Wednesday, February 08, 2006

Just what are we optimizing?

Just what are we optimizing?

"It drives me nuts!!  They don't get it! What is their problem??"  My friend Ricardo was yelling in the phone.


Down boy, I said.  Inhale.  What's going on?


"Optimizing.  They keep talking about optimizing.  But they are clueless what to optimize!!!"  I could almost see his neck muscles bulging through the phone.


OK, tell me what you heard.


"So, I'm sitting in a meeting. One department's guy is making a big speech about why he has to get his efficiency figures up.  The next department makes the same speech, except that her group gets inefficient when the first group gets efficient.  The first group just dumps stuff to her to gain the efficiency.  And nothing resolved, they just went back and forth."


Yeah, so tell me something new, Ricardo; departments argue.  Why are you so mad?


"What makes me mad is that nobody saw it!!  Everyone in the meeting was operating on the assumption that if each department is efficient, the entire company is efficient! And we've learned from Goldratt and Womack and many others we need system optimization, not local optimization."


That's why I like you, Ricardo, you're a good student.  But you're out of school now.  What do you do with this knowledge?


"I don't know.  My lectures just don't seem to work." 


Well, if you yell at them like you are yelling at me, I'd guess they aren't.  So what would be better?


"There you go probably are going to suggest I show them something."


What would you suggest?  What's a way to demonstrate this elusive optimization?


He thought a moment.  "How about time?  Like the amount of time it takes to process a product?"


Seems like a good idea.  But show me some numbers.


He thought some more.  "If department A tries to be more efficient, it can crank up it's output to 300 units per hour.  But, by doing that, they slow down department B to 240 units per hour."


So what happens to the extra 60 units every hour?


"Aw, they just pile up in the aisle.  Gets a little messy by the end of the day.  But department A has better numbers."


So how much gets shipped to the customer in this plan?


"Well, without overtime, just around 1,900 units a day, since department B can only do 240 per hour.   But a lot of times they stick around an hour or two to get the aisle cleaned out."


So how efficient is that to pay time and a half for those folks?  A rhetorical question.  I try another tack.  If Department A is a bit "inefficient" what do the numbers look like?


"Well, department A slows down to about 280 units per hour, while department B gets to 250 per hour."  A further pause.  "And so that would put about 2,000 parts per day out the door.  Without overtime."


There's your example, my friend.  Use the real numbers.  The competition is outside the plant, not inside. 


Optimize...the whole, not the part.


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