[The fastest way to read The Goal, and the absolute fastest way to learn The Theory of Constraints.][Watch a video summary.]
Jonah is retrieved from the airport and supports the team at the plant.
“What you’re saying is that making an employee work and profiting from that work are two different things.”
Ineffective employee time has a second trap – it creates future work that continues to be off target. Stopping bad direction work is a huge relief on an organization.
Page by Page
P203 – “Before we jump to conclusions, let’s invest half an hour to go into the plant so we can find out what’s happening,” Jonah says.
P204 – “You know, I would guess, just from looking at it, that you have at least a month or more of work lined-up here for this machine.
P205 – “But let’s say you need only 450 hours a month, or 75 percent, of Y to keep the flow equal to demand. What happens when Y has worked its 450 hours? Do you let it sit idle?”
P206 – “Excess inventory,” says Stacey.
P207 – Bob shrugs and says, “We build the orders and ship them.” “How can you?” asks Jonah.
Money cannot be made without the part as the constraint.
P208 – As he says this, I’m thinking to myself about the finished goods we’ve got crammed into warehouses.
Warehouses full of inventory are an operations and financial red flag.
P209 – “A major constraint here in your system is this machine,” says Jonah.
“When you make a non-bottleneck do more work than this machine, you are not increasing productivity. On the contrary, you are doing exactly the opposite. You are creating excess inventory, which is against the goal.”
“But what are we supposed to do?” asks Bob. “If we don’t keep our people working, we’ll have idle time, and idle time will lower our efficiencies.”
“So what?” asks Jonah.
Jonah is calling out the importance of cadence. It doesn’t make sense for the plant to outwork the constraint.
P210 – Then Ralph suggests, “What you’re saying is that making an employee work and profiting from that work are two different things.”
P211 – “We’re releasing material faster than the bottlenecks can process it.”
Creating inventory that cannot be advanced has no purpose. It is makework. Many companies make this mistake with projects – kicking off projects that cannot be completed.
Pingback: The Goal – Chapter 31 – Defending Performance and a Promotion | Fred Lybrand