VELOCITY - DEE JACOB [110]
“The Winner management culture is metrics-driven. That is, the managers with the best KPIs – Key Performance Indicators, as they’re called – get the best bonuses and promotions.”
She put that sticky note near the bottom of the whiteboard.
“One of the Winner beliefs is that ‘maximum utilization’ of each and every resource results in ‘maximum efficiency.’ All Winner managers attempt to make their numbers look like they are managing for ‘maximum utilization.’
“The ‘maximum utilization’ assumption is incorporated in Winner’s proprietary WING software.
“If followed unquestioningly, WING results in extremely high inventories, because resource capacities have not been balanced against demand. Everything is running flat out, and inventory is being produced whether it is needed or not.”
“I suspect what most managers do is find ways to fiddle with the data fed into WING, and essentially lie to it,” said Wayne.
“That’s what I did,” Murphy said with a shrug of his bearish shoulders. “It’s the only way to survive.”
Amy rolled her eyes.
“So Winner turns to Lean Six Sigma. Winner’s application of Lean seeks to reduce capacity and keep the remaining capacity at maximum levels. Resources, in theory at least, operate at close to one hundred percent – maximum utilization, the ideal – and inventories are lower.
“Therefore,” Amy continued, “we have reconfigured resources at Oakton so that mathematically we have just enough capacity to meet demand.
“Because we have eliminated ‘excess’ capacity, we have a real problem accommodating fluctuations in workload – especially when production
approvals come in sporadically and late from Rockville. In other words, we can walk, but we can’t run. And if anything trips us up while we’re walking, we fall behind.
“Therefore, we cannot play the catch-up game.
“Therefore, if something becomes late, it stays late.”
Amy looked over the layout of the notes, and said, “Well, clearly there is an intersection of these two cause-and-effect chains.”
“In other words,” said Wayne, “If we have only ‘just enough’ capacity to meet demand, then whenever an unforeseen event causes a delay, we cannot make up for slippage.”
“You hit the nail on the head,” said Murphy, “and because of slippage, there are temporary bottlenecks caused by the inability to stay within the takt time cycle.”
For the twenty minutes or so, with Amy at the board rearranging the notes, writing new ones, and connecting them by drawing arrows from one to the next, they talked and argued and resolved – ultimately created a cause-effect chain that seemed logical and true.
Amy then read through the chain:
“With a balanced production line, Oakton has only ‘just enough’ capacity.
“Small variations cause temporary bottlenecks in the flow throughout the system.
“Therefore, Godzilla is often less productive than before.
“Therefore, flow time in increasing, not decreasing.
“Therefore, Hi-T is often missing scheduled shipping dates.
“To save customer satisfaction, we now routinely use expensive overnight courier deliveries.
“Even with overnight shipping, deliveries are still days overdue from what was promised.
“Therefore, more and more customers are mad at us.
“Therefore, our sales force is demoralized.
“Therefore, our sales are declining.
“Therefore, cash flow is deteriorating.
“Therefore, the company is losing money rather than making money.
“Therefore, we are not meeting objectives.
“Therefore, Winner management is angry.
“Therefore, the jobs and careers of many at Hi-T are in jeopardy.”
Amy turned to everyone else.
“Well,” she said, “that is just an amazing chain of undesirable consequences.”
“Kind of like a train wreck,” said Wayne.
“But it didn’t start that way,” said Amy. “Look. Down at the base, the intentions were positive.”
She wrote one more note and placed it at the very bottom of the whiteboard, below all the others. It read:
“Each of us wants to be successful.”
She pointed from the bottom note she had just fixed to the board and the