The Goal: A Process of Ongoing Improvement, page 12
"Okay, fair enough,’’ I say finally.
We shake hands across the table.
A waiter interrupts to ask if we’re ready to order. Neither of us have opened the menus, but it turns out we both want coffee. The waiter informs us there’s a ten-dollar minimum for sitting in the dining room. So Jonah tells him to bring us both our own pots of coffee and a quart of milk. He gives us a dirty look and vanishes.
"Now then,’’ Jonah says. "Where shall we begin . . .’’
"I thought maybe first we could focus on the robots,’’ I tell him.
Jonah shakes his head.
"Alex, forget about your robots for now. They’re like some new industrial toy everybody’s discovered. You’ve got much more fundamental things to concern yourself with,’’ he says.
"But you’re not taking into account how important they are to us,’’ I tell him. "They’re some of our most expensive equipment. We absolutely have to keep them productive.’’
"Productive with respect to what?’’ he asks with an edge in his voice.
"Okay, right...we have to keep them productive in terms of the goal,’’ I say. "But I need high efficiencies to make those things pay for themselves, and I only get the efficiencies if they’re making parts.’’
Jonah is shaking his head again.
"Alex, you told me in our first meeting that your plant has very good efficiencies overall. If your efficiencies are so good, then why is your plant in trouble?’’
He takes a cigar out of his shirt pocket and bites the end off of it.
"Okay, look, I have to care about efficiencies if only for the reason that my management cares about them,’’ I tell him.
"What’s more important to your management, Alex: efficiencies or money?’’ he asks.
"Money, of course. But isn’t high efficiency essential to making money?’’ I ask him.
"Most of the time, your struggle for high efficiencies is taking you in the opposite direction of your goal.’’
"I don’t understand,’’ I say. "And even if I did, my management wouldn’t.’’
But Jonah lights his cigar and says between puffs, "Okay, let’s see if I can help you understand with some basic questions and answers. First tell me this: when you see one of your workers standing idle with nothing to do, is that good or bad for the company?’’
"It’s bad, of course,’’ I say.
"Always?’’
I feel this is a trick question.
"Well, we have to do maintenance—’’
"No, no, no, I’m talking about a production employee who is idle because there is no product to be worked on.’’
"Yes, that’s always bad,’’ I say.
"Why?’’
I chuckle. "Isn’t it obvious? Because it’s a waste of money! What are we supposed to do, pay people to do nothing? We can’t afford to have idle time. Our costs are too high to tolerate it. It’s inefficiency, it’s low productivity—no matter how you measure it.’’
He leans forward as if he’s going to whisper a big secret to me.
"Let me tell you something,’’ he says. "A plant in which everyone is working all the time is very inefficient.’’
"Pardon me?’’
"You heard me.’’
"But how can you prove that?’’ I ask.
He says, "You’ve already proven it in your own plant. It’s right in front of your eyes. But you don’t see it.’’
Now I shake my head. I say, "Jonah, I don’t think we’re communicating. You see, in my plant, I don’t have extra people. The only way we can get products out the door is to keep everyone working constantly.’’
"Tell me, Alex, do you have excess inventories in your plant?’’ he asks.
"Yes, we do,’’ I say.
"Do you have a lot of excess inventories?’’
"Well... yes.’’
"Do you have a lot of a lot of excess inventories?’’
"Yeah, okay, we do have a lot of a lot of excess, but what’s the point?’’
"Do you realize that the only way you can create excess inventories is by having excess manpower?’’ he says.
I think about it. After a minute, I have to conclude he’s right; machines don’t set up and run themselves. People had to create the excess inventory.
"What are you suggesting I do?’’ I ask. "Lay off more people? I’m practically down to a skeleton force now.’’
"No, I’m not suggesting that you lay off more people. But I am suggesting that you question how you are managing the capacity of your plant. And let me tell you, it is not according to the goal.’’
Between us, the waiter sets down two elegant silver pots with steam coming out of their spouts. He puts out a pitcher of cream and pours the coffee. While he does this, I find myself staring toward the window. After a few seconds, I feel Jonah reach over and touch my sleeve.
"Here’s what’s happening,’’ he says. "Out there in the world at large, you’ve got a market demand for so much of whatever it is you’re producing. And inside your company, you’ve got so many resources, each of which has so much capacity, to fill that demand. Now, before I go on, do you know what I mean by a ‘balanced plant’?’’
"You mean balancing a production line?’’ I ask.
He says, "A balanced plant is essentially what every manufacturing manager in the whole western world has struggled to achieve. It’s a plant where the capacity of each and every resource is balanced exactly with demand from the market. Do you know why managers try to do this?’’
I tell him, "Well, because if we don’t have enough capacity, we’re cheating ourselves out of potential throughput. And if we have more than enough capacity, we’re wasting money. We’re missing an opportunity to reduce operational expense.’’
"Yes, that’s exactly what everybody thinks,’’ says Jonah. "And the tendency for most managers is to trim capacity wherever they can, so no resource is idle, and everybody has something to work on.’’
"Yeah, sure, I know what you’re talking about,’’ I say. "We do that at our plant. In fact, it’s done at every plant I’ve ever seen.’’
"Do you run a balanced plant?’’ he asks.
"Well, it’s as balanced as we can make it. Of course, we’ve got some machines sitting idle, but generally that’s just outdated equipment. As for people, we’ve trimmed our capacity as much as we can,’’ I explain. "But nobody ever runs a perfectly balanced plant.’’
"Funny, I don’t know of any balanced plants either,’’ he says. "Why do you think it is that nobody after all this time and effort has ever succeeded in running a balanced plant?’’
"I can give you a lot of reasons. The number one reason is that conditions are always changing on us,’’ I say.
"No, actually that isn’t the number one reason,’’ he says.
"Sure it is! Look at the things I have to contend with—my vendors, for example. We’ll be in the middle of a hot order and discover that the vendor sent us a bad batch of parts. Or look at all the variables in my work force—absenteeism, people who don’t care about quality, employee turnover, you name it. And then there’s the market itself. The market is always changing. So it’s no wonder we get too much capacity in one area and not enough in another.’’
"Alex, the real reason you cannot balance your plant is much more basic than all of those factors you mentioned. All of those are relatively minor.’’
"Minor?’’
"The real reason is that the closer you come to a balanced plant, the closer you are to bankruptcy.’’
"Come on!’’ I say. "You’ve got to be kidding me.’’
"Look at this obsession with trimming capacity in terms of the goal,’’ he says. "When you lay off people, do you increase sales?’’
"No, of course not,’’ I say.
"Do you reduce your inventory?’’ he asks.
"No, not by cutting people,’’ I say. "What we do by laying off workers is cut our expenses.’’
"Yes, exactly,’’ Jonah says. "You improve only one measurement, operational expense.’’
"Isn’t that enough?’’
"Alex, the goal is not to reduce operational expense by itself. The goal is not to improve one measurement in isolation. The goal is to reduce operational expense and reduce inventory while simultaneously increasing throughput,’’ says Jonah.
"Fine. I agree with that,’’ I say. "But if we reduce expenses, and inventory and throughput stay the same, aren’t we better off?’’
"Yes, if you do not increase inventory and/or reduce throughput,’’ he says.
"Okay, right. But balancing capacity doesn’t affect either one,’’ I say.
"Oh? It doesn’t? How do you know that?’’
"We just said—’’
"I didn’t say anything of the sort. I asked you. And you assumed that if you trim capacity to balance with market demand you won’t affect throughput or inventory,’’ he says. "But, in fact, that assumption—which is practically universal in the western business world—is totally wrong.’’
"How do you know it’s wrong?’’
"For one thing, there is a mathematical proof which could clearly show that when capacity is trimmed exactly to marketing demands, no more and no less, throughput goes down, while inventory goes through the roof,’’ he says. "And because inventory goes up, the carrying cost of inventory—which is operational expense—goes up. So it’s questionable whether you can even fulfill the intended reduction in your total operational expense, the one measurement you expected to improve.’’
"How can that be?’’
"Because of the combinations of two phenomena which are found in every plant,’’ he says. "One phenomenon is called ‘dependent events.’ Do you know what I mean by that term? I mean that an event, or a series of events, must take place before another can begin... the subsequent event depends upon the ones prior to it. You follow?’’
"Yeah, sure,’’ I say. "But what’s the big deal about that?’’ "The big deal occurs when dependent events are in combination with another phenomenon called ‘statistical fluctuations,’’’ he says. "Do you know what those are?’’
I shrug. "Fluctuations in statistics, right?’’
"Let me put it this way,’’ he says. "You know that some types of information can be determined precisely. For instance, if we need to know the seating capacity in this restaurant, we can determine it precisely by counting the number of chairs at each table.’’
He points around the room.
"But there are other kinds of information we cannot precisely predict. Like how long it will take the waiter to bring us our check. Or how long it will take the chef to make an omelet. Or how many eggs the kitchen will need today. These types of information vary from one instance to the next. They are subject to statistical fluctuations.’’
"Yeah, but you can generally get an idea of what all those are going to be based on experience,’’ I say.
"But only within a range. Last time, the waiter brought the check in five minutes and 42 seconds. The time before it only took two minutes. And today? Who knows? Could be three, four hours,’’ he says, looking around. "Where the hell is he?’’ "Yeah, but if the chef is doing a banquet and he knows how many people are coming and he knows they’re all having omelets, then he knows how many eggs he’s going to need,’’ I say. "Exactly?’’ asks Jonah. "Suppose he drops one on the floor?’’ "Okay, so he has a couple extra.’’
"Most of the factors critical to running your plant successfully cannot be determined precisely ahead of time,’’ he says. The arm of the waiter comes between us as he puts the totaled check on the table. I pull it to my side of the table. "All right, I agree,’’ I say. "But in the case of a worker doing the same job day in, day out, those fluctuations average out over a period of time. Frankly, I can’t see what either one of those two phenomena have to do with anything.’’
Jonah stands up, ready to leave.
"I’m not talking about the one or the other alone,’’ he says, "but about the effect of the two of them together. Which is what I want you to think about, because I have to go.’’
"You’re leaving?’’ I ask.
"I have to,’’ he says.
"Jonah, you can’t just run off like this.’’
"There are clients waiting for me,’’ he says.
"Jonah, I don’t have time for riddles. I need answers,’’ I tell him.
He puts his hand on my arm.
"Alex, if I simply told you what to do, ultimately you would fail. You have to gain the understanding for yourself in order to make the rules work,’’ he says.
He shakes my hand.
"Until next time, Alex. Call me when you can tell me what the combination of the two phenomena mean to your plant.’’
Then he hurries away. Fuming inside, I flag down the waiter and hand him the check and some money. Without waiting for the change, I follow in the direction of Jonah out to the lobby.
I claim my overnight bag from the bellhop at the desk where I checked it, and sling it over my shoulder. As I turn, I see Jonah, still without jacket or tie, talking to a handsome man in a blue pinstripe suit over by the doors to the street. They go through the doors together, and I trudge along a few steps behind them. The man leads Jonah to a black limousine waiting at the curb. As they approach, a chauffeur hops out to open the rear door for them.
I hear the handsome man in the blue pinstripe saying as he gets into the limo behind Jonah, "After the facilities tour, we’re scheduled for a meeting with the chairman and several of the board...’’ Waiting inside for them is a silver-haired man who shakes Jonah’s hand. The chauffeur closes the door and returns to the wheel. I can see only the vague silhouettes of their heads behind the dark glass as the big car quietly eases into traffic.
I get into a cab.
The drivers asks, "Where to, chief?’’
12
There is a guy I heard about in UniCo who came home from work one night, walked in, and said, "Hi, honey, I’m home!’’ And his greeting echoed back to him from the empty rooms of his house. His wife had taken everything: the kids, the dog, the goldfish, the furniture, the carpets, the appliances, the curtains, the pictures on the wall, the toothpaste, everything. Well, just about everything—actually, she left him two things: his clothes (which were in a heap on the floor of the bedroom by the closet; she had even taken the hangers), and a note written in lipstick on the bathroom mirror which said, "Good-bye, you bastard!’’
As I drive down the street to my house, that kind of vision is running through my mind, and has been periodically since last night. Before I pull into the driveway, I look at the lawn for the telltale signs of tracks left by the wheels of a moving van, but the lawn is unmarred.
I park the Mazda in front of the garage. On my way inside, I peek through the glass, Julie’s Accord is parked inside, and I look at the sky and silently say, "Thank You.’’
She’s sitting at the kitchen table, her back to me as I come in. I startle her. She stands up right away and turns around. We stare at each other for a second. I can see that the rims of her eyes are red.
"Hi,’’ I say.
"What are you doing home?’’ Julie asks.
I laugh—not a nice laugh, an exasperated laugh. "What am I doing home? I’m looking for you!’’ I say. "Well, here I am. Take a good look,’’ she says, frowning at me.
"Yeah, right, here you are now,’’ I say. "But what I want to know is where you were last night.’’
"I was out,’’ she says.
"All night?’’
She’s prepared for the question.
"Gee, I’m surprised you even knew I was gone,’’ she says. "Come on, Julie, let’s cut the crap. I must have called the number here a hundred times last night. I was worried sick about you. I tried it again this morning and nobody answered. So I know you were gone all night,’’ I say, "And, by the way, where were the kids?’’
"They stayed with friends,’’ she says.
"On a school night?’’ I ask. "And what about you? Did you stay with a friend?’’
She puts her hands on her hips.
"Yes, as a matter of fact, I did stay with a friend,’’ she says. "Man or woman?’’
Her eyes get hard on me. She takes a step forward. "You don’t care if I’m home with the kids night after night,’’ she says. "But if I go away for one night, all of a sudden you have to know where I’ve been, what I’ve done.’’
