Critical Chain - Eliyahu M. Goldratt [35]
He raises his voice. "What is not common knowledge is that ‘protecting throughput' implies a contradictory philosophy. It implies the ‘throughput world.' What is that?"
Everybody is now quiet. Even Rick.
"First, let's clarify to ourselves the essence of throughput." Pointing to the chain on the screen, Johnny explains: "One link is purchasing, another starts production, another finishes production, another assembles, still another ships to clients, et cetera. If one link, just one link, drops the ball, what happens to the throughput of the company?"
"Drops," many answer.
"When we deal with throughput, it is not just the links that are important; the linkages are just as important."
Rick finds himself nodding in agreement.
"What is the equivalent of throughput in our physical chain? What is determined not just by the links, but by the fact that they interact with each other? It's not weight. If we remove all interaction, all linkages, and we are left with just a pile of links, the weight is still the same. So what property typifies a chain? It is the strength of the chain. If one link breaks, just one link, the chain is broken; the strength of the chain drops to zero.
"Now, I have some seemingly trivial, but very important questions for you. What determines the strength of a chain?"
"The weakest link," somebody in the front answers loudly.
"And how many weakest links do we have in a chain?" Johnny stresses the word ‘weakest."'
"One."
Rick doesn't like Johnny's style. He would never stress such trivialities. But he must admit that it's effective. Johnny now has everybody's attention.
"Now," Johnny says, in an invigorating voice, "now, let's see what that implies. You are still the president in charge of the entire chain. I'm still in charge of just one department. Since there is only one weakest link, let's take the more general case, the case where I'm in charge of a department that is not the weakest link. And . . . and once again you tell me to improve. To improve the strength this time. And once again I come back and report to you that with ingenuity and time and money I improved. I strengthened my link. I made it three times stronger. Give me a medal."
He pauses and smiles. "Remember, you are not really interested in my link. You are interested in the chain. My link wasn't the weakest. If I made my link stronger, how much did I improve the strength of your chain? Nothing. Absolutely nothing."
Jim looks at Rick. "I told you." Rick doesn't respond. His mind is racing.
"Don't you see what we are facing now?" Johnny starts to pace again. His strides are full of energy. "Most of the local improvements do not contribute to the global!" he almost shouts. "And we do want the global, we do want the organization as a whole to improve. Now we know that since any improvement requires attention and time and money, the way to improve the total organization is definitely not through inducing many local improvements, the more the better. That's not the way."
"Interesting," Jim says to himself.
"So where do we stand? In order to control cost, managers must manage according to the ‘cost world,' while in order to protect throughput they must manage according to the ‘throughput world.' Can they manage according to both at the same time?"
Nobody volunteers even a speculation.
"We try," Johnny sighs. "We definitely try. For example, are you familiar with the term, ‘the end of the month syndrome'?"
Many laugh. Especially the guests from industry.
"At the beginning of the month," Johnny explains, "we control cost. Tight fist on overtime. Batch sizes must be optimal. But at the end of the month, forget it. Do everything to ship the damn goods out the door. Expedite these three pieces, go on overtime for the entire weekend. Ship!"
Johnny lowers his voice. "What happens? At the beginning of the month these companies are managed according to the cost