The Goal: A Process of Ongoing Improvement (35 page)

"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.

"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.
"Go ahead, Stacey.’’
"Come on fellas, don’t look at me like that. After operating for so long with mountains of finished goods, wouldn’t anybody do the same?’’
"Do what?’’ Bob is lost. "Will you please stop talking in riddles?’’
"We all knew how important it was to make the bottlenecks work all the time.’’ Stacey starts at last to explain. "Remember, ‘An hour lost on the bottleneck is an hour lost for the entire plant.’ So, when I realized that the load on the bottlenecks was dropping, I issued orders for products to be on the shelf, in stock. Stupid, I know now, but at least at the moment our finished goods are balanced to roughly six weeks. No more of that awful situation where we hold mountains of some products and not even one single unit of others.’’
"That’s good,’’ Lou says. "It means we can easily deplete it. Alex be careful not to do it too fast, remember the bottom-line ramifications.’’
It’s Stacey’s turn to be puzzled. "Why shouldn’t we get rid of the finished products as fast as possible?’’ she asks.
"Never mind,’’ I impatiently say. "Lou can, and should, explain it to all of you later. Right now we should correct our fivestep process. Now we all know to what extent Ralph was right, something is definitely missing.’’
"Can I correct it?’’ Stacey says sheepishly, and goes to the board.
When she returns to her seat the board has the following:
1. IDENTIFY the system’s constraint(s).
2. Decide how to EXPLOIT the system’s constraint(s).
3. SUBORDINATE everything else to the above decision.
4. ELEVATE the system’s constraint(s).
5. WARNING!!!! If in the previous steps a constraint has been broken, go back to step 1, but do not allow INERTIA to cause a system’s constraint.

Examining the board, Lou moans, "It’s much worse than I thought.’’
"On the contrary,’’ I’m surprised. "It’s much better than I thought.’’
We look at each other. "You first,’’ I say. "Why do you claim that it’s much worse?’’
"Because I’ve lost my only guideline.’’
When he realizes that we don’t get it, he elaborates; "All the changes that we made so far, all the sacred cows that we had to slaughter, had one thing in common, they all stem from cost accounting. Local efficiencies, optimum batch sizes, product cost, inventory evaluations, all came from the same source. I didn’t have much problem with it. As a controller I questioned cost accounting validity for a long time. Remember, it’s the invention of the beginning of the century when conditions were much different from today. As a matter of fact, I started to have a very good guideline; if it comes from cost accounting it must be wrong.’’
"Very good guideline,’’ I smile. "But what is your problem?’’
"Don’t you see, the problem is much bigger; it’s not only cost accounting. We put on the green and red tags not because of cost accounting, but because we realized the importance of the bottlenecks. Stacey created orders for finished goods because of our new understanding, because she wanted to make sure that the bottlenecks’ capacity will not be wasted. I thought that it takes a lot of time to develop inertia. What I now see is that it takes less than one month.’’
"Yes, you are right,’’ I say gloomily. "Whenever the constraint is broken it changes conditions to the extent that it is very dangerous to extrapolate from the past.’’
"As a matter of fact,’’ Stacey adds, "even the things that we put in place in order to elevate the constraint must be reexamined.’’
"How can we do it?’’ Bob asks. "It’s impossible to question everything every time.’’
"Something is still missing,’’ Ralph summarizes.
Something definitely is still missing.
"Alex, it’s your turn to explain,’’ Lou says.
"Explain what?’’
"Why did you claim that it’s much better?’’
I smile. It’s about time for some good news.
"Fellows, what stopped us from once again taking another jump on the bottom line? Nothing, except for the conviction that we don’t have enough capacity. Well, now we know differently. Now we know that we have a lot of spare capacity.’’
How much spare capacity do we actually have?
"Stacey, how much of the current load on the oven and the NCX10 is due to the fictitious orders?’’
"Roughly twenty percent,’’ she says quietly.
"Marvelous,’’ I rub my hands together. "We have enough capacity to really take the market. I’d better drive to headquarters tomorrow morning and have a heart-to-heart talk with Johnny Jons. Lou, I’ll definitely need you. On second thought, Ralph, will you join us? And bring your computer with you, we’re going to show them something.’’

It is six o’clock in the morning when I pick up Lou and Ralph at the plant. We (I) decided that it will be best, since picking them up at their houses would mean I would have had to leave home close to five. In any event, we’re probably not going to spend more than a few hours at headquarters so it’s reasonable to assume that we’ll be back to work in the afternoon.

We hardly talk. Ralph, in the back seat, is busy with his laptop computer. Lou probably thinks that he’s still in bed. I drive on automatic pilot. That is, my mind is busy constructing imaginary conversations with Johnny Jons. I somehow have to convince him to get many more orders for our plant.

Yesterday, in the heat of discovering the amount of free capacity that we have, I looked only on the bright side. Now I wonder if I’m not just asking for miracles.

I recheck the numbers in my head. In order to fill our capacity Johnny will have to come up with over ten million dollars of additional sales. It is totally unrealistic that he holds so much up his sleeve.

So, squeezing, begging, and pleading techniques will not help. We’ll have to come up with some innovative ideas. Well, the truth is that so far I haven’t been able to come up with any. Let’s hope Johnny has some clever ideas; he’s the one who is supposed to be the expert in sales.

"I want you to meet Dick Pashky,’’ Johnny Jons says as we enter the small conference room. "He’s one of my best people. Dedicated, professional, and above all he’s full of innovative approaches. I thought it would be a good idea for you to get to know him. Do you mind if he joins us?’’