The Goal

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pacity of a resource in isolation. Its true productive capacity de- pends upon where it is in the plant. And trying to level capacity with demand to minimize expenses has really screwed us up. We shouldn't be trying to do that at all.'

'But that's what everybody else does,' says Bob.

'Yes, everybody does. Or claims to. As we now can see, it's a stupid thing to try,' I say.

'So how do other manufacturers survive?' asks Lou.

I tell him I was wondering that myself. What I suspect is that as a plant comes close to being balanced through the efforts of engineers and managers doing the wrong things, events head toward a crisis and the plant is very quickly un balanced by shift- ing workers or by overtime or by calling back some people from layoff. The survival incentive overrides false beliefs.

'Okay, but again, what are we going to do?' asks Bob. 'We can't hire without division approval. And we've even got a policy against overtime.'

'Maybe it's time to call Jonah again,' says Stacey.

And I say, 'I think maybe you're right.'

It takes Fran half an hour to locate the area of the world where Jonah happens to be today, and another hour passes be- fore Jonah can get to the phone to talk to us. As soon as he's on the line, I have another secretary round up the staff again and corral them in my office so we can hear him on a speaker phone. While they're coming in, I tell Jonah about the hike with Herbie where I discovered the meaning of what he was telling me, and what we've learned about the effects of the two phenomena in the plant.

'What we know now,' I tell him, 'is that we shouldn't be looking at each local area and trying to trim it. We should be trying to optimize the whole system. Some resources have to have more capacity than others. The ones at the end of the line should have more than the ones at the beginning-sometimes a lot more. Am I right?'

'You're on the money,' says Jonah.

'Good. Glad to hear we're getting somewhere,' I say. 'Only the reason I called is, we need to know where to go from here.'

He says, 'What you have to do next, Alex, is distinguish between two types of resources in your plant. One type is what I call a bottleneck resource. The other is, very simply, a non-bottle- neck resource.'

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I whisper to everybody to start taking some notes on this.

'A bottleneck,' Jonah continues, 'is any resource whose ca- pacity is equal to or less than the demand placed upon it. And a non-bottleneck is any resource whose capacity is greater than the demand placed on it. Got that?'

'Right,' I tell him.

'Once you have recognized these two types of resources,' says Jonah, 'you will begin to see vast implications.'

'But, Jonah, where does market demand come in?' Stacey asks. 'There has to be some relationship between demand and capacity.'

He says, 'Yes, but as you already know, you should not bal- ance capacity with demand. What you need to do instead is bal- ance the flow of product through the plant with demand from the market. This, in fact, is the first of nine rules that express the relationships between bottlenecks and non-bottlenecks and how you should manage your plant. So let me repeat it for you: Bal- ance flow, not capacity.'

Stacey is still puzzled. She says, 'I'm not sure I understand. Where do the bottlenecks and non-bottlenecks come into the pic- ture?'

Jonah says, 'Let me ask you: which of the two types of re- sources determines the effective capacity of the plant?'

'It would have to be the bottleneck,' she says.

I say, 'That's right. It's like the kid on that hike last weekend -Herbie. He had the least capacity and he was the one who actually determined how fast the troop as a whole could move.'

'So where should you balance the floor?' asks Jonah.

'Oh, I see,' says Stacey. 'The idea is to make the flow through the bottleneck equal to demand from the market.'

'Basically, yes, you've got it,' says Jonah. 'Actually, the flow should be a tiny bit less than the demand.' ' 'How come?' asks Lou.

'Because if you keep it equal to demand and the market demand goes down, you'll lose money,' says Jonah. 'But that's a fine point. Speaking fundamentally, the bottleneck flow should be on a par with demand.'

Bob Donovan is now making various noises, trying to get into the conversation.

'Excuse me, but I thought bottlenecks were bad,' says Bob. 'They ought to be eliminated where possible, right?'

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'No, bottlenecks are not necessarily bad-or good,' says Jo- nah, 'they are simply a reality. What I am suggesting is that where they exist, you must then use them to control the flow through the system and into the market.'

That makes sense to me as I'm listening, because I'm remem- bering how I used Herbie to control the troop during the hike.

'Now I have to run,' says Jonah, 'because you caught me during a ten-minute break in a presentation.'

I jump in. 'Jonah, before you go-!'

'Yes?'

'What's our next step?'

He says, 'Well, first of all, does your plant have any bottle- necks?'

'We don't know,' I tell him.

'Then that's your next step,' he says. 'You have to find this out, because it makes an enormous difference in how you manage your resources.'

'How do we find the bottlenecks?' says Stacey.

'It's very simple, but it would take a few minutes to explain. Look, try to figure that out for yourselves,' says Jonah. 'It's re- ally easy to do if you think about it first.'

I say, 'Okay, but...'

'Good- bye for now,' he says. 'Call me when you know if you have a bottleneck.'

The speaker phone issues a click, followed by a fuzzy hum.

'Well... what now?' asks Lou.

'I guess we look at all our resources,' I say, 'and compare them against market demand. If we find one in which demand is greater than capacity, then we'll know we've got a bottleneck.'

'What happens if we find one?' asks Stacey.

'I guess the best thing to do would be what I did to the scout troop,' I say. 'We adjust capacity so the