The Goal: a process of Ongoing Improvement

particular to do, when we remembered we had a whole house in Bearington
with nobody in it to bother us. So we bought a bottle of wine, some cheese
and a loaf of bread, came here and got comfortable.
From the living room window where I stand in the dark looking out, it
seems as though the whole world is asleep except me. I’m angry with myself
at not being able to sleep. But I can’t let go of what’s on my mind.

---

Yesterday we had a staff meeting. There was some good news —and
some bad news. Actually, there was a lot of good news. High among the
headlines were the new contracts marketing has been winning for us. We’ve
picked up about half-a-dozen new orders since I talked to Johnny. More good
news was the fact that efficiencies have gone up, not down, as a result of
what we’ve been doing in the plant. After we began withholding the release
of materials and timing the releases according to the completed processing of
heat-treat and the NCX-10, efficiencies dipped somewhat. But that was
because we were consuming excess inventories. When the excess inventories
were exhausted—which happened quickly as a result of the increase in
throughput—efficiencies came back up again.
Then, two weeks ago, we implemented the new smaller batch sizes.
When we cut batch sizes in half for non-bottlenecks, efficiencies stayed solid,
and now it seems as though we’re keeping the work force even more
occupied than before.
That’s because a really terrific thing has happened. Before we reduced
batch sizes, it wasn’t uncommon for a work center to be forced idle because it
didn’t have anything to process—even though we were wading through
excess inventory. It was usually because the idle work center had to wait for
the one preceding it to finish a large batch of some item. Unless told
otherwise by an expeditor, the materials handlers would wait until an entire
batch was completed before moving it. In fact, that’s still the case. But now
that the batches are smaller, the parts are ready to be moved to the next work
station 
sooner
than they were before.
What we had been doing many times was turning a nonbottleneck into a
temporary bottleneck. This was forcing other work centers downstream from
it to be idle, which reflected poorly on efficiencies. Now, even though we’ve
recognized that non-bottlenecks have to be idle periodically, there is actually
less
idle time than before. Since we cut batch sizes, work is flowing through
the plant more smoothly than ever. And it’s weird, but the idle time we do
have is less noticeable. It’s spread out in shorter segments. Instead of people
hanging around with nothing to do for a couple of hours, now they’ll have
maybe a few tento twenty-minute waits through the day for the same volume

---

of work. From everybody’s standpoint, that’s much better.
Still more good news is that inventories are at their lowest ever in the
plant. It’s almost shocking to walk out into the plant now. Those stacks and
piles of parts and sub-assemblies have shrunk to half their former size. It’s as
if a fleet of trucks had come and hauled everything away. Which is, in fact,
about what happened. We’ve shipped the excess inventory as finished
product. Of course, the notable part of the story is that we haven’t filled the
plant back up again by dumping new work-in-process on the floor. The only
work-in-process out there now is for current demand.
But then there’s the bad news. Which is what I’m thinking about when I
hear footsteps on the carpet behind me in the dark.
"Al?’’
"Yeah.’’
"How come you’re out here in the dark?’’
"Can’t sleep.’’
"What’s wrong?’’
"Nothing.’’
"Then why don’t you come back to bed?’’
"I’m just thinking about some things.’’
It’s quiet for a second. For a moment, I think she’s gone away. Then I feel
her beside me.
"Is it the plant?’’ she asks.
"Yeah.’’

---

"But I thought everything was getting better,’’ she says. "What’s wrong?’’
"It has to do with our cost measurement,’’ I tell her.
She sits down beside me.
"Why don’t you tell me about it,’’ she says.
"Sure you want to hear about it?’’ I ask.
"Yes, I do.’’
So I tell her: the cost of parts looks as though it’s gone up because of the
additional setups necessitated by the smaller batch sizes.
"Oh,’’ she says. "I guess that’s bad, right?’’
"Politically speaking, yes,’’ I tell her. "Financially speaking, it doesn’t make
a damn bit of difference.’’
"How come?’’ she asks.
"Well...do you know why it looks like the cost has gone up?’’ I ask her.
"No, not at all,’’ she says.
I get up to switch on a lamp and find a piece of paper and pencil.
I tell her, "Okay, I’ll give you an example. Suppose we have a batch of l00