The Goal: A Process of Ongoing Improvement, Third Revised Edition
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you?"
Stacey says, "Okay, but you have to promise me you won't
change it because of pressure from marketing."
"My word of honor," I tell her. Then I say to Ted and Mario,
"In all seriousness, I hope you two guys know that heat-treat and
the NCX-10 are the most important processes in the whole plant.
How well you manage those two could very well determine
whether this plant has a future."
"We'll do our best," says Ted.
"I can assure you that they will," says Bob Donovan.
Right after that meeting, I go down the hall to the personnel
relations for a meeting with Mike O'Donnell, the union local
president. When I walk in, my personnel manager, Scott Dolin, is
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gripping the armrests of his chair with white knuckles, while
O'Donnell is talking at the top of his voice.
"What's the problem here?" I ask.
"You know very well what the problem is: your new lunch
rules in heat-treat and n/c machining," says O'Donnell. "They're in violation of the contract. I refer you to Section Seven, Paragraph Four . . ."
I say, "Okay, wait a minute, Mike. It's time we gave the
union an update on the situation of the plant."
For the rest of the morning I describe for him the situation
the plant is in. Then I tell him some of what we've discovered and
explain why the changes are necessary.
Wrapping up, I say, "You understand, don't you, that it's
probably only going to affect about twenty people at the most?"
He shakes his head.
"Look, I appreciate you trying to explain all this," he says.
"But we got a contract. Now if we look the other way on one
thing, what's to say you won't start changing whatever else you
don't like?"
I say, "Mike, in all honesty, I can't tell you that down the
road aways, we won't need to make other changes. But we're
ultimately talking about jobs. I'm not asking for cuts in wages or
concessions on benefits. But I am asking for flexibility. We have
to have the leeway necessary to make changes that will allow the
plant to make money. Or, very simply, there may not be a plant
in a few months."
"Sounds like scare tactics to me," he says finally.
"Mike, all I can say is, if you want to wait a couple of months
to see if I'm just trying to scare everyone, it'll be too late."
O'Donnell is quiet for a moment.
Finally, he says, "I'll have to think about it, talk it over and all
that. We'll get back to you."
By early afternoon, I can't stand it anymore. I'm anxious to
find out how the new priority system is working. I try calling Bob
Donovan, but he's out in the plant. So I decide to go have a look
for myself.
The first place I check is the NCX-10. But when I get to the
machine, there's nobody to ask. Being an automated machine, it
runs a lot of the time with nobody tending it. The problem is that
when I walk up, the damn thing is just sitting there. It isn't run-
ning and nobody is doing a set-up. I get mad.
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I go find Mario.
"Why the hell isn't that machine working?" I ask him.
He checks with the foreman. Finally he walks back to me.
"We don't have the materials," he says.
"What do you mean, you don't have materials," I shout. "What do you call these stacks of steel everywhere?"
"But you told us to work according to what's on the list," says
Mario.
"You mean you finished all the late parts?"
"No, they did the first two batches of parts," says Mario.
"When they got to the third part on the list, they looked all
around and couldn't find the materials for it in the queue. So
we're shut down until they turn up."
I'm ready to strangle him.
"That's what you wanted us to do, right?" says Mario. "You
wanted us to do only what was on the list and in the same order as listed, didn't you? Isn't that what you said?"
Finally I say, "Yes, that is what I said. But didn't it occur to
you that if you couldn't do one item on the list you should go on
to the next?"
Mario looks helpless.
"Well, where the hell are the materials you need?" I ask him.
"I have no idea," he says. "They could be any of half-a-dozen places. But I think Bob Donovan might have somebody looking
for them already."
"Okay, look," I tell him. "You have the setup people get this machine ready for whatever is the next part on that list for which you do have the materials. And keep this hunk of junk running."
"Yes sir," says Mario.
Fuming mad, I start back to the office to have Donovan
paged, so I can find out what went wrong. Halfway there, I pass
some lathes and there he is, talking to Otto the foreman. I don't
know how civil the tone is. Otto appears to be dismayed by Bob's
presence. I stop and stand there waiting for Bob to finish and
notice me. Which happens directly. Otto walks over and calls his
machinists together. Bob comes over to me.
I say, "You know about what's going on—"
"Yes, I know," he says. "That's why I'm here."
"What's the problem?"
"Nothing, no problem," he says. "Just standard operating
procedure."
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It turns out, as Bob explains to me, that the parts they were
waiting for at the NCX-10 have been sitting there for about a
week. Otto has been running other batches of parts. He didn't
know about the importance of the parts destined for the NCX-10.
To him they looked like any other batch—and a rather unimpor-
tant one judging from the size. When Bob got here, they were in
the middle of a big, long run. Otto didn't want to stop . . . until
Donovan explained it to him, that is.
"Dammit, Al, it's just like before," Bob says. "They get set up and they start running one thing, and then they have to break in
the middle so we can finish something else. It's the same damn
thing!"
"Now hold on," I say. "Let's think about this for a second."
Bob shakes his head. "What is there to think about?"
"Let's just try to reason this through," I say. "What was the problem?"
"The parts didn't arrive at the NCX-10, which meant the
operators couldn't run the batch they were supposed to be run-
ning," says Bob in kind of a sing-song way.
"And the cause was that the bottleneck parts were held up by
this non-bottleneck machine running non-bottleneck parts," I
say. "Now we've got to ask ourselves why that happened."
"The guy in charge here was just trying to stay busy, that's
all," says Bob.
"Right. Because if he didn't stay busy, someone like you
would come along and jump all over him," I say.
"Yeah, and if I didn't, then someone like you would jump all
over me," says Bob.
"Okay, granted. Bu
t even though this guy was busy, he
wasn't helping to move toward the goal," I say.
"Well . . ."
"He wasn't, Bob! Look," I say. I point to the parts destined
for the NCX-10. "We need those parts now, not tomorrow. The
non-bottleneck parts we may not need for weeks, or even months
—maybe never. So by continuing to run the non-bottleneck parts,
this guy was actually interfering with our ability to get an order
out the door and make money."
"But he didn't know any better," says Bob.
"Exactly. He couldn't distinguish between an important
batch of parts and an unimportant one," I say. "Why not?"
"Nobody told him."
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"Until you came along," I say. "But you can't be everywhere, and this same kind of thing is going to happen again. So how do
we communicate to everybody in the plant which parts are im-
portant?"
"I guess we need some kind of system," says Bob.
"Fine. Let's go work on one right away so we don't have to
keep putting up with this crap," I say. "And before we do any-
thing else, let's make sure that people at both of the bottlenecks
know to keep working on the order with the highest priority
number on the list."
Bob has a final chat with Otto to make sure he knows what to
do with the parts. Then the two of us head for the bottlenecks.
Finally we're walking back to the office. Glancing at Bob's
face, I can tell he's still bothered by what happened.
"What's wrong? You look unconvinced about all this," I say.
"Al, what's going to happen if we repeatedly have people
break up process runs to run parts for the bottlenecks?" he asks.
"We should be able to avoid idle time on the bottlenecks," I
say.
"But what's going to happen to our costs on the other 98
percent of the work centers we got here?" he asks.
"Right now, don't worry about it. Let's just keep the bottle-
necks busy," I say. "Look, I'm convinced you did the right thing back there. Aren't you?"
"Maybe I did the right thing," he says, "but I had to break all the rules to do it."
"Then the rules had to be broken," I say. "And maybe they
weren't good rules to begin with. You know we've always had to
break up process runs for expediency to get orders shipped. The
difference between then and now is that now we know to do it
ahead of time, before the external pressure comes. We've got to
have faith in what we know."
Bob nods in agreement. But I know he'll only believe the
proof. Maybe I'm the same, if I'm honest about it.
A few days pass while we develop a system to cure the prob-
lem. But at eight o'clock on Friday morning, at the beginning of
first shift, I'm in the cafeteria watching the employees wander in.
With me is Bob Donovan.
After our earlier misunderstanding, I decided that the more
people who know about the bottlenecks and how important they
are, the better off we'll be. We're holding fifteen-minute meetings
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with everyone working in the plant, both foremen and hourly
people. This afternoon, we'll do the same thing with people
working second shift, and I'll come in late tonight to talk to the
third shift as well. When we've got everybody this morning, I get
up in front of them and talk.
"All of you know that this plant has been in a downward slide
for some time. What you don't know is that we're in the position
to begin to change that," I tell them. "You're here in this meeting because we're introducing a new system today ... a system
which we think will make the plant more productive than it's
been in the past. In the next few minutes, I'm going to explain
briefly some of the background that made us develop this new
system. And then Bob Donovan is going to tell you how it works."
Trying to keep meetings to fifteen minutes doesn't give us
the time to tell them very much. But using the analogy of an
hourglass, I do explain briefly about the bottlenecks and why we
have to give priority to parts on the heat-treat and NCX-10 rout-
ings. For the things I can't take time to tell them, there is going to
be a newsletter, which will replace the old plant employee paper,
and which will report developments and progress in the plant.
Anyway, I turn over the microphone to Donovan and he tells
them how we're going to prioritize all materials in the plant so
everybody knows what to work on.
"By the end of today, all work-in-process on the floor will be
marked by a tag with a number on it," he says and holds up some
samples. "The tag will be one of two colors: red or green.
"A red marker means the work attached to it has first prior-
ity. The red tags go on any materials needing to be processed by a
bottleneck. When a batch of parts with that color marker arrives
at your work station, you are to work on them right away."
Bob explains what we mean by "right away." If the employee
is working on a different job, it's okay to finish what he's doing, as
long as it doesn't take more than half an hour. Before an hour
has passed, certainly, the red-tagged parts should be getting at-
tention.
"If you are in the middle of a setup, break the setup immedi-
ately and get ready for the red parts. When you've finished the
bottleneck parts, you can go back to what you were doing before.
"The second color is green. When there is a choice between
working on parts with a red marker and parts with a green
marker, you work on the parts with the red marker first. So far,
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most of the work-in-process out there will be marked by green.
Even so, you work on green orders only if you don't have any red
ones in queue.
"That explains the priority of the colors. But what happens
when you've got two batches of the same color? Each tag will have
a number marked on it. You should always work on the materials
with the lowest number."
Donovan explains some of the details and answers a couple
of questions, after which I wrap it up.
I tell them, "This meeting was my idea. I decided to take you
away from your jobs, mostly because I wanted everyone to hear
the same message at the same time, so that—I hope—you'll have
a better understanding of what's going on. But another reason is
that I know it's been a long time since most of you have heard any
good news about the plant. What you've just heard about is a
beginning. Even so, the future of this plant and the security of
your jobs will only be assured when we start making money
again. The most important thing you can do is to work with us
. . . and, together, we'll all be working to keep this plant work-
ing."
Late that afternoon, my
phone rings.
"Hi, this is O'Donnell. Go ahead with the new policy on
lunch and coffee breaks. We won't challenge it."
I relay the news to Donovan. And with these small victories,
the week ends.
At 7:29 on Saturday evening, I park the washed, waxed,
buffed and vacuumed Mazda in the Barnett driveway. I reach for
the bouquet of flowers beside me on the seat, and step out onto
the lawn wearing my new courting duds. At 7:30, I ring the door-
bell.
Julie opens the door.
"Well, don't you look nice," she says.
"So do you," I tell her.
And she does.
There are a few stiff minutes spent talking with her parents.
Mr. Barnett asks how everything is going at the plant. I tell him it
looks like we may be on our way to a recovery, and mention the
new priority system and what it will do for the NCX-10 and heat-
treat. Both of her parents look at me blankly.
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"Shall we go?" suggests Julie.
Joking, I tell Julie's mother, "I'll have her home by ten
o'clock."
"Good," says Mrs. Barnett. "We'll be waiting."
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22
"There you have it," says Ralph.
"Not bad," says Stacey.
"Not bad? It's a lot better than not bad," says Bob.
"We must be doing something right," says Stacey.
"Yeah, but it isn't enough," I mutter.
A week has passed. We're grouped around a computer ter-
minal in the conference room. Ralph has extracted from the com-
puter a list of overdue orders that we shipped last week.
"Isn't enough? At least it's progress," says Stacey. "We
shipped twelve orders last week. For this plant, that's not bad.
And they were our twelve most overdue orders."
"By the way, our worst overdue order is now only forty four
days late," says Ralph. "As you may recall, the worst one used to be fifty eight days."
"All right!" says Donovan.
I step back to the table and sit down.
Their enthusiasm is somewhat justified. The new system of
tagging all the batches according to priority and routing has been
working fairly well. The bottlenecks are getting their parts
promptly. In fact, the piles of inventory in front of them have
grown. Following bottleneck processing, the red-tagged parts