'You should have a reasonable idea after we've finished. If your plant folds, then obviously the value of your learning won't have been much; you won't owe me anything. If, on the other hand, you learn enough from me to make billions, then you should pay me accordingly,' he says.
I laugh. What have I got to lose?
'Okay, fair enough,' I say finally.
We shake hands across the table.
A waiter interrupts to ask if we're ready to order. Neither of us have opened the menus, but it turns out we both want coffee. The waiter informs us there's a ten-dollar minimum for sitting in the dining room. So Jonah tells him to bring us both our own pots of coffee and a quart of milk. He gives us a dirty look and vanishes.
'Now then,' Jonah says. 'Where shall we begin...'
'I thought maybe first we could focus on the robots,' I tell him.
Jonah shakes his head.
'Alex, forget about your robots for now. They're like some new industrial toy everybody's discovered. You've got much more fundamental things to concern yourself with,' he says.
'But you're not taking into account how important they are to us,' I tell him. 'They're some of our most expensive equip- ment. We absolutely have to keep them productive.'
'Productive with respect to what?' he asks with an edge in his voice.
'Okay, right... we have to keep them productive in terms of the goal,' I say. 'But I need high efficiencies to make those things pay for themselves, and I only get the efficiencies if they're making parts.'
Jonah is shaking his head again.
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'Alex, you told me in our first meeting that your plant has very good efficiencies overall. If your efficiencies are so good, then why is your plant in trouble?'
He takes a cigar out of his shirt pocket and bites the end off of it.
'Okay, look, I have to care about efficiencies if only for the reason that my management cares about them,' I tell him.
'What's more important to your management, Alex: efficien- cies or money?' he asks.
'Money, of course. But isn't high efficiency essential to mak- ing money?' I ask him.
'Most of the time, your struggle for high efficiencies is taking you in the opposite direction of your goal.'
'I don't understand,' I say. 'And even if I did, my manage- ment wouldn't.'
But Jonah lights his cigar and says between puffs, 'Okay, let's see if I can help you understand with some basic questions and answers. First tell me this: when you see one of your workers standing idle with nothing to do, is that good or bad for the company?'
'It's bad, of course,' I say.
'Always?'
I feel this is a trick question.
'Well, we have to do maintenance-'
'No, no, no, I'm talking about a production employee who is idle because there is no product to be worked on.'
'Yes, that's always bad,' I say.
'Why?'
I chuckle. 'Isn't it obvious? Because it's a waste of money! What are we supposed to do, pay people to do nothing? We can't afford to have idle time. Our costs are too high to tolerate it. It's inefficiency, it's low productivity-no matter how you measure it.'
He leans forward as if he's going to whisper a big secret to me.
'Let me tell you something,' he says. 'A plant in which ev- eryone is working all the time is very inefficient.'
'Pardon me?'
'You heard me.'
'But how can you prove that?' I ask.
He says, 'You've already proven it in your own plant. It's right in front of your eyes. But you don't see it.'
Now I shake my head. I say, 'Jonah, I don't think we're communicating. You see, in my plant, I don't have extra people. The only way we can get products out the door is to keep every- one working constantly.'
'Tell me, Alex, do you have excess inventories in your plant?' he asks.
'Yes, we do,' I say.
'Do you have a lot of excess inventories?'
'Well... yes.'
'Do you have
'Yeah, okay, we do have a lot of a lot of excess, but what's the point?'
'Do you realize that the only way you can create excess in- ventories is by having excess manpower?' he says.
I think about it. After a minute, I have to conclude he's right; machines don't set up and run themselves. People had to create the excess inventory.
'What are you suggesting I do?' I ask. 'Lay off more peo- ple? I'm practically down to a skeleton force now.'
'No, I'm not suggesting that you lay off more people. But I am suggesting that you question how you are managing the ca- pacity of your plant. And let me tell you, it is not according to the goal.'
Between us, the waiter sets down two elegant silver pots with steam coming out of their spouts. He puts out a pitcher of cream and pours the coffee. While he does this, I find myself staring toward the window. After a few seconds, I feel Jonah reach over and touch my sleeve.
'Here's what's happening,' he says. 'Out there in the world at large, you've got a market demand for so much of whatever it is you're producing. And inside your company, you've got so many resources, each of which has so much capacity, to fill that demand. Now, before I go on, do you know what I mean by a 'balanced plant'?'
'You mean balancing a production line?' I ask.
He says, 'A balanced plant is essentially what every manufac- turing manager in the whole western world has struggled to achieve. It's a plant where the capacity of each and every resource
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is balanced exactly with demand from the market. Do you know why managers try to do this?'
I tell him, 'Well, because if we don't have enough capacity, we're cheating ourselves out of potential throughput. And if we have more than enough capacity, we're wasting money. We're missing an opportunity to reduce operational expense.'
'Yes, that's exactly what everybody thinks,' says Jonah. 'And the tendency for most managers is to trim capacity wherever they can, so no resource is idle, and everybody has something to work on.'
'Yeah, sure, I know what you're talking about,' I say. 'We do that at our plant. In fact, it's done at every plant
