"Please proceed," I say to Ralph.
He goes to the board and takes the eraser.
"At least don't erase the five steps," Bob protests.
"They don't seem to help us much," Ralph laughs nervously. "Identify the system's constraints," he reads. "That is not the problem now. The problem is that the bottlenecks are moving all over the place."
Nevertheless, he puts the eraser down and turns to the flip chart. He draws a row of circles.
"Suppose that each circle represents a work center," he starts to explain. "The tasks are flowing from the left to the right. Now, let's suppose that this one is a bottleneck," and he marks one of the middle circles with a big X.
"Very nice," says Bob sarcastically. "Now what?"
"Now let's introduce Murphy into the picture," Ralph re- sponds calmly. "Suppose that Murphy hits directly on the bottle- neck."
"Then the only thing left to do is to curse wholeheartedly," Bob spits. "Throughput is lost."
"Correct," Ralph says. "But what happens when Murphy hits anywhere before the bottleneck? In such a case, the stream of tasks to the bottleneck is temporarily stopped and the bottleneck is starved. Isn't this our case?"
"Not at all," Bob brushes it away. "We never operated that way. We always make sure that some inventory accumulates in front of the bottleneck, so when an upstream resource goes down for some time, the bottleneck can continue to work. As a matter of fact, Ralph, we had so much inventory there that we had to choke the material release to the floor. Come on," he says impatiently, "that is exactly what you're doing on your computers. Why do we have to regurgitate what we all know by heart?"
Ralph goes back to his seat. "I just wondered if we really know how much inventory we should allow to accumulate in front of the bottlenecks?"
"Bob, he has a point," Stacey remarks.
"Of course I have," Ralph is really annoyed. "We wanted three days' inventory in front of each bottleneck. I started with
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releasing material two weeks before it was due at the bottleneck. Then it turned out that that's too much, so I cut it to one week and everything was okay. Now it's not okay."
"So increase it back," Bob says.
"I can't," Ralph sounds desperate. "It will increase our lead time beyond what we currently promise."
"What's the difference?" Bob roars. "In any event we're slid- ing on our promises."
"Wait, wait," I cut into their quarrel. "Before we do anything drastic, I want to understand better. Ralph, let's go back to your picture. As Bob pointed out, we do hold some stock in front of the bottleneck. Now let's suppose that Murphy hits somewhere before the bottleneck, then what?"
"Then," Ralph says patiently, "the flow of parts to the bottle- neck stops, but the bottleneck, using the stock that accumulated right in front of it, continues to work. Of course that eats into the stock and so, if we don't build enough stock to start with, the bottleneck might go down."
"Something doesn't match." Stacey says. "According to what you just said, we have to guarantee the uninterrupted work of the bottleneck by building stock that will last more than the time to overcome Murphy on the upstream resource."
"Correct," says Ralph.
"Don't you see that it can't be the explanation?" Stacey says.
"Why?" Ralph doesn't get it, and neither do I.
"Because the time to overcome a problem upstream did not change, we haven't faced any major catastrophies lately. So if the stock was sufficient to protect the bottlenecks before, it must be sufficient now as well. No Ralph, it's not a matter of insufficient stocks, it's simply new wandering bottlenecks."
"I guess you're right."
Maybe Ralph is convinced by Stacey's argument, but I'm not.
"I think that Ralph might be right after all," I say. "We just have to carry his line of thought a little further. We said that when one of the upstream resources goes down, the bottleneck starts to eat into its stock. Once the problem is corrected, what do all the upstream resources have to do? Remember, if there is one thing that we can be sure of, it's that Murphy will strike again."
"All upstream resources," Stacey answers, "now have to re- build the inventory in front of the bottleneck, before Murphy hits
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again. But what's the problem? We released enough material for them."
"It's not the material that concerns me," I say. "It's the ca- pacity. You see, when the problem that caused the stoppage is overcome, the upstream resources not only have to supply the current consumption of the bottleneck, at the same time they have to rebuild the inventory."
"That's right," Bob beams. "That means that there are times when the non-bottlenecks must have more capacity than the bot- tlenecks../Vo w I understand. The fact that we have bottlenecks and non-bottlenecks is not because we designed the plant very poorly. It's a must. If the upstream resources don't have spare capacity, we won't be able to utilize even one single resource to the maximum; starvation will preclude it."
"Yes," Ralph says. "But now the question is, how much spare capacity do we need?"
"No, that is not the question," I gently correct him. "Just as your previous question, 'how much inventory do we need?' is not the real question either."
"I see," Stacey says thoughtfully. "It's a trade-off. The more inventory we allow before the bottleneck, the more time is avail- able for upstream resources to catch up, and so, on average, they need less spare capacity. The more inventory the less spare ca- pacity and vice versa."
"Now it's clear what's happening," Bob continues. "The new orders have changed the balance. We took more orders, which by themselves didn't turn any resource into a new bottleneck, but they did drastically reduce the amount of spare capacity on the non-bottlenecks, and we didn't compensate with increased inven- tory in front of the bottleneck."
Everybody agrees. As usual, when the answer finally emerges it's plain common sense.
"Okay Bob," I say. "What do you think you should do now?"
He takes his time. We wait.
Finally he turns to Ralph and says, "We have outstanding promises for very short delivery times on only a small percent of our order intake. Can you identify those orders on an on-going basis?"
"No problem," answers Ralph.
"Okay," Bob continues. "For those orders, continue to re- lease material one week in advance. For all others, increase it to
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two weeks. Let's hope that that will be enough. Now, we have to rebuild the inventory in front of the bottlenecks and in front of assembly. Stacey, take all the necessary steps to put the plant, and I mean all the non-bottlenecks, to work throughout the weekend. Don't accept any excuses, it's an emergency. I'll notify sales that until further notice they should not promise any delivery in less than four weeks from receipt of the order. It will jeopardize their new campaign, but that's life."
Right in front of our eyes the baton has been passed. It's obvious who is the boss now. I feel proud and jealous at the same time.
"Bob has taken over very nicely," Lou says as we enter my office. At least this front is covered."
"Yes," I agree. "But I hate to put him in a position where his first independent actions are so negative."
"Negative?" Lou asks. "What do you mean by negative?"
"All the actions he is forced to take are leading in the wrong direction." I answer. "Of course, he doesn't have any choice, the alternative is much worse, but still..."
"Alex, I'm probably thicker than usual today, but I really don't understand. What do you mean by 'leading in the wrong direction?' '
"Don't you see?" I'm irritated by the whole situation. "What is the unavoidable result of telling sales that they should quote four weeks' delivery? Remember, just two weeks ago we went out of our way to persuade them to quote two weeks. They didn't have much confidence then. Now, it will cause them to drop the entire sales campaign."