The Goal

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is balanced exactly with demand from the market. Do you know why managers try to do this?"

I tell him, "Well, because if we don't have enough capacity, we're cheating ourselves out of potential throughput. And if we have more than enough capacity, we're wasting money. We're missing an opportunity to reduce operational expense."

"Yes, that's exactly what everybody thinks," says Jonah. "And the tendency for most managers is to trim capacity wherever they can, so no resource is idle, and everybody has something to work on."

"Yeah, sure, I know what you're talking about," I say. "We do that at our plant. In fact, it's done at every plant I've ever seen."

"Do you run a balanced plant?" he asks.

"Well, it's as balanced as we can make it. Of course, we've got some machines sitting idle, but generally that's just outdated equipment. As for people, we've trimmed our capacity as much as we can," I explain. "But nobody ever runs a perfectly balanced plant."

"Funny, I don't know of any balanced plants either," he says. "Why do you think it is that nobody after all this time and effort has ever succeeded in running a balanced plant?"

"I can give you a lot of reasons. The number one reason is that conditions are always changing on us," I say.

"No, actually that isn't the number one reason," he says.

"Sure it is! Look at the things I have to contend with-my vendors, for example. We'll be in the middle of a hot order and discover that the vendor sent us a bad batch of parts. Or look at all the variables in my work force-absenteeism, people who don't care about quality, employee turnover, you name it. And then there's the market itself. The market is always changing. So it's no wonder we get too much capacity in one area and not enough in another."

"Alex, the real reason you cannot balance your plant is much more basic than all of those factors you mentioned. All of those are relatively minor."

"Minor?"

"The real reason is that the closer you come to a balanced plant, the closer you are to bankruptcy."

"Come on!" I say. "You've got to be kidding me."

"Look at this obsession with trimming capacity in terms of