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alex has a meeting at work.
stacey and bob are late cuz they’re dealing with problematic orders.
to manage the division alex has to clarify how he can apply jonah’s ideas in different situations, e.g. - to different plants, to sales etc.
stacey sez they should ask what their goal is as managers. lou sez the goal is to get the division to make more money now and in the future.
stacey sez more isn’t a specific number so that got can’t be achieved.
lou sez she’s right, and they need to move the company toward that goal. to do that they should start a process of ongoing improvement.
nobody knows what this means or how to do it, although hilton smyth uses the phrase “ongoing improvement” in his memos.
bob sez he’s seen a lot of ongoing improvement projects in plants and they’re always a pain in the neck.
bob sez they improved the plant by actually doing stuff rather than talking.
stacey sez the difference between these projects and what they did in the plant is mow they interpreted improvement.
lou sez the relevant measurements are throughput, inventory and operating expense.
most improvement projects focus on operating expenses. lou sez they’ve concentrated more on throughput and inventory, which changed by tens of percent, not operating expense, which changed by 2 percent.
alex wants to know how they’re going to get the division to concentrate on throughput.
bob sez that a process of ongoing improvement has to consist of steps they could do: they need to figure out what process they followed.
ralph sez the process and throughput ideas are connected. a complex organisation is like a chain composed of links. looking at cost is like looking at the weight of the links. but looking at throughput is like considering the strength of links cuz you have use all the links to get throughput. the strength of the chain is determined by its weakest link, which is like the bottleneck.
the process is
step 1 identify bottlenecks
step 2 decide how to exploit the bottlenecks
step 3 subordinate everything else to exploiting the bottlenecks
step 4 elevate the bottlenecks - make them more productive
step 5 look for more bottlenecks if a bottleneck has been broken
stacey sez they went through that process more than once and the nature of the bottlenecks changed.
they started out with production bottlenecks like the ncx-10 and then the market became the bottleneck. she suggests changing the word bottleneck to constraint since calling the market a bottleneck doesn’t make sense.
later alex asks julie how he’s going to continue the momentum.
alex can’t push for more orders cuz that will lead to more bottlenecks and get them back to expediting. but their results don’t justify more staff or machines.
julie sez they’ll have to wait until the plant generates enough money to justify investment.