Quotes About Operations

No," he says. "Through sales— not production. If you produce something, but don't sell it, it's not throughput. Got it?

the best thing to do would be to reorganize everything so the resource with the least capacity would be first in the routings. All other resources would have gradual increases in capacity to make up for the statistical fluctuations passed on through dependency.

Was your plant able to ship even one more product per day as a result of what happened in the department where you installed the robots?

Check your numbers if you'd like," says Jonah. "But if your inventories haven't gone down . . . and your employee expense was not reduced . . . and if your company isn't selling more products—which obviously it can't, if you're not shipping more of them—then you can't tell me these robots increased your plant's productivity.

Flow means that inventories in the operation are moving. When inventory is not moving, inventory accumulates. Accumulation of inventory takes up space. Therefore, an intuitive way to achieve better flow is to limit the space allowed for inventory to accumulate. To achieve better flow, Ford limited the space allotted for work-in-process between each two work centers.

that's a third assumption that's wrong," I say. "We've assumed that utilization and activation are the same. Activating a resource and utilizing a resource are not synonymous.

Bottlenecks temporarily limit throughput. Maybe your plant is proof of that. But they have little impact upon inventory." "It's completely the opposite, Hilton," I say. "Bottlenecks govern both throughput and inventory. And I'll tell you what my plant really has shown: it's proved our performance measurements are wrong.

Actually, the flow should be a tiny bit less than the demand.

Interesting, isn't it, that each one of those definitions contains the word money," he says. "Throughput is the money coming in. Inventory is the money currently inside the system. And operational expense is the money we have to pay out to make throughput happen. One measurement for the incoming money, one for the money still stuck inside, and one for the money going out.

All this is, if I understand it correctly, is a different way of doing the accounting. All employee time—whether it's direct or indirect, idle time or operating time, or whatever—is operational expense, according to Jonah. You're still accounting for it. It's just that his way is simpler, and you don't have to play as many games.

What my people and I have done is to examine daily the queues in front of the assembly and in front of the bottlenecks— we call them 'buffers.' We check just to be sure that everything that's scheduled to be worked on is there—that there are no 'holes.' We thought that if a new bottleneck pops up it would immediately show up as a hole in at least one of these buffers.

Increase throughput while simultaneously reducing both inventory and operating expense.

If you produce something, but don't sell it, it's not throughput

First, make sure the bottlenecks' time is not wasted," he says. "How is the time of a bottleneck wasted? One way is for it to be sitting idle during a lunch break. Another is for it to be processing parts which are already defective—or which will become defective through a careless worker or poor process control. A third way to waste a bottleneck's time is to make it work on parts you don't need.

Once the somebody is already on the payroll, it doesn't cost us any more to have him be idle. Whether somebody produces parts or waits a few minutes doesn't increase our operating expense. But excess inventory . . . now that ties up a lot of money.

If Ralph can determine a schedule for releasing red-tag materials based on the bottlenecks, he can also determine a schedule for final assembly. Once he knows when the bottleneck parts will reach final assembly, he can calculate backwards and determine the release of the non-bottleneck materials along each of their routes. In this way, the bottlenecks will be determining the release of all the materials in the plant.

By running non-bottlenecks for "efficiency," we've built inventories far in excess of demand.

With the bottlenecks more productive now, our throughput has gone up and our backlog is declining. But making the bottlenecks more productive has put more demand on the other work centers. If the demand on another work center has gone above one hundred percent, then we've created a new bottleneck.

sit there marveling that we're going to reduce the efficiency of some operations and make the entire plant more productive.

I sit there marveling that we're going to reduce the efficiency of some operations and make the entire plant more productive.

Throughput is the money coming in. Inventory is the money currently inside the system. And operational expense is the money we have to pay out to make throughput happen. One measurement for the incoming money, one for the money still stuck inside, and one for the money going out.

The natural effort of every individual to better his own condition . . . is so powerful a principle, that it is alone, and without any assistance, not only capable of carrying on the society to wealth and prosperity, but of surmounting a hundred impertinent obstructions with which the folly of human laws too often incumbers its operations.

The American people have a right to know on the rare occasions in which their money is used to invest in private operations, if you will, take bets on capitalism, that is very well vetted, very well thought out and without political interference.

There's no one person that can provide all the insights I need to run the business. There are so many aspects to WeWork: Digital, real estate, operations, space, and design. I pick and choose people who can help in each aspect.