Eliyahu M. Goldratt Quotes
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Just remember we are always talking about the organization as a whole—not about the manufacturing department, or about one plant, or about one department within the plant. We are not concerned with local optimums.
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Five Focusing Steps 1. IDENTIFY the system’s constraint. 2. Decide how to EXPLOIT the system’s constraint. 3. SUBORDINATE everything else to the above decisions. 4. ELEVATE the system’s constraint. 5. If in the previous steps a constraint has been broken Go back to step 1, but do not allow inertia to cause a system constraint.
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Make the bottlenecks work only on what will contribute to throughput today … not nine months from now. That’s one way to increase capacity at the bottlenecks. The other way you increase bottleneck capacity is to take some of the load off the bottlenecks and give it to non-bottlenecks.
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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. I guess that means we’d only need half the investment in work-in-process to keep the plant working. If we could work it out with our vendors, we could conceivably cut all our inventories in half, and by cutting our inventories in half, we reduce the amount of cash tied up at any one time, which eases the pressure on cash flow.
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Look, we give sales a rigid lead time for each product. So if it’s not in finished goods, those are the numbers they should use to promise to clients. Yeah, they deviate from it, but not by much. Maybe there should be another way. Maybe the quoted lead times should be done case by case, according to the load on the bottlenecks. And maybe we shouldn’t regard the quantities required as if we have to supply them in one shot.
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All this is, if I understand it correctly, is a different way of doing the accounting. All employee time—whether it’s direct or indirect, idle time or operating time, or whatever—is operational expense, according to Jonah. You’re still accounting for it. It’s just that his way is simpler, and you don’t have to play as many games.
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The new orders have changed the balance. We took more orders, which by themselves didn’t turn any resource into a new bottleneck, but they did drastically reduce the amount of spare capacity on the non-bottlenecks, and we didn’t compensate with increased inventory in front of the bottleneck.
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The goal is not to improve one measurement in isolation. The goal is to reduce operational expenses AND reduce inventories and increase throughput simultaneously.
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To make money by increasing net profit, while simultaneously increasing return on investment, and simultaneously increasing cash flow.
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The above doesn’t mean that, for environments in which the assumptions of Lean are not valid, fragments of Lean cannot be used.
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If we reduce batch sizes by half, we also reduce by half the time it will take to process a batch. That means we reduce queue and wait by half as well. Reduce those by half, and we reduce by about half the total time parts spend in the plant. Reduce the time parts spend in the plant and our total lead time condenses. And with faster turn-around on orders, customers get their orders faster.
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Flow means that inventories in the operation are moving. When inventory is not moving, inventory accumulates. Accumulation of inventory takes up space. Therefore, an intuitive way to achieve better flow is to limit the space allowed for inventory to accumulate. To achieve better flow, Ford limited the space allotted for work-in-process between each two work centers.
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An expert is not someone who gives you the answer, it is someone who asks you the right question.
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Once the somebody is already on the payroll, it doesn’t cost us any more to have him be idle. Whether somebody produces parts or waits a few minutes doesn’t increase our operating expense. But excess inventory . . . now that ties up a lot of money.
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Adhering to the flow concept mandates the abolishment of local efficiencies. Ohno addressed this issue again and again in his books, stressing that there is no point in encouraging people to produce if the products are not needed in the very short-term. This emphasis is probably the reason that outside Toyota TPS first became known as Just-in-time production.
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The daring nature of Ford’s method is revealed when one realizes that a direct consequence of limiting the space is that when the allotted space is full, the workers feeding it must stop producing. Therefore, in order to achieve flow, Ford had to abolish local efficiencies. In other words, flow lines are flying in the face of conventional wisdom; the convention that, to be effective, every worker and every work center have to be busy 100% of the time.
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The secret of being a good scientist, I believe, lies not in our brain power. We have enough. We simply need to look at reality and think logically and precisely about what we see. The key ingredient is to have the courage to face inconsistencies between what we see and deduce and the way things are done. This challenging of basic assumptions is essential to breakthroughs.
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We don’t break setups, or light a fire. We just point out to the foreman of that work center which job we would prefer he gets to next.
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And if quality were truly the goal, then how come a company like Rolls Royce very nearly went bankrupt?
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But, there is another effect that stems from restricting the accumulation of inventory. It makes it very visible to spot the real problems that jeopardize the flow—when one work center in a line stops producing for more than a short while, soon the whole line stops. Ford took advantage of the resulting clear visibility to better balance the flow by addressing and eliminating the apparent stoppages.4 The end result of abolishing local efficiencies and balancing the flow is a substantial increase in throughput. Henry Ford achieved the highest throughput per worker of any car manufacturing company of his time.
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Inventory is all the money that the system has invested in purchasing things which it intends to sell.
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For most work centers every such switch necessitates spending time to do the required setup. Since the containers, by design, called for a relatively small number of parts the production batches that they dictated were, many times, ridiculously smaller relative to the setup required. Initially for many work centers the time required for setups was more than the time required for production, resulting in a significant drop in throughput. It is no wonder that Ohno faced enormous resistance—so much so that Ohno wrote that his system was referred to as the ‘abominable Ohno system’ from the late 1940’s to the early 1960’s.8 Ohno (and his superiors) certainly had an extraordinary determination and vision to continue to push for the implementation of a system, that for any person who looked at it from a local perspective, as most shop personnel must have, simply didn’t make sense.
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To efficiently produce quality products sounds like a good goal. But can that goal keep the plant working? I’m bothered by some of the examples that come to mind. If the goal is to produce a quality product efficiently, then how come Volkswagen isn’t still making Bugs?
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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.