1984 – 1985 MDE Systems Inc, the Beginning
As much as I hated leaving Tucson and moving back to the armpit of the world, I moved to the Los Angeles area specifically, Torrance Ca. It was July 4th 1984. The following week I founded MDE Systems Inc., a California corporation and I was in business as an independent consultant and a contracted GMD agent.
I opened an office because I didn’t want to work out of my home, as I did with Production Data Systems in the late 60’s. Using an extra bedroom as an office proved to lead towards more sex than work and now I was engaged to be married so no hanky panky..
I also hired my secretary from the Hughes Tool Company days back in 1966, Barbara. She had been working as an office manager for the past fifteen or so years at a medical office. It took a while, but I found her, offered her a job and she immediately gave her two weeks’ notice to join me. That’s loyalty and trust.
She had faith in me.
Besides her outstanding work ethic and job knowledge I hired her so I would have to make a payroll. Even if she was the only person, I had to make a payroll. That in turn would force me to get going and keep going.
So, I hit the ground running and in the first 9 months grossed somewhere around $385,000 in IBM hardware and software sales commissions, GMD software sales commissions and consulting fees as a one-man consulting firm.
Before hiring any new help, I was the lead consultant and was implementing MAPICS MRP systems in 6 companies in the Los Angeles area at the same time. That is no easy feat.
I soon bought a beautiful 1984 Cadillac Coupe Deville two door and was on my way. It was Powder Blue.
I did marry that little secretary from Toronto in September of 1984, but I won ‘t say very much about that. I will mention a few things that are pertinent to my story later.
My major claim to fame with MDE came about in early 1985 when a company, in the City of Industry close to L.A., called IBM for some help. The help they needed was not the help IBM had any expertise in so IBM contacted GMD Systems in Atlanta. As the new GMD contracted agent, GMD referred the company to me. The company was Wiggins Connectors, then a division of Transamerica De Laval.
At the time Transamerica De Laval owned about 16 to 20 manufacturing companies of various sizes that manufactured various products in and out of the aircraft industry across the country. Each company had a General Manager, who was responsible for all profit and loss of his company. As far as each of the De Laval companies stacked up in performance, Wiggins was in last place and the GM knew he was on his way out.
Unknown to me, he had decided to interview as many manufacturing consultants as necessary until he was sold on one. He had decided he would then follow the selected consultant’s advice to the letter because everything he had tried had failed.
We were a match made in heaven.
When IBM suggested that he talk to me, it was a great intro for me to have a company like IBM as my backer. The GM interviewed me for about a week and finally decided to go with me. It reminded me of the time Rom Von Stolk had interviewed me in Nogales a few years before, but this was more intense.
In the end, he chose me and he literally turned the company over to me via my ideas on how to run a manufacturing company. He was really in a hurry to turn things around because, as I found out later he had been given six months to get the company turned around or he was out.
We reorganized the company and that made the Director of Manufacturing unhappy so we agreed to his departure. We changed some policies and that made the Chief Financial Officer unhappy so we said goodbye to him too.
To make a long story short, in the following six months with the organizational changes made, policies and procedures put in place things had improved to such a degree, Wiggins was first in on time shipments, had the lowest inventory dollars and was the most profitable division in the Transamerica De Laval list of companies.
The GM’s job was saved and he became a legend in the Transamerica De Laval hierarchy. The letter he wrote below sums up what he thought about what happened. It was written about ten years later by the then president of Adel Wiggins as testament of what I just stated.
Introduction by a Manufacturing Executive
American manufacturing companies work very hard to adapt or implement any number of new management fads that come in vogue often in three to five year cycles. The reason they are quick to jump in, is usually to fix something that is not right internally which affect the external customer. The primary three “wants” of any customer are 1.) A high quality item at 2.) A reasonable price and 3.) Delivered on time.
Focusing on quality and/or cost has proven that on time delivery doesn’t necessarily follow, however, to have a product consistently supplied on time definitely drives quality and will reduce cost.
Chuck Diaz has spent many years taking complex products and companies to be better performers by bringing the manufacturing process back to basics. It is amazing how hard some of us work at taking simple tasks and making them complex and confusing. Systems that cause this are often not imposed by the operations or manufacturing group. Usually Accounting, Engineering, Quality, MIS, or even Marketing has more to say in making the product than Manufacturing that has the end responsibility. Chuck taught me some 10 years ago that in a plant that manufactures a product all operating decisions should be weighed heavier towards operations than any other group. Why? The results will be 1.) A high quality item at 2.) A consistent cost structure produced 3.) In the shortest time — exactly what the end customer desires.
In the year following the implementation of Chuck’s manufacturing philosophy the following happened:
1. Cost of sales dropped from over 70% to 55%.
2. Overdue orders dropped from an average of $1.5 million to $300,000.
3. Inventory dropped from 36% of sales to 29%.
4. Sales increased 40% and direct labor dropped 68%.
5. While sales increased, the backlog remained constant.
President, Adel Wiggins Group
With the immediate success at Wiggins, IBM sat up at took a second look at me and my company. Even though I was a one-man operation they offered to place me under contract with IBM Los Angeles as a manufacturing systems consultant in a program called the Marketing Assistant Program, (MAP). The MAP contract with IBM acknowledged my expertise in manufacturing systems and the first time I signed a contract with IBM I was on top of the world.
Think of it, “ME,” Chuck Diaz, with no degree, with no programming ability, no systems engineering degree, no nothing but street smarts and a lot of manufacturing experience, is recognized by IBM as an expert in my field! Wow! Life was good!
Back then experience was still an important factor and a person didn’t have to have a degree to achieve. Unlike today where the Liberals have convinced us we need a degree to voice an opinion, they have successfully eliminated common sense and any intelligence we may be born with in favor of a degree that teaches NOTHING!
What I did have was a ton of real life experience actually responsible for shipping everything from Shillelagh Missiles to Hughes helicopters, from F-4 electronics to Mercury and Apollo environmental systems, from aircraft actuators to ram air turbines, I had done it all from the ground up. I thought I had finally received my due recognition in the form of a contract with IBM.
My years in the car business also played a role in my ability to “stay on top” of a conversation while trying to sell myself to a potential client. That experience was worth its weight in gold.
To make things better, during the process of fixing things at Wiggins, IBM San Diego had a huge problem with a company that had ordered an IBM System 36 computer and MAPICS software, but refused to accept delivery. In the IBM world that’s like a Category 5 Hurricane. There’s an acronym for it, but I can’t remember it. It’s a major event with all hands-on deck when it happens. And, it’s the last thing IBM wants to happen.
Not knowing what to do San Diego called IBM Los Angeles and IBM Los Angeles asked me to intervene on behalf of IBM San Diego to see what could be done. The company was Mellos Griot, they manufactured lasers of all sizes.
I accepted the challenge and flew down to San Diego after getting an appointment with the president. During our meeting I was told a “new” manufacturing manager had determined he did not want MAPICS. He wanted to buy an MRP program that he had used at the last company he worked at. Let’s just call it the ABC system software.
I asked the president for an opportunity to review his company and offer an outside opinion on the ABC software and MAPICS, at no charge. He agreed on the condition that I also talk to the new manufacturing manager.
I first did my usual week long evaluation of the company, it’s manual systems and procedures, its organizational structure and interviewed employees from the top to the bottom. I did this in preparation for my meeting with the new manufacturing manager.
I finally asked for and received an appointment with the new manufacturing manager. I was there ten minutes before my appointment ready to do battle. He did not show up so after waiting an hour I asked to reschedule the meeting. We did and the next meeting was the same. He didn’t show up.
In man to man business terms, he was telling me he was too important to sit down with me, he had made up his mind and didn’t want to hear anything I had to say. I understood him clearly.
Having done my homework, I had found out the last company he had been with was not that happy with the ABC system and I found three other companies who were disgusted with ABC software. In fairness, I also found three companies who were disgusted with MAPICS. My point being, a successful implementation has nothing to do with the software, but IBM offered greater support in contracted consultants like me.
I then met with the president and presented my findings and how I believed MAPICS, with the help of professional implementation support, would fit just fine. What won him over was my showing him companies who were failing with MAPICS.
I got him to understand the failure was in the implementation and misunderstanding of what was being done and not the software. I also asked the president to call the GM at Wiggins as a reference and he was sold
When I told him the new manufacturing manager had not shown up for three appointments and why I thought he did it, he really got mad. He said he would make sure the man would meet with me the next time, but I wanted a different meeting.
I asked the president to have the Manufacturing Manager fly to Los Angeles and we would meet in the Airline Lounge that had meeting rooms for that purpose. The president said he would make sure the Manufacturing Manager was there at the agreed time. I think it was one or two days later.
Forcing the Manufacturing Manager to fly to LA was part of knocking him down a few pegs and to get him to listen to reason. I was letting him know I didn’t have time to go back to San Diego to meet with him and play his silly games.
The meeting lasted about two hours and he came to see the light. I think the president may have lit a fire under him too. We parted great friends and the company accepted delivery of the System 36 and the MAPICS software. I had gained another client too.
In fact, I sold them a newer larger IBM System 36 and a newer updated version of IBM MAPICS Manufacturing software. IBM was so happy with me and they offered me a MAP contract with their San Diego office.
Now that I had my two MAP contracts with IBM I needed to find someone to work for me, but this someone didn’t have to be as good of a consultant as I was, he had to know how to handle the political end of IBM and GMD. I wasn’t any good at that.
Prior to joining GMD, while I was at some of the MAPICS schools I had met a guy named Jack who worked directly for GMD, he was also a prior IBM’er. He was the first person I thought of when I was ready to hire my first consultant employee so I went looking for Jack and found him.
Jack really didn’t like me that much and it took a lot of convincing to get him on board, and a big bonus. I had to offer him a $120,000 bonus because he really really didn’t want to work for me, but money talks and he accepted my offer.
He was a talented individual and knew the inner workings of IBM, which was exactly what I needed. I immediately made him my representative with IBM and GMD. His job was to get as many MAP contracts with all the IBM branches in our territory. When he joined MDE I had one office located in Torrance CA.
I knew he and I wouldn’t get along in the same office because his personality and mine wouldn’t allow it, so I had to do something about it. While I was trying to figure out just what to do, fate stepped in and gave me my answer.
During the ending weeks of my full-time participation at Wiggins, and while I was also working with the laser manufacturer, IBM sent me to another company in San Diego.
This IBM account was a company that I can’t remember the name of, but they were more screwed up than G.I. Toronto was. IBM had sent me there to see if I could help. Again, the first thing was my week long review and I ran a cycle count to check the company’s inventory accuracy. What I found was a first for me!
The inventory accuracy was ZERO PERCENT! Like in not one inventory record came close to the actual on hand inventory.
I was so shocked at the finding I immediately asked for a meeting with the owner and told him the news. He looked at me and before he said a word I asked him, “Did you plan to have this system work this way?” That hit him right between the eyes and he said absolutely not, why would I ask such a thing.
His company had some government contracts and I told him I was familiar with government contracts. I asked him if he had any CPFF contract. CPFF stands for Cost Plus Fixed Fee and a company will not lose money on that type of contract.
I told him I didn’t think I wanted to work with his company because his problems were far worse than inventory accuracy, but he insisted I become his manufacturing consultant, that I implement MAPICS and he called IBM to insure it. We signed a contract and I had my reason to move to San Diego with this and other accounts piling up.
I opened an office in San Diego and with all the GMD sales, IBM commissions, consulting fee’s we hired more consultants and moved an IBM System 34 into my new office in San Diego to do the processing off site. The office took the entire second floor of a new building next to downtown San Diego.
My wife and I had already had a meeting of the minds because I gave her back my wedding ring three months after we got married. I asked her to please go back to Canada, but she wouldn’t do it and I was too busy to argue the point. I sent her to San Diego State and other colleges hoping she would meet someone, I even encouraged her to go out with other college girlfriends on Friday and Saturday nights, but nothing worked.
As I write this, it’s hard for me to believe I stayed in a situation I did not want and just pretended we were married. But what the hell, I was busy.
I did do what most people would and bought a sail boat to enjoy the harbor and party on. We pretended to get along, but there was no intimacy after the third month. I think we moved to San Diego towards the end of 1985 so we had been married a year or more. I’m not going to tell you why things went sour, but trust me with my decision.
Back to work.
Most people who have worked for me usually come around to my way of thinking after a while Jack became one of my most loyal employees over the next few years.
My method of operation, (MO), appeared radical to most people who didn’t know me, but I am who I am, I know what I know and I do what I do. I can’t do it any other way.
An example of my MO was the way I would interview a potential consultant.
I insisted that MDE consultants had to know their craft at a level ten of knowledge. A level ten is when you can answer a question that someone asks after another question on the same subject, requiring a deeper level of knowledge. The first question is level one knowledge. Answering a second deeper question, on the same subject, is level two knowledge. A third answer to a deeper question, on the same subject would then be level three knowledge and so on until you can answer ten questions, each deeper, on the same subject showing you truly are a master of that subject being discussed, a subject matter expert.
Of course, a consultant would have to have that deep of knowledge on hundreds of subjects relating to manufacturing, accounting, purchasing, production and inventory control in a manufacturing or repair and overhaul environment. This knowledge must include manual systems as well as automated systems. Today I doubt any manufacturing systems consultants could create a manual system to run a manufacturing plant that lost all its computer capability. We could then and still do now.
If the applicant had the qualifications, he also had to answer another question during the interview. It became known as “The Question.”
“Let’s assume you’ve been working on an account for four months located outside of San Francisco. At 11:00 AM you get a phone call from the account and they are ready to sign, but require you to fly to San Francisco and be in a meeting at 4:00PM.”
“You have the reservations made and are driving to the airport to catch the 1:00 PM flight to San Francisco from Los Angeles.”
“On the way there your next-door neighbor calls and says they just took your wife to the hospital to have your first child.”
“Will you make that flight?”
Those who answered “No” didn’t get the job.
In my world, it’s far more important to his life, his wife’s life and his new child’s life that he continue and make their life as comfortable for them as possible. I know in today’s world that doesn’t fit, but I believe the feminization of the American male has caused a lot of the problems we have today.
I believe a man must work and earn the living for the family and the wife must stay home and take care of her husband and their children first and foremost. Men who allow their wives to work are failures and I will not accept that today’s world requires both to work. They are failures and lazy.
After coming to work for me, and this included at AiResearch, Hughes Tool or any other job, an employee learned very quickly that I don’t accept failure. To this day I have a sign in my office that reads:
“Good excuses are no longer accepted for not getting the job done.”
And I mean it, I did then and do now.
Before you think I’m some kind of raving lunatic, I don’t think I ever fired anyone in my entire business career, except car salesmen, bartenders and cocktail waitresses. Yes waitresses.
I hold myself to the same policy. While this is a minor example and has nothing to do with consulting, on one occasion I had to get to San Diego from LAX. I arrived at the airport late and the flight was full, but I had to be on that flight. I ran all the way to the gate and tried to buy a ticket there. No luck. So I jumped on the ticket counter and yelled out my plight to the crowd and offered $200 for a $29 ticket. I got my ticket and was on my way.
It’s a much more complicated environment and my catching a flight example is very simplistic, but it shows an attitude of not failing at any cost. I wonder if Dr. Dao would have sold his seat to me.
In the manufacturing consulting environment, there are hundreds of consultants who can tell you what is needed to improve a company’s inventory, work in process, Bill of Material accuracy etc. There are only a handful that can show a company how to improve that performance to ship a quality product, on time and make money doing so. MDE was such a company.
The following is from an IBM memo about me and MDE:
“How could they fail? MDE hosted an agenda that included an IBM HQ speaker and the president of Transamerica Wiggins, who told the audience his company “saved $1.5 million in the first year using “vanilla” MAPICS and the services of Chuck Diaz.”
A.L. Schoonover, IBM Western Area Support Internal Memo
That statement sounds good for the software and me, but the key wasn’t the software, it was sound policies, procedures and organizational structure.
By the end of 1985 MDE Systems was on the MAP and I was at the bottom of a very high mountain looking up starting my climb.
Next 1986 – 1987 GMD, MDE and the VSE