The Goal

89

"Alex, you told me in our first meeting that your plant has very good efficiencies overall. If your efficiencies are so good, then why is your plant in trouble?"

He takes a cigar out of his shirt pocket and bites the end off of it.

"Okay, look, I have to care about efficiencies if only for the reason that my management cares about them," I tell him.

"What's more important to your management, Alex: efficien- cies or money?" he asks.

"Money, of course. But isn't high efficiency essential to mak- ing money?" I ask him.

"Most of the time, your struggle for high efficiencies is taking you in the opposite direction of your goal."

"I don't understand," I say. "And even if I did, my manage- ment wouldn't."

But Jonah lights his cigar and says between puffs, "Okay, let's see if I can help you understand with some basic questions and answers. First tell me this: when you see one of your workers standing idle with nothing to do, is that good or bad for the company?"

"It's bad, of course," I say.

"Always?"

I feel this is a trick question.

"Well, we have to do maintenance-"

"No, no, no, I'm talking about a production employee who is idle because there is no product to be worked on."

"Yes, that's always bad," I say.

"Why?"

I chuckle. "Isn't it obvious? Because it's a waste of money! What are we supposed to do, pay people to do nothing? We can't afford to have idle time. Our costs are too high to tolerate it. It's inefficiency, it's low productivity-no matter how you measure it."

He leans forward as if he's going to whisper a big secret to me.

"Let me tell you something," he says. "A plant in which ev- eryone is working all the time is very inefficient."

"Pardon me?"

"You heard me."

"But how can you prove that?" I ask.

He says, "You've already proven it in your own plant. It's right in front of your eyes. But you don't see it."

Now I shake my head. I say, "Jonah, I don't think we're communicating. You see, in my plant, I don't have extra people. The only way we can get products out the door is to keep every- one working constantly."

"Tell me, Alex, do you have excess inventories in your plant?" he asks.

"Yes, we do," I say.

"Do you have a lot of excess inventories?"

"Well... yes."

"Do you have a lot of a lot of excess inventories?"

"Yeah, okay, we do have a lot of a lot of excess, but what's the point?"

"Do you realize that the only way you can create excess in- ventories is by having excess manpower?" he says.

I think about it. After a minute, I have to conclude he's right; machines don't set up and run themselves. People had to create the excess inventory.

"What are you suggesting I do?" I ask. "Lay off more peo- ple? I'm practically down to a skeleton force now."

"No, I'm not suggesting that you lay off more people. But I am suggesting that you question how you are managing the ca- pacity of your plant. And let me tell you, it is not according to the goal."

Between us, the waiter sets down two elegant silver pots with steam coming out of their spouts. He puts out a pitcher of cream and pours the coffee. While he does this, I find myself staring toward the window. After a few seconds, I feel Jonah reach over and touch my sleeve.

"Here's what's happening," he says. "Out there in the world at large, you've got a market demand for so much of whatever it is you're producing. And inside your company, you've got so many resources, each of which has so much capacity, to fill that demand. Now, before I go on, do you know what I mean by a 'balanced plant'?"

"You mean balancing a production line?" I ask.

He says, "A balanced plant is essentially what every manufac- turing manager in the whole western world has struggled to achieve. It's a plant where the capacity of each and every resource