Eliyahu M. Goldratt Quotes
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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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Kanban system directs each work center when and what to produce but, more importantly, it directs when not to produce. No card—no production.
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If Ralph can determine a schedule for releasing red-tag materials based on the bottlenecks, he can also determine a schedule for final assembly. Once he knows when the bottleneck parts will reach final assembly, he can calculate backwards and determine the release of the non-bottleneck materials along each of their routes. In this way, the bottlenecks will be determining the release of all the materials in the plant.
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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.
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Money for knowledge has us stumped for a while. Then we decide it depends, quite simply, upon what the knowledge is used for. If it’s knowledge, say, which gives us a new manufacturing process, something that helps turn inventory into throughput, then the knowledge is operational expense. If we intend to sell the knowledge, as in the case of a patent or a technology license, then it’s inventory. But if the knowledge pertains to a product which UniCo itself will build, it’s like a machine—an investment to make money which will depreciate in value as time goes on. And, again, the investment that can be sold is inventory; the depreciation is operational expense.
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The improvement efforts of other companies are misguided since they are aimed at achieving cost savings rather than being totally focused on improving the flow.
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I say an hour lost at a bottleneck is an hour out of the entire system. I say an hour saved at a non-bottleneck is worthless. Bottlenecks govern both throughput and inventory.
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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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So this is the goal: To make money by increasing net profit, while simultaneously increasing return on investment, and simultaneously increasing cash flow.
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Cost Accounting is enemy number one of productivity.
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The key is in the hands of production. These techniques to manage the buffers should not be used just to track missing parts while there is still time, they should be used mainly to focus our local improvement efforts. We must guarantee that the improvements on the CCRs will always be sufficient to prevent them from becoming bottlenecks.
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I still claim that there are only few constraints. Our division is too complex to have more than a very few independent chains. Lou, don’t you realize that everything we mentioned so far is closely connected? The lack of sensible long-term strategy, the measurement issues, the lag in product design, the long lead times in production, the general attitude of passing the ball, of apathy, are all connected. We must put our finger on the core problem, on the root that causes them all. That is what actually is meant by identify the constraint. It’s not prioritizing the bad effects, it’s identifying what causes them all.
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That’s how Jonah knew. He was using the measurements in the crude form of simple questions to see if his hunch about the robots was correct: did we sell any more products (i.e., did our throughput go up?); did we lay off anybody (did our operational expense go down?); and the last, exactly what he said: did our inventories go down?
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Productivity is the act of bringing a company closer to its goal. Every action that brings a company closer to its goal is productive. Every action that does not bring a company closer to its goal is not productive.
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Tell me how you measure me, and I will tell you how I will behave.
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Why not make the work easier and more interesting so that people do not have to sweat? The Toyota style is not to create results by working hard. It is a system that says there is no limit to people’s creativity. People don’t go to Toyota to ‘work’ they go there to ‘think’.
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If any organization was built for a purpose and any organization is composed of more than one person, then we must conclude that the purpose of the organization requires the synchronized efforts of more than one person.
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Okay, so why was the plant built in the first place? It was built to produce products. Why can’t that be the goal? Jonah said it wasn’t. But I don’t see why it isn’t the goal. We’re a manufacturing company. That means we have to manufacture something, doesn’t it? Isn’t that the whole point, to produce products? Why else are we here?
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The entire bottleneck concept is not geared to decrease operating expense, it’s focused on increasing throughput.
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What are we asking for? For the ability to answer three simple questions: ‘what to change?’, ‘what to change to?’, and ‘how to cause the change?’ Basically what we are asking for is the most fundamental abilities one would expect from a manager. Think about it. If a manager doesn’t know how to answer those three questions, is he or she entitled to be called manager?
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So I’ve got limits on how fast I can go—both my own (I can only go so fast for so long before I fall over and pant to death) and those of the others on the hike. However, there is no limit on my ability to slow down. Or on anyone else’s ability to slow down. Or stop. And if any of us did, the line would extend indefinitely. What’s happening isn’t an averaging out of the fluctuations in our various speeds, but an accumulation of the fluctuations. And mostly it’s an accumulation of slowness—because dependency limits the opportunities for higher fluctuations. And that’s why the line is spreading. We can make the line shrink only by having everyone in the back of the line move much faster than Ron’s average over some distance.
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All those calls and meetings were fire fighting. I remind myself. No fires, no fighting. Now, everything is running smoothly— almost too smoothly.
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Ford’s starting point was that the key for effective production is to concentrate on improving the overall flow of products through the operations. His efforts to improve flow were so successful that, by 1926, the lead time from mining the iron ore to having a completed car composed of more than 5,000 parts, on the train ready for delivery, was 81 hours!3 Eighty years later, no car manufacturer in the world has been able to achieve, or even come close, to such a short lead time.