[Dig deeper with the full Chapter-by-Chapter Review of The Goal.] [Watch a video summary of Chapter 28.]

Rogo works with his team to extend their lead.  When things are going well it can be tempting to take relative leadership and coast.  Rogo is beating his peers at other plants.  However, to get the most for all of the business – he makes a bold step and tries to extend his lead again.

Highlights

“Okay, if we cut batch sizes in half, then that means it ought to take half the time it does now.”

Batch size is a common underlying driver in The Lean Startup.  Large batch sizes are a reason that innovation in materials science is so difficult.  Plants that take weeks to startup don’t easily shut down to do trials.  Experiment design is very expensive.

Page by Page

P229 – “If I were you, I wouldn’t worry too much about being shut down.”

P230 – “If we cut our batch sizes in half, then I guess that at any one time we’d have half the work-in-process on the floor.”

Rogo is on to something.  If we think of flow as a fluid – then smaller particles will travel through the plant faster.

P231 – “But queue and wait often consume large amounts of time—in fact, the majority of the elapsed total that the part spends inside the plant.”

Reducing batch size for known products will cut down on inventory and WIP.

P232 – “And with less time spent sitting in a pile, the speed of the flow of parts increases.”

If personnel and plant expenses are known, then we don’t have to add any resources to cut batch size.

P233 – “Okay, if we cut batch sizes in half, then that means it ought to take half the time it does now.”

Cutting batch size is almost always a good thing.

P234 – “We’ve worked off our backlog of overdue orders, as you know.”

Reducing inventory of past due work to zero is a great way to create revenue and cash flow.  If a business it has orders it cannot meet, figuring out how to deliver those orders is a great place to start.

P235 – “With our overdues gone, and our current backlog declining, I’ve got to get more work into my plant.

Here the plant becomes part of a larger system – the whole supply chain.  Now that the plant is not a constraint (since it has worked through inventory), it has earned the right to go hunt for more business.  A plant that constrains the supply chain is unlikely to win new work.

With the lessons learned, the operations and marketing teams can collaborate to pursue profitable new business for the site.