Why is it that we sometimes have so much trouble getting the result we want? It should be a simple matter of putting the right performance metrics in place and then waiting for great results.
Unfortunately, somewhere between our elegant initiatives and the bottom line, the Law of Unintended Consequences comes into play.
We're faced with a fundamental paradox: We need to keep our metrics simple, so they can be practically implemented. At the same time, we need enough detail to account for complex organizational interactions.
Let's say you want to improve customer satisfaction by improving production responsiveness. You might set up a system to track production velocity by measuring the number of parts produced per hour. Your expectation is that the factory will focus on speed of execution by increasing yield and volume while decreasing unit production time. What you'll actually reap is more work in process, increased overtime, reduced safety and lower productivity. There are ways to control these undesirable effects, but by the time they're in place, your original intent may be lost.
The experience of a plant dealing with this paradox recently is illustrative. There was no real problem with management's goal, just the practical application. While they were trying to speed up their constraint, they'd taken their eye off the rest of the plant because they were only measuring the production rate of the constraint.
The trouble became apparent when new owners acquired the plant. Other plants were getting many more parts per man-hour invested--the real cost driver. The root problem was that the operators--and management--had interpreted the goal as encouraging suboptimal labor performance. Hence, everyone's productivity dropped to the lowest common denominator.
The product requires 10 parts, each made on one of 10 machines. Nine operators ran nine machines that could each process 1,000 parts per day; one operator ran a machine constrained to 100 parts a day. So the 10 operators produced 100 products per day, supposedly justified by the goal. They should have been making 100 products per day with one operator on the constraint, and one operator running nine machines at spot rates of 1,000 per day.
Machine utilization may be only important for the constraint, but, in this case, labor utilization was important everywhere. The solution was shifting labor to the real point of action. Within the limits of return on investment, every machine was driven to minimal cycle time and is now always waiting and ready for an operator. Every operator now works productively every minute. Buffers exist in sizes that allow the operators to leave the unconstrained tasks and go somewhere else to be productive.
The approach was integrated throughout the company. Now:
- Goals conform to actual conditions.
- Efforts are concentrated to achieve goals.
- Action is simultaneous across the depth and breadth of the organization.
- Efforts are coordinated throughout the organization. Adaptable operations are sustained at a high tempo.
- Everyone's effectiveness is maintained. Individual events are combined to achieve objectives. The constraint is still getting the lion's share of attention, but the rest of the plant is now set up to really support it effectively, and the metrics encourage that. By making the effort to conquer the Law of Unintended Consequences, they've achieved the goals that were eluding them.