I first read The Goal: A Process of Ongoing Improvement when I actively became involved in process improvement.  I was bit late to the party; however since my first read of this business novel, a copy has always graced my bookshelf.  The Goal uses the story of Alex Rogo, plant manager, to illustrate the theory of constraints and how the wrong measurement focus can harm an organization. The focus of the re-read is less on the story, but rather on the ideas that have shaped lean thinking. Even though set in a manufacturing plant the ideas are useful in understanding how all projects and products can be delivered more effectively.  Earlier entries in this re-read are:

Part 1                Part 2                  Part 3                      Part 4                Part 5           Part 6

As we noted during our re-read of John P. Kotter’s Leading Change, significant organizational change typically requires changes to many different groups and processes to be effective. As we observed in Chapter 18, change is difficult even when everyone has sense of urgency and understands the goal of the change.

Chapter 19

Alex begins to despair of being able to deal with two constraints at in the same process. After dinner with his mom and kids, he picks up Johan at the airport.  On the way to the plant, Johan points out that there are only two reason why what Alex and his team are learning won’t help them save the plant. The first reason is if there is no demand for the product they are making and second if they are not willing to change. Once at the plant, Johan gets a briefing on the problems.  The multiple bottleneck problem has Alex and his team on edge.  They do not see a solution and press Johan on how other plants handle bottlenecks. A bottleneck is any resource that has a capacity that is equal to or less than the demand placed upon it.  Johan points out that most plants do not have bottlenecks, rather they have excess capacity and therefore are not efficient.  Efficient plants have and manage bottlenecks rather than over-investing in capacity. Johan points out that in order to increase the output of the overall process only the capacity of the bottlenecks need to be addressed. Increasing the capacity of the bottlenecked resource increases the throughput of the process.

Johan, Alex and his management staff adjourn to the plant to see the problems in action.  When they visit the robot, which is the first bottleneck in the process, it is idle. The staff went on a break before they completed the set up needed to manufacture parts for an order. Johan points out that any downtime on a bottlenecked resource can’t be made up later in the process, and any downtime limits the plant’s ability to produce completed product, which directly impacts the bottom line. As a group, they explore ideas to increase the capacity of the robot (bottleneck) ranging from changing how breaks are taken to re-commissioning the older machines that the robots replaced.

When the team reaches the second bottleneck, the heat-treating step, the problem of increasing capacity continues to plague the group.  You just can’t add extra heat-treating capacity quickly due to the footprint of the department and the equipment needed.  Johan quizzes the group on different ideas to increase the capacity of the step. He begins by asking whether all the part that go through heat treating really require the step. They also discussed why they were padding out the batches to build inventory and decrease cost per unit of work. Doing work that is not needed (including building inventory of parts that will be used later) steals capacity that can be better used to relieve some of the pressure on the bottleneck. During discussion Johan observes a pile of rejected parts that had been heat treated.  He observes that using a bottlenecked resource to work on broken parts does not make sense. One solution is to move the parts inspection step before the heat-treating step, so that only good parts are treated; an effective increase in the capacity of the process.  This is just like building code and then using an independent testing resource to find the problems just before it is scheduled for implementation.

The focus in Chapter 19 is to drive home the point that every time the capacity of a bottleneck is increased more product can be shipped. The impact of a bottleneck is not the cost of individual part, but the cost of the whole product that cannot be shipped.

Johan leaves the team with a reminder that wasted time on a bottleneck includes idle time, time working on defects and making parts that are not currently needed.

Chapter 20

Early the next morning Alex meets with his team to start planning how to implement the ideas they discussed the previous evening.  Some of the changes, like moving the quality inspections before the bottlenecks, are relatively simple, while others, such as changing the union work rules, are more difficult. However starting to implement the changes is more important than waiting until they all can be implemented.  This is similar to the Agile approach of making small changes and gathering feedback, rather than big bang approaches.  Alex tells his team to shift priorities to make the latest job (most behind schedule) the top priority.  While we might argue that a better approach might be to approach prioritization using the weighted shortest job first approach to maximize value delivered, the important message in the chapter is the shift of focus from step efficiency to maximizing product delivery.

The chapter ends with Alex reminding his team that the changes in process and the new work they are doing is of maximum importance.  Anything that takes their focus off moving forward, including reports for the home office, imperils their future.

Summary of The Goal so far:

Chapters 1 through 3 actively present the reader with a burning platform. The plant and division are failing. Alex Rogo has actively pursued increased efficiency and automation to generate cost reductions, however performance is falling even further behind and fear has become central feature in the corporate culture.

Chapters 4 through 6 shift the focus from steps in the process to the process as a whole. Chapters 4 – 6 move us down the path of identifying the ultimate goal of the organization (in this book). The goal is making money and embracing the big picture of systems thinking. In this section, the authors point out that we are often caught up with pursuing interim goals, such as quality, efficiency or even employment, to the exclusion of the of the ultimate goal. We are reminded by the burning platform identified in the first few pages of the book, the impending closure of the plant and perhaps the division, which in the long run an organization must make progress towards their ultimate goal, or they won’t exist.

Chapters 7 through 9 show Alex’s commitment to change, seeks more precise advice from Johan, brings his closest reports into the discussion and begins a dialog with his wife (remember this is a novel). In this section of the book the concept “that you get what you measure” is addressed. In this section of the book, we see measures of efficiency being used at the level of part production, but not at the level of whole orders or even sales. We discover the corollary to the adage ‘you get what you measure’ is that if you measure the wrong thing …you get the wrong thing. We begin to see Alex’s urgency and commitment to make a change.

Chapters 10 through 12 mark a turning point in the book. Alex has embraced a more systems view of the plant and that the measures that have been used to date are more focused on optimizing parts of the process to the detriment to overall goal of the plant.  What has not fallen into place is how to take that new knowledge and change how the plant works. The introduction of the concepts of dependent events and statistical variation begin the shift the conceptual understanding of what measure towards how the management team can actually use that information.

Chapters 13 through 16 drive home the point that dependent events and statistical variation impact the performance of the overall system. In order for the overall process to be more effective you have to understand the capability and capacity of each step and then take a systems view. These chapters establish the concepts of bottlenecks and constraints without directly naming them and that focusing on local optimums causes more trouble than benefit.

Chapters 17 through 18 introduces the concept of bottlenecked resources. The affect of the combination dependent events and statistical variability through bottlenecked resources makes delivery unpredictable and substantially more costly. The variability in flow through the process exposes bottlenecks that limit our ability to catch up, making projects and products late or worse generating technical debt when corners are cut in order to make the date or budget.

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