The hold that never expires

What the planning board said

Zerrand's autumn window is weeks 26 to 41: sixteen weeks on nine sewing lines. That is 144 line-weeks of capacity. A line-week is one sewing line running for one week, and it is how a factory counts the time it has to sell. On 3 June the board looked like this.

The header on that board read 91.7% loaded, because it added the firm and the held weeks together. Everybody in the building read that number every Monday and nobody questioned it. It is the single most misleading figure in this course.

What a hold actually is

A hold is a buyer saying keep me six weeks on two lines in weeks 33 to 38, the purchase order is coming. Zerrand had three of them: 14 line-weeks for a possible second parka delivery from Vintry Hall, 8 for a Callisay repeat, and 4 for an extra Ospreyfield colour.

None of the three was a contract. None carried a deposit. And — this is the part that matters — none of them carried a date after which it expired. Each was granted in a phone call in March or April, written into the grid by the planner, and never looked at again.

Describe that arrangement to a bank and it will recognise it instantly. The buyer has the right, but not the obligation, to take a stated amount of capacity at a price agreed months earlier. It can take it or walk away, and it pays nothing either way. That is an option, and Zerrand gave away three of them.

Course 13.6 prices the option a factory gives away when it holds a price firm for forty-five days. A capacity hold has the same shape, with a different thing inside it and a different way of paying. You do not pay for a capacity hold in cash. You pay for it in the enquiries you refuse.

The enquiry that was refused

On 3 June an enquiry arrived from Kelvenn Outdoor, a new account: 18,000 fleece-lined shells, delivery weeks 35 to 39, worth USD 96,480 of costed margin over roughly 10 line-weeks.

The planner turned it down, and not carelessly. He looked at the grid. The six weeks Kelvenn wanted held only 4 free line-weeks. He would not break a hold given to an existing customer for a first order from a stranger. Anybody in that chair would have done the same. He reported it to the commercial director as a refusal on capacity, not a commercial decision.

Now put the numbers side by side. That is the thing nobody did.

The conversion rate is the share of holds that turn into real purchase orders. Refusing Kelvenn to protect a hold cost USD 5,420.95 a line-week, and USD 54,209.50 across the ten. That was before anything went wrong, in a June when the season still looked excellent. It is not a mistake by the planner. It is a decision he was never shown, because the board printed held capacity at its face value, and a face value is not a value.

The honest header figure weights the held line-weeks at the conversion rate. It is 85.0% loaded, not 91.7%. On that board Kelvenn fits.

The part that makes holds a book problem, not a planning problem

Of the 26 held line-weeks, 11 turned into purchase orders and 15 expired. That is 42.3%, well below Zerrand's long-run 63.0%.

Look at when they expired. Eight of the fifteen were released between 14 and 22 September, the same nine days as the cancellations in lesson 3, and for the same reason. The buyers holding capacity were the buyers whose autumn was not selling.

This is the finding, and it is why holds belong in a course about the order book rather than in one about planning.

A hold is worth least at exactly the moment you most need it to be worth something. The news that cancels a firm order releases a hold on the same morning. So held capacity is not a cushion against a bad season. It is the same bet, taken again, with no money behind it. A factory that reads 91.7% loaded and relaxes has counted its least independent asset at face value.

Three rules, and the number in each

Zerrand's rules for the following season fit on a card. Every one of them has a figure in it, not a principle.

1. No hold without an expiry date. A hold expires automatically 21 days after it is granted, or six weeks before the first week it covers, whichever comes sooner. Renewing it is a phone call and takes ten seconds. The point is that somebody has to make that call.
2. The board shows the weighted figure. Held line-weeks appear on the grid at their conversion rate, and the header number is the weighted one. The face-value number stays available and stops being the headline.
3. A firm order beats a hold on value, with first refusal. Any confirmed order worth more per line-week than the weighted value of the hold it would displace may take the slot. The holder gets 48 hours to confirm before it goes. Under that rule the Kelvenn enquiry, at 9,648.00 against 4,227.05, is accepted on the day it arrives.

What a hold is worth keeping

None of this is an argument against granting holds. A buyer planning a season needs to know the capacity exists before it can commit to a purchase order. A factory that refuses to hold anything is hard to buy from. Zerrand's holds were good commercial practice.

The argument is that a hold is a service with a price, and a factory should choose how it gets paid for it. Three ways are ordinary in this trade. A hold fee, credited against the order if it lands. A fabric deposit, so the buyer carries the cloth commitment rather than the factory. Or a first-refusal window, which turns an open-ended hold into a dated one. Course 14.2 covers how each is written. Course 16.4 covers how the conversation is run. Course 7.4 owns the loading grid itself and what a shortfall costs to fix.

Act as a production planner who has been asked to prove that held capacity is really worth what the board says it is worth. Facts: my window runs from week [NUMBER] to week [NUMBER] on [NUMBER] lines, so I have [NUMBER] line-weeks. Firm purchase orders take [NUMBER] line-weeks and their total costed margin is [AMOUNT]. Here are my holds, one row each: buyer, line-weeks, the weeks they cover, the date the hold was granted, whether it has an expiry date, whether any deposit or fee was taken — [PASTE THE ROWS]. Over my last [NUMBER] seasons, holds converted into purchase orders [PERCENT] of the time overall and [PERCENT] of the time when they were still open inside six weeks of the window. Do the following. First, give me the costed margin per firm line-week, and use it to value one held line-week at each of those conversion rates. Second, give me my loading percentage twice: once at face value the way my board shows it, and once with the held line-weeks weighted. Give me the difference in points. Third, for every hold, tell me its weighted value, how many days it has been open, and what date it should expire on if I set the rule at [NUMBER] days or six weeks before its first week, whichever comes sooner. Fourth, here is an enquiry I am thinking of turning down — [DESCRIBE IT: units, weeks needed, costed margin]. Compare its margin per line-week against the weighted value of each hold it would displace, and tell me plainly whether to take it. Fifth, tell me which of my holds are from buyers already in my largest demand group, because those are the ones that will expire on the same news that cancels the orders beside them. Do not treat a hold as a booking.

What to take away

Held capacity is an option you give a buyer, and you pay for it in refused enquiries rather than in cash. Its face value is not its value. Weight it by your own conversion record, and weight it again when it is close to its window. And because a hold is released by the same news that cancels the order beside it, held capacity is never the cushion it looks like on a Monday board.