The Goal: A Process of Ongoing Improvement, page 38
"This is a very important lesson,’’ I say. "What you claim is that we have moved from the ‘cost world’ into the ‘throughput world’.’’
After a minute of silence I continue, "You know what, it really highlights another problem. Changing the measurements’ scale of importance, moving from one world into another, is without a doubt a culture change. Let’s face it, that is exactly what we had to go through, a culture change. But how are we going to take the division through such a change?’’
I go to pour myself another cup of coffee. Bob joins me. "You know, Alex, something is still missing. I have the feeling that the entire approach we took was different.’’
"In what way?’’ I ask.
"I don’t know. But one thing I can tell you, we haven’t declared any improvement project, they grow from the need. Somehow it was always obvious what the next step should be.’’
"I guess so.’’
We spend good time. We bring up the actions we took and verify that each one actually has been guided by our new scale. Bob is very quiet until he jumps to his feet.
"I nailed the bastard!’’ he shouts, "I have it!’’
He goes to the board, grabs a marker and put a heavy circle around the word ‘improvement.’ "Process of on-going improvement,’’ he booms. "Lou and his fixation on measurements forced us to concentrate on the last word. Don’t you realize that the real sneaky SOB is the first one?’’ and he draws several circles around the word ‘process.’
"If Lou has a fixation about measurements,’’ I say somewhat irritated, "then you certainly have a fixation about processes. Let’s hope your fixation will turn up to be as useful as his.’’
"Sure thing, boss. I knew that the way we handled it was different. That it wasn’t just a matter of scales.’’
He returned to his seat still beaming.
"Do you care to elaborate?’’ Stacey inquires in a soft voice.
"You haven’t got it?’’ Bob is surprised.
"Neither did we.’’ We all looked perplexed.
He looks around and when he realizes that we are serious he asks, "What is a process? We all know. It’s a sequence of steps to be followed. Correct?’’
"Yes...’’
"So, will anybody tell me what the process is that we should follow? What is the process mentioned in our ‘process of on-going improvement’? Do you think that launching several improvement projects is a process? We haven’t done that, we have followed a process. That’s what we have done.’’
"He’s right,’’ says Ralph in his quiet voice.
I stand up and shake Bob’s hand. Everybody is smiling at him.
Then Lou asks, "What process have we followed?’’
Bob doesn’t hurry to answer. At last he says, "I don’t know, but we definitely followed a process.’’
To save embarrassment I hurriedly say, "Let’s find it. If we followed it, it shouldn’t be too difficult to find. Let’s think, what is the first thing we did?’’
Before anybody has a chance to answer Ralph says, "You know, these two things are connected.’’
"What things?’’
"In the ‘cost world’ as Alex called it, we are concerned primarily with cost. Cost is drained everywhere, everything cost us money. We had viewed our complex organization as if it were composed out of many links and each link is important to control.’’
"Will you please get to the point?’’ Bob asks impatiently.
"Let him talk,’’ Stacey is no less impatient.
Ralph ignores them both and calmly continues, "It’s like measuring a chain according to its weight. Every link is important. Of course, if the links are very different from each other then we use the principle of the twenty-eighty rule. Twenty percent of the variables are responsible for eighty percent of the result. The mere fact that we all know the Pareto principle shows us to what extent Lou is right, the extent to which we all were in the cost world.’’
Stacey puts her hand on Bob’s to prevent him from interfering.
"We recognize that the scale has to be changed,’’ Ralph continues. "We choose throughput as the most important measurement. Where do we achieve throughput? At each link? No. Only at the end of all operations. You see, Bob, deciding that throughput is number one is like changing from considering weight to considering strength.’’
"I don’t see a thing,’’ is Bob’s response.
Ralph doesn’t let go, "What determines the strength of a chain?’’ he asks Bob.
"The weakest link, wise guy.’’
"So if you want to improve the strength of the chain, what must your first step be?’’
"To find the weakest link. To identify the bottleneck!’’ Bob pats him on the back. "That’s it! What a guy!’’ And he pats him again.
Ralph looks a little bent, but he is glowing. As a matter of fact, we all are.
After that it was easy. Relatively easy. It wasn’t too long before the process was written clearly on the board:
STEP 1. Identify the system’s bottlenecks.
(After all it wasn’t too difficult to identify the oven and the NCX10 as the bottlenecks of the plant.) STEP 2. Decide how to exploit the bottlenecks.
(That was fun. Realizing that those machines should not take a lunch break, etc.)
STEP 3. Subordinate everything else to the above decision. (Making sure that everything marches to the tune of the constraints. The red and green tags.)
STEP 4. Elevate the system’s bottlenecks.
(Bringing back the old Zmegma, switching back to old, less "effective’’ routings. . . .)
STEP 5. If, in a previous step, a bottleneck has been broken go back to step 1.
I look at the board. It’s so simple. Plain common sense. I’m wondering, and not for the first time, how come we didn’t see it before, when Stacey speaks up.
"Bob is right, we certainly followed this process, and we cycled through it more than once—even the nature of the bottlenecks we had to deal with changed.’’
"What do you mean by the ‘nature of the bottlenecks?’’’ I ask.
"I mean a major change,’’ she says. "You know, something serious like the bottleneck changing from being a machine to being something totally different, like insufficient market demand. Each time that we’ve gone through this five-step cycle the nature of the bottleneck has changed. First the bottlenecks were the oven and the NCX10, then it was the material release system —remember the last time when Jonah was here?—then it was the market, and I’m afraid that very soon it’ll be back in production.’’
"You’re right,’’ I say. And then, "It’s a little odd to call the market or the system of material release a bottleneck. Why don’t we change the word, to...’’
"Constraint?’’ Stacey suggests.
We correct it on the board. Then we just sit there admiring our work.
"What am I going to do to continue the momentum?’’ I ask Julie.
"Never satisfied, huh?’’ and then she adds passionately, "Alex, why do you drive yourself so hard? Aren’t the five steps that you developed enough of an achievement for one day?’’
"Of course it’s enough. It’s more than enough. Finding the process that everybody is looking for, the way to proceed systematically on the line of on-going improvement, is quite an achievement. But Julie, I’m talking about something else. How can we continue to improve the plant rapidly?’’
"What’s the problem? It seems that everything is sailing forward quite smoothly.’’
I sigh, "Not exactly, Julie. I can’t push aggressively for more orders because we’re afraid that any additional sales will create more bottlenecks and throw us back into the nightmare of expediting. On the other hand, I can’t ask for a major expansion in hiring or machines; the existing bottom line results don’t justify it yet.’’
"My impatient husband,’’ she laughs. "It looks like you simply have to sit tight and wait until the plant generates enough money to justify more investments. In any event darling, very shortly it will be Donovan’s headache. It’s about time you allowed others to worry.’’
"Maybe you’re right,’’ I say, not totally convinced.
37
"Something is wrong,’’ Ralph says after we’ve made ourselves comfortable. "Something is still missing.’’
"What?’’ Bob says aggressively, all geared up to protect our new creation.
"If step 3 is right...’’ Ralph is speaking very slowly, "if we have to subordinate everything to the decision that we made on the constraint, then...’’
"Come on Ralph,’’ Bob says. "What’s all this ‘if we have to subordinate’? Is there any doubt that we must subordinate the non-constraints to the constraints? What are the schedules that you generate on your computers if not the act of subordinating everything to our decision about the bottlenecks’ work?’’
"I don’t doubt that,’’ Ralph says apologetically. "But when the nature of the constraint has changed, one would expect to see a major change in the way we operate all non-constraints.’’
"That makes sense,’’ Stacey says encouragingly. "So what is bothering you?’’
"I don’t recall that we did such changes.’’
"He’s right,’’ Bob says in a low voice. "I don’t recall it either.’’
"We didn’t,’’ I confirm after a while.
"Maybe we should have?’’ Bob says in a thoughtful voice.
"Let’s examine it,’’ I say. And then, "When was the first time the constraint changed?’’
"It happened when some green-tag parts started arriving at assembly too late,’’ Stacey says without hesitation. "Remember our fear that new bottlenecks were popping up?’’
"Yes,’’ I say. "And then Jonah came and showed us it wasn’t new bottlenecks, but that the constraint had shifted to being the way we released work to the plant.’’
"I still remember the shock,’’ Bob comments, "of restricting the release of material, even though the people had practically nothing else to work on.’’
"And our fear that ‘efficiencies’ would drop,’’ Lou comments. "In retrospect, I’m amazed that we had the courage to do it.’’
"We did it because it made perfect sense,’’ I say. "Reality certainly proved us right. So Ralph, in that case at least, we did affect all the non-constraints. Should we move on?’’
Ralph doesn’t answer.
"Something’s still troubling you?’’ I inquire.
"Yes,’’ he says, "but I can’t put my finger on it.’’
I wait for him.
Finally Stacey says, "What’s the problem, Ralph? You, Bob, and I generated the work list for the constraints. Then you had the computer generate release dates for all material, based on that list. We definitely changed the way we operated a non-constraint, that is, if we consider the computer as a non-constraint.’’
Ralph laughs nervously.
"Then,’’ Stacey continues, "I made my people obey those computer lists. That was a major change in the way they operate —especially when you consider how much pressure the foremen put on them to supply them with work.’’
"But you must admit the biggest change was on the shop floor,’’ Bob contributes. "It was very difficult for most people to swallow that we really meant they shouldn’t work all the time. Don’t forget that the fear of layoffs was hanging heavily above us.’’
"I guess it’s all right,’’ Ralph gives up.
"What did we do with the method we were using?’’ Lou asks. "You know, the green and red tags.’’
"Nothing,’’ Stacey replies. "Why should we do anything about it?’’
"Thank you, Lou,’’ Ralph says. "That is exactly what was bothering me.’’ Turning to Stacey he adds, "Do you remember the reason for using those tags in the first place? We wanted to establish clear priorities. We wanted each worker to know what is important and must be worked on immediately, and what is less important.’’
"That’s right,’’ she says. "That’s exactly why we did it. Oh, I see what you mean. Now—not like in the past when we released stuff just to provide work—now whatever we release to the floor is basically of the same importance. Let me think for a minute.’’
We all do.
"Oh shit,’’ she moans.
"What’s the matter?’’ Bob asks.
"I just realized the impact that those darn tags have on our operation.’’
"Well?’’ Bob presses her.
"I’m embarrassed,’’ she says. "I’ve been complaining about our problems with the six or seven capacity constraint resources, I raised all the red flags, I’ve gone as far as to demand that incoming orders be restricted. And now I see that I’ve created the problem with my own hands.’’
"Fill us in, Stacey,’’ I request. "You’re way ahead of us.’’
"Of course. You see, when do the green and red tags have an impact? Only when a work center has a queue, when the worker has to choose between two different jobs that are waiting; then he always works on the red tag first.’’
"So?’’
"The largest queues,’’ Stacey goes on, "are in front of the bottlenecks, but there the tags are irrelevant. The other place where we have relatively high queues is in front of the capacity constraint resources. These resources supply some parts to the bottlenecks, red-tag parts, but they work on many more greentag parts, parts that go to assembly not through the bottlenecks. Today they do the red-tag parts first. This naturally delays the arrival of the green parts to assembly. We catch it when it is pretty late, when holes are already evident in the assembly buffer. Then, and only then, we go and change the priorities at those work centers. Basically, we restore the importance of the green parts.’’
"So what you’re telling us,’’ Bob cannot contain his surprise, "is that if you just eliminate the tags, it will be much better?’’
"Yes, that’s what I’m saying. If we eliminate the tags and we instruct the workers to work according to the sequence in which the parts arrive—first come, first done—the parts will be done in the right sequence, fewer holes will be created in the buffers, my people will not have to track where the material is stuck, and...’’
"And the foreman will not have to constantly reshuffle priorities.’’ Bob completes her sentence.
I try to confirm what I heard. "Stacey, are you positive that your warning about those constraint resources was just a false alarm? Can we safely take more orders?’’
"I think so,’’ she says. "It explains one of my biggest mysteries, why there are so few holes in the bottlenecks’ buffers, while there are more and more in the assembly buffer. By the way fellows, the fact that there are more and more holes indicates that eventually we will run into the problem of insufficient capacity, but not right now. I’ll take care of those tags immediately. You won’t see them tomorrow.’’
"Well, this discussion was very beneficial,’’ I conclude. "Let’s carry on. When was the second constraint broken?’’
"When we started shipping everything much ahead of time,’’ Bob answers. "Shipping three weeks earlier is a clear indication that the constraint is no longer in production but in the market. Lack of sufficient orders limited the plant from making more money.’’
"Correct,’’ Lou confirms. "What do you think: did we do anything different on the non-constraints?’’
"Not me,’’ says Bob.
"Me neither,’’ echoes Ralph. "Hey, wait a minute. How come we continue to release material according to the oven and the NCX10 if they are no longer the constraints?’’
We look at each other. Really, how come?
"Something even funnier is going on. How come my computer shows that these two work centers are still a constraint, that they are constantly loaded to one hundred percent?’’
I turn my eyes to Stacey, "Do you know what’s going on?’’
"I’m afraid I do,’’ she admits. "It’s definitely not my day.’’
"And all this time I wondered why our finished goods were not depleting at a faster rate,’’ I say.
"Will one of you tell us what’s going on?’’ Bob says impatiently.
