The Goal: a process of Ongoing Improvement

parts or waits a few minutes doesn’t increase our operating expense. But
excess inventory...now 
that 
ties up a lot of money.’’
"Okay,’’ says Bob, "but what about the reporting system? Seems to me that at
the end of the month, when old Bill Peach is ready to decide if we stay open
or if we close down, he’s not going to be awfully positive about us if he sees
our efficiencies have taken a dive. I hear they do tend to frown upon that at
headquarters.’’
There is quiet in the room. Then Lou says, "He does have a point, Al.’’
I listen to the hum of the air conditioning for a moment.
"All right, look,’’ I say finally. "If we 
don’t 
go ahead with a system to
withhold inventory and release it according to the bottlenecks, we’ll be
missing a major opportunity to improve performance and save the plant. And
I’m not about to stand by and let that happen just to maintain a standard that
obviously has more impact on middle management politics than it does on
the bottom line. I say we go ahead with this. And if efficiencies drop, let
them.’’
After those brave words, so reminiscent of Admiral Farragut and his Damn-
the-Torpedoes speech, the others are a little mistyeyed.
"And, ah, Bob,’’ I tell Donovan, "if there 
is 
a lot of idle time out there, don’t
hassle anybody—just make damn sure it doesn’t show up in the efficiency
reports next month, okay?’’

---

"Gotcha, boss.’’

---

27
"...Let me say in conclusion that had it not been for the increase in
revenue generated last month by the Bearington plant and its products, the
UniWare Division’s losses would have continued for the seventh consecutive
month. All of the other manufacturing operations in the division reported
only marginal gains in performance or sustained losses. Despite the
improvement at Bearington and the fact that as a result the division recorded
its first operating profit of this year, we have a long way to go before we are
back on solid financial footing.’’
Having said that, Ethan Frost gets the nod from Bill Peach and sits down.
I’m sitting halfway down a long table where all the plant managers are
gathered. On Peach’s right is Hilton Smyth, who happens to be glowering at
me in the aftermath of Frost’s tribute to my plant. I relax in my chair and for
a moment allow myself to contemplate the view through the broad plateglass
window, a sunny city on an early summer day.
May has ended. Aside from the problem with the shortages of non-
bottleneck parts, which have now gone away, it’s been an excellent month.
We’re now timing the release of all materials according to a new system
Ralph Nakamura developed, which is keyed to the speed of the bottlenecks.
He’s got a data terminal now at both of the bottlenecks, so as inventory is
processed, the latest information can be fed directly into the plant data base.
With the new system we’re beginning to see excellent results.
Ralph did a little experimenting with the system and soon discovered we
can predict within a day, more or less, when a shipment will leave the plant.
Based on this, we’ve been able to put together a report to marketing listing all
customer orders and dates when they will be shipped. (I don’t know if
anybody in marketing really believes that report, but so far it’s been highly
accurate.)

---

"Rogo,’’ says Peach, "because you seem to be the only one among us
who has improved to any degree, we’ll let you start the round of reports.’’
I open up the cover of my report and launch into a presentation of the
highlights. By almost every standard, we’ve had a good month. Inventory
levels have fallen and are continuing to fall rapidly. Withholding some
materials has meant we’re no longer choking on work-in-process. Parts are
reaching the bottlenecks when they’re supposed to, and the flow through the
plant is much smoother than before.
And what happened to efficiencies? Well, they did fall initially as we
began to withhold raw material from the floor, but not as much as we had
been afraid they would—it turns out we were consuming excess inventory.
But with the rate of shipments up dramatically, that excess has melted
quickly. And now that we’re beginning to resume releases of materials to
non-bottlenecks again, efficiencies are on their way back up. Donovan has
even told me confidentially he thinks the real numbers in the future will be
almost the same as before.
The best news is we’ve wiped out our backlog of overdue orders.
Amazing as it seems, we’re completely caught up. So customer service has
improved. Throughput is up. We’re on our way back. It’s too bad the
standard report we’ve prepared can’t begin to tell the full story of what’s
really going on.
When I’ve finished, I look up the table and see Hilton Smyth whispering
something to Bill Peach. There is quiet around the table for a moment. Then
Bill nods to Hilton and talks to me.
"Good job, Al,’’ Bill says stiffly.
Through with me, Bill asks another manager to deliver his report. I sit
back, irritated slightly that Peach wasn’t more positive, that he didn’t put
more praise on me the way Frost had indicated he should. I came in here
feeling as though we’d really turned the plant around. And I guess I expected
a little more than a "good job,’’ a pat on the head.

---

But then I have to remind myself that Peach doesn’t know the extent of
the change. Should he know? Should we be telling him? Lou has asked me
about this. And I’ve told him, no; let’s hold off for a while.
We could go to Bill Peach and make a presentation to him, put all our
cards on the table and let him decide. In fact, that’s exactly what we will do
eventually. But not yet. And I think I have a good reason.
I’ve worked with Bill Peach for a lot of years; I know him pretty well.
He’s a smart man—but he is not an innovator. A couple of years ago, he
might have let us run with this for a while. Not today. I have a feeling if we
go to him now, he’ll put on his hard nose and tell me to run the plant by the
cost accounting methods he believes in.
I have to bide my time until I can go to him with a solid case that my way
(Jonah’s way, really) is the one that truly works. It’s too early for that. We’ve
broken too many rules to tell him the full story now.
But will we have the time? That’s what I keep asking myself. Peach
hasn’t voluntarily lifted the threat to close the plant. I thought he might say
something (publicly or privately) after this report, but he hasn’t. I look at him
at the end of the table. He seems distracted, not like himself. The others talk
and he seems only half interested. Hilton seems to cue him on what to say.
What’s with him?
The meeting breaks up about an hour after lunch, and by then I’ve
decided to have a private talk with Peach if I can get it. I follow him out into
the corridor from the conference room and ask him. He invites me into his
office.
"So when are you going to let us off the hook?’’ I ask him after the door
is closed.
Bill sits down in a big upholstered chair and I take the one opposite him.
Without the desk between us, it’s a nice little intimate chat.
Bill looks straight at me and says, "What makes you think I’m going to?’’

---

"Bearington is on its way back,’’ I tell him. "We can make that plant make
money for the division.’’
"Can you?’’ he asks. "Look, Al, you’ve had a good month. That’s a step in
the right direction. But can you give us a second good month? And a third
and fourth? That’s what I’m waiting to see.’’
"We’ll give them to you,’’ I say to him.
"I’m going to be frank,’’ says Peach. "I’m not yet convinced this hasn’t been
just a flash in the pan, so to speak. You had a huge overdue backlog. It was
inevitable you’d ship it eventually. What have you done to reduce costs?
Nothing that I can see. It’s going to take a ten or fifteen percent reduction in
operating expense to make the plant profitable for the long term.’’
I feel my heart sink. Finally, I say, "Bill, if next month we turn in another
improvement, will you at least delay the recommendation to close the plant?’’
He shakes his head. "It’ll have to be a bigger improvement than what you
gave us in this past period.’’
"How big?’’
"Just give me fifteen percent more on the bottom line than you did this
month,’’ he says.
I nod. "I think we can do that,’’ I say—and note the split second of shock
blink into Peach’s face.
Then he says, "Fine. If you can deliver that, and keep delivering it, we’ll keep
Bearington open.’’
I smile. If I do this for you, I’m thinking, you’d be an idiot to close us.
Peach stands, our chat concluded.

---

I fly the 
Mazda
up the entrance ramp to the Interstate with the accelerator
floored and the radio turned up loud. The adrenalin is pumping. The thoughts
in my head are racing faster than the car.
Two months ago I figured I might be sending out my resume by now. But
Peach just said if we turned in another good month he’d let the plant stay
open. We’re almost there. We just might be able to pull this off. Just one
more month.