure they can deliver the quality you require on time and at a fair price, but many of us consider that our specialty.