The Goal: a process of Ongoing Improvement

competitive
products with bottleneck parts are sold virtually as soon as they come out of
final assembly. A few of them sit in the warehouse a day or two before they
go to the customer, but due to the backlog, not many.
I look at Jonah. To the four diagrams on the floor, he has now added numbers
so that together they look like this...

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Jonah says, "We’ve examined four linear combinations involving X and
Y. Now, of course, we can create endless combinations of X and Y. But the
four in front of us are fundamental enough that we don’t have to go any
further. Because if we use these like building blocks, we can represent 
any
manufacturing situation. We don’t have to look at trillions of combinations of
X and Y to find what is universally true in all of them; we can generalize the
truth simply by identifying what happens in each of these four cases. Can you
tell me what you have noticed to be similar in all of them?’’
Stacey points out immediately that in no case does Y ever determine
throughput for the system. Whenever it’s possible to activate Y above the
level of X, doing so results only in excess inventory, not in greater
throughput.
"Yes, and if we follow that thought to a logical conclusion,’’ says Jonah,
"we can form a simple rule which will be true in every case: the level of
utilization of a non-bottleneck is not determined by its own potential, but by
some other constraint in the system.’’
He points to the NCX-10.
"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

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working, we’ll have idle time, and idle time will lower our efficiencies.’’
"So what?’’
asks Jonah.
Donovan is taken aback. "Beg pardon, but how the hell can you say that?’’
"Just take a look behind you,’’ says Jonah. "Take a look at the monster
you’ve made. It did not create itself. You have created this mountain of
inventory with your own decisions. And why? Because of the wrong
assumption that you must make the workers produce one hundred percent of
the time, or else get rid of them to ‘save’ money.’’
Lou says, "Well, granted that maybe one hundred percent is unrealistic. We
just ask for some acceptable percentage, say, ninety percent.’’
"Why is ninety percent acceptable?’’ asks Jonah. "Why not sixty percent, or
twenty-five? The numbers are meaningless unless they are based upon the
constraints of the system. With enough raw materials, you can keep one
worker busy from now until retirement. But 
should 
you do it? Not if you
want to make money.’’
Then Ralph suggests, "What you’re saying is that making an employee work
and profiting from that work are two different things.’’
"Yes, and that’s a very close approximation of the second rule we can
logically derive from the four combinations of X and Y we talked about,’’
says Jonah. "Putting it precisely, activating a resource and utilizing a resource
are not synonymous.’’
He explains that in both rules, "utilizing’’ a resource means making use of the
resource in a way that moves the system toward the goal. "Activating’’ a
resource is like pressing the ON switch of a machine; it runs whether or not
there is any benefit to be derived from the work it’s doing. So, really,
activating a non-bottleneck to its maximum is an act of maximum stupidity.
"And the implication of these rules is that we must 
not
seek to optimize every
resource in the system,’’ says Jonah. "A system of local optimums is not an

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optimum system at all; it is a very inefficient system.’’
"Okay,’’ I say, "but how does knowing this help us get the missing parts
unstuck at the milling machines and moved to final assembly?’’
Jonah says, "Think about the build-up of inventory both here and at your
milling machines in terms of these two rules we just talked about.’’
"I think I see the cause of the problem,’’ Stacey says, "We’re releasing
material faster than the bottlenecks can process it.’’
"Yes,’’ says Jonah. "You are sending work onto the floor whenever
non
bottlenecks are running out of work to do.’’
I say, "Granted, but the milling machines are a bottleneck.’’
Jonah shakes his head and says, "No, they are not—as evidenced by all this
excess inventory behind you. You see, the milling machines are not
intrinsically a bottleneck. 
You
have turned them into one.’’
He tells us that with an increase in throughput, it is possible to create new
bottlenecks. But most plants have so much extra capacity that it takes an
enormous increase in throughput before this happens. We’ve only had a
twenty percent increase. When I had talked to him by phone, he thought it
unlikely a new bottleneck would have occurred.
What happened was that even as throughput increased, we continued loading
the plant with inventory as if we expected to keep all our workers fully
activated. This increased the load dumped upon the milling machines and
pushed them beyond their capacity. The first-priority, red-tagged parts were
processed, but the green-tagged parts piled up. So not only did we get excess
inventory at the NCX-10 and at heat-treat, but due to the volume of
bottleneck parts, we clogged the flow at another work center and prevented
non-bottleneck parts from reaching assembly.
When he’s finished, I say, "All right, I see now the error of our ways. Can
you tell us what we should do to correct the problem?’’

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"I want you all to think about it as we walk back to your conference room and
then we’ll talk about what you should do,’’ says Jonah. "The solution is fairly
simple.’’

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26
Just how simple the solution is doesn’t become apparent to me until I’m
home that night. I’m sitting at the kitchen table with a pad of paper and a
pencil thinking about what was suggested today when Sharon comes in.
"Hi,’’ she says as she sits down.
"Hi,’’ I say back. "What’s up?’’
"Not much,’’ she says. "Just wondered what you were doing.’’
"I’m working,’’ I tell her.
"Can I help?’’ she asks.
"Well...I don’t know,’’ I say. "It’s kind of technical. I think you’ll probably
be bored by it.’’
"Oh,’’ she says. "Does that mean you want me to leave?’’ Guilt strikes.
"No, not if you want to stay,’’ I tell her. "Do you want to try to solve a
problem?’’
"Okay,’’ she says, brightening.
I say, "All right. Let me think of how to put this to you. Do you know about
the scout hike Dave and I were on?’’ "She doesn’t, but I do!’’ says Dave,
racing into the kitchen.
He skids to a stop on the smooth floor and says, "Sharon doesn’t know
anything about the hike. But I can help you.’’ I say, "Son, I think there is a
career for you in sales.’’ Sharon indignantly says, "Yes, I 
do
know about the

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hike.’’ "You weren’t even there,’’ says Dave.
"I’ve heard everybody talk about it,’’ she says.
"Okay, 
both
of you can work on this,’’ I say. "Here’s the problem: We’ve got
a line of kids on a hike in the woods. In the middle of the line, we’ve got
Herbie. We’ve already taken the pack off Herbie’s back to help him go faster,
but he’s still the slowest. Everybody wants to go faster than Herbie. But if
that happens, the line will spread out and some of the kids will get lost. For
one reason or another, we can’t move Herbie from the middle of the line.
Now, how do we keep the line from spreading?’’
They both become thoughtful.
I say, "All right, now both of you go into the other room. I’ll give you ten
minutes, and then we’ll see which one of you comes up with the best idea to
keep everyone together in the line.’’ "What does the winner get?’’ asks Dave.
"Well... anything within reason.’’