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82 SMT Magazine • January 2017 As mentioned last month, academia has been able to adjust their educational offering to our changing understanding of the general laws. What they haven't done very well is adjust to the constantly changing practical application of these laws in product production—what we call Industrial Engineering. Professors try to interpret the real world's needs and adjust, but those without practical experience continue to fail in the learning for earning part 5 . They are always playing catch up. Sometimes we may have noble strategic ob- jectives, but fail to develop or carry out a tac- tical plan to meet those objectives—the words are easy. Academia always has good intentions for industry, but seldom achieve good results. An academic institution has an objective of giv- ing their students a firm understanding of the classical subjects. Part of the tactical plan that schools use to achieve this objective in techni- cal subjects is to confront students with closed- form problems. Students that can demonstrate success in solving these problems are thought to have grasped an understanding of the under- lying subject matter. In the real world, critical thinking is an in- valuable tool to solve the open-form problems that, more often than not, we are confronted with. Even with the best intentions, the aca- demic classroom is a difficult environment to teach this important judgment tool. The real world has had to comply with aca- demia, rather than demand that academia meet their needs for qualified graduates. Lofty think- ing and the ability to solve non-linear differen- tial equations, while important, are not critical to success on the production floor. How are We Going to Pay these People? Last month, I introduced a fictional elec- tronic product assembly company, Chips and Dips, or what we affectionately call C&D 6 . For space considerations, we present only two of the organizational charts for C&D. There are about 20 more. All of these depart- ments, sections and groups are managed and nested into those above them until we reach the top level organizational chart where they ulti- mately reside in one of six directorates, hence, the term hierarchical: 1. Operations 2. Engineering 3. Business Development 4. Finance 5. Quality 6. Human Resources Adding the total cost of this top-level chart alone results in $1.285 million in salaries (this does not include the cost of each employee's benefits [average of 40% of salaries, or $514,000] and incentives). This adds up to a general and administrative cost of about $1.8 million + of indirect cost that MUST be absorbed by the di- rect labor rate when we quote a job—say, to build electronic home alarm security systems for an OPD (original product developer). Add to this the indirect labor expended by the Operations directorate, about $2 million more. This causes us to load the average direct labor rate (the average salary with benefits) of machine operators, hand assemblers, test per- sonnel, hand soldering, etc., typically hourly employees used for the direct assembly of the product with about $3.8 million. But, that's just part of the indirect cost iceberg—there are five more directorates! All the department managers and some en- tire departments in the other five directorates are indirect labor sources as well, and must be absorbed by selling direct labor. This brief dis- cussion makes it clear why the volume of direct labor that we sell is critical. As striking as these indirect costs are, the organization's depart- ments also create natural silos. This results in an employee's sense of working for operations or engineering or quality assurance first, not C&D! A NEW ORGANIZATIONAL MODEL USING LOGIC, PART 2 " In the real world, critical thinking is an invaluable tool to solve the open-form problems that, more often than not, we are confronted with. "