The Goal

Lou nods his head in approval. Bob, Ralph, and Stacey con- tinue to look at me with poker faces. They even look offended. There must be something wrong in what I've said, but I can't see what.

"Ralph, by how much are our bottlenecks overloaded?" I ask.

"They're not overloaded," he says flatly.

"No problem there," I conclude. "So let..."

"He didn't say that," Stacey cuts me off.

"I don't understand," I say. "If the bottlenecks are not over- loaded then..."

Maintaining an expressionless face she says, "From time to time the bottlenecks are starved. Then the work comes to them in a big wave."

"And then," Bob continues, "we don't have a choice but to go into overtime. That's the case all over the plant. It looks like the bottlenecks are moving all the time."

I sit quietly. What can we do now?

"If it were as easy as determining some overloads," Stacey says, "don't you think we would easily solve it?"

She is right. I should have more confidence in them.

"My apologies," I mutter.

We sit quietly for a minute. Then Bob speaks up, "We can't handle it by shuffling priorities and going into overtime. We've already tried that for several days. It might help save some spe- cific orders but it throws the entire plant into chaos and then many more orders are in trouble."

"Yes," Stacey agrees. "Brute force seems to push us more and more into the spiral. That's why we asked for this meeting."

I accept their criticism.

"Okay, it's obvious that we have to approach it systematically Anyone got an idea where to begin?"

"Maybe we should start by examining a situation where we have one bottleneck." Ralph suggests hesitantly.

"What's the point?" Bob objects. "We now have the opposite.

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We are facing many, traveling bottlenecks." It's apparent that they've had that discussion before.

I don't have any other suggestion, nor does anybody else. I decide to gamble on Ralph's hunch. It worked in the past.

"Please proceed," I say to Ralph.

He goes to the board and takes the eraser.

"At least don't erase the five steps," Bob protests.

"They don't seem to help us much," Ralph laughs nervously. "Identify the system's constraints," he reads. "That is not the problem now. The problem is that the bottlenecks are moving all over the place."

Nevertheless, he puts the eraser down and turns to the flip chart. He draws a row of circles.

"Suppose that each circle represents a work center," he starts to explain. "The tasks are flowing from the left to the right. Now, let's suppose that this one is a bottleneck," and he marks one of the middle circles with a big X.

"Very nice," says Bob sarcastically. "Now what?"

"Now let's introduce Murphy into the picture," Ralph re- sponds calmly. "Suppose that Murphy hits directly on the bottle- neck."

"Then the only thing left to do is to curse wholeheartedly," Bob spits. "Throughput is lost."

"Correct," Ralph says. "But what happens when Murphy hits anywhere before the bottleneck? In such a case, the stream of tasks to the bottleneck is temporarily stopped and the bottleneck is starved. Isn't this our case?"

"Not at all," Bob brushes it away. "We never operated that way. We always make sure that some inventory accumulates in front of the bottleneck, so when an upstream resource goes down for some time, the bottleneck can continue to work. As a matter of fact, Ralph, we had so much inventory there that we had to choke the material release to the floor. Come on," he says impatiently, "that is exactly what you're doing on your computers. Why do we have to regurgitate what we all know by heart?"

Ralph goes back to his seat. "I just wondered if we really know how much inventory we should allow to accumulate in front of the bottlenecks?"

"Bob, he has a point," Stacey remarks.

"Of course I have," Ralph is really a

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releasing material two weeks before it was due at the bottleneck. Then it turned out that that's too much, so I cut it to one week and everything was okay. Now it's not okay."

"So increase it back," Bob says.

"I can't," Ralph sounds desperate. "It will increase our lead time beyond what we currently promise."

"What's the difference?" Bob roars. "In any event we're slid- ing on our promises."

"Wait, wait," I cut into their quarrel. "Before we do anything drastic, I want to understand better. Ralph, let's go back to your picture. As Bob pointed out, we do hold some stock in front of the bottleneck. Now let's suppose that Murphy hits somewhere before the bottleneck, then what?"

"Then," Ralph says patiently, "the flow of parts to the bottle- neck stops, but the bottleneck, using the stock that accumulated right in front of it, continues to work. Of course that eats into the stock and so, if we don't build enough stock to start with, the bottleneck might go down."

"Something doesn't match." Stacey says. "According to what you just said, we have to guarantee the uninterrupted work of the bottleneck by building stock that will last more than the time to overcome Murphy on the upstream resource."

"Correct," says Ralph.

"Don't you see that it can't be the explanation?" Stacey says.

"Why?" Ralph doesn't get it, and neither do I.

"Because the time to overcome a problem upstream did not change, we haven't faced any major catastrophies lately. So if the stock was sufficient to protect the bottlenecks before, it must be sufficient now as well. No Ralph, it's not a matter of insufficient stocks, it's simply new wandering bottlenecks."

"I guess you're right."

Maybe Ralph is convinced by Stacey's argument, but I'm not.

"I think that Ralph might be right after all," I say. "We just have to carry his line of thought a little further. We said that when one of the upstream resources goes down, the bottleneck starts to eat into its stock. Once the problem is corrected, what do all the upstream resources have to do? Remember, if there is one thing that we can be sure of, it's that Murphy will strike again."

"All upstream resources," Stacey answers, "now have to re- build the inventory in front of the bottleneck, before Murphy hits

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again. But what's the problem? We released enough material for them."

"It's not the material that concerns me," I say. "It's the ca- pacity. You see, when the problem that caused the stoppage is overcome, the upstream resources not only have to supply the current consumption of the bottleneck, at the same time they have to rebuild the inventory."

"That's right," Bob beams. "That means that there are times when the non-bottlenecks must have more capacity than the bot- tlenecks../Vo w I understand. The fact that we have bottlenecks and non-bottlenecks is not because we designed the plant very poorly. It's a must. If the upstream resources don't have spare capacity, we won't be able to utilize even one single resource to the maximum; starvation will preclude it."

"Yes," Ralph says. "But now the question is, how much spare capacity do we need?"

"No, that is not the question," I gently correct him. "Just as your previous question, 'how much inventory do we need?' is not the real question either."

"I see," Stacey says thoughtfully. "It's a trade-off. The more inventory we allow before the bottleneck, the more time is avail- able for upstream resources to catch up, and so, on average, they need less spare capacity. The more inventory the less spare ca- pacity and vice versa."

"Now it's clear what's happening," Bob continues. "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 inven- tory in front of the bottleneck."