Based on manufacturing plant manager Alex’s own experience and his corporate managers’ directives, Alex spends much of his energy trying to make the individual workers and machines in his plant as efficient as possible. He prides himself on the fact that his workers are rarely idle and everything is constantly moving—until his business advisor, Jonah, reveals to him that such efficiency, such constant busyness, is not a good objective to hold. As Alex learns to optimize his manufacturing plant (make it faster, less wasteful, and thus more profitable as a whole), he realizes that every laborer and machine operating at full capacity 100 percent of the time does not speed up their overall manufacturing process but actually slows it down. This suggests that a manager should try to optimize their entire system rather than focus on the efficiency of individual pieces.
Like everyone else in his corporate division, Alex initially (and wrongly) believes that his manufacturing process will work best when every machine and every worker are operating as efficiently as possible, suggesting that such devotion to efficiency is a common error among businesspeople. At the beginning of the novel, Alex and his management staff assume that if every worker and machine is working as hard and as long as they possibly can, the entire manufacturing plant will naturally produce as much as it is physically capable of producing. They believe that any form of idleness, which to them implies inefficiency, wastes both money and time and thus slows down their entire manufacturing process. Alex and his staff prioritize the individual efficiency of every worker and machine over anything else, believing that this methodology will produce the most profit for the least amount of investment. Alex and his staff are not alone in their belief in efficiency. Alex’s corporate managers require Alex’s manufacturing plant to record and report the efficiency of every department, every machine, and every worker—and they threaten punishment when those efficiencies fall. Alex’s corporate managers’ shared belief suggests that this devotion to efficiency is widespread among business managers. However, Alex’s commitment to efficiency causes problems in the plant. To maintain their efficiency, when a worker or a machine does not have any immediate work to do (because they are waiting for someone else to finish building their piece of a product), they start doing nonessential work like building spare parts for potential projects in the future. However, because there are hundreds of workers and the plant struggles to stay organized, this creates mountains of spare parts and excess inventory that are rarely used. Although the workers and machines are technically efficient because they are always working and never idle, their “efficiency” creates mountains of waste, indicating that efficiency on its own is not a useful standard to uphold.
Jonah teaches Alex that because different stages of the manufacturing process work at different speeds, an optimized manufacturing system will naturally have workers and machines who are idle, suggesting that individual inefficiencies within a system does not mean the system is less optimized. In Alex’s plant, each stage of manufacturing a product is done by a different worker with a different machine, and those machines operate at different speeds. As Jonah explains through his Theory of Constraints, the manufacturing process cannot possibly move faster than the slowest machines (the bottlenecks) in the process operate, so some machines and workers find themselves idle as they wait for the slow machines to perform their task. However, forcing idle machines or laborers to maintain peak efficiency and do unnecessary work—as Alex and his staff do—only creates excess inventory, which may never be needed. Since excess inventory wastes money and materials, Alex realizes that prioritizing efficiency might not only be fruitless, but wasteful. As he looks at his efficient-looking but failing plant, he realizes that he can no longer “assume that making people work and making money are the same thing,” suggesting that just because his workers and machines are busy does not mean that the plant is optimized or profitable. Jonah counsels Alex that “a plant in which everyone is working all the time is very inefficient,” and that, contrary to common belief, some idleness is a good sign. The faster machines will have to be idle at times while they wait for the bottlenecks to do their work. Rather than forcing them to do unnecessary work and create wasteful excess inventory, Jonah advises that it is better to just let them be idle and take it as a sign that the whole process is running on schedule. Although idle machines and workers may seem inefficient in isolation, they do not actually indicate that the system is less optimized than it could be.
Once Alex learns to focus on optimizing the plant’s manufacturing process as a whole, the plant’s overall rate of production increases, demonstrating that optimizing an entire system is a better objective than increasing the efficiency of each individual part of it. Ironically, Alex optimizes his plant by putting less stress on the efficiency of individual parts. With less excess inventory causing mess and disorganization in the plant, Alex discovers that they can produce finished, selling products at a faster and more consistent rate than ever before, even though some machines are occasionally idle. Furthermore, by creating less wasted excess inventory, Alex’s plant can increase their throughput (sales profits) while keeping inventory and operating expenses lower, resulting in a greater overall profit and serving their ultimate goal of making money. Goldratt ultimately argues that managers should put their energy into streamlining their process as a whole, even when that means accepting idleness or apparent inefficiency.
Efficiency vs. Optimization ThemeTracker
Efficiency vs. Optimization Quotes in The Goal: A Process of Ongoing Improvement
Can I assume that making people work and making money are the same thing? We’ve tended to do that in the past. The basic rule has just been to keep everybody and everything out here working all the time; keep pushing that product out the door. And when there isn’t any work to do, make some. And when we can’t make them work, lay them off.
Our hike is a set of dependent events…in combination with statistical fluctuations. Each of us is fluctuating in speed, faster and slower. But the ability to go faster than average is restricted. It depends upon all the others ahead of me in line. So even if I could walk five miles per hour, I couldn’t do it if the boy in front of me could only walk two miles per hour. And even if the kid directly in front of me could walk that fast, neither of us could do it unless all the boys in the line were moving at five miles per hour at the same time.
“This much is clear to me. We have to change the way we think about production capacity. We cannot measure the capacity of a resource in isolation. Its true productive capacity depends upon where it is in the plant. And trying to level capacity with demand to minimize expenses has really screwed us up. We shouldn’t be trying to do that at all.”
“I’m going to have Bob Donovan put together an I.E. to write up [your new] procedures formally, so we can start using them round the clock. […] You keep that mind of yours working. We need it.”
“But what are we supposed to do?” asks Bob. “If we don’t keep our people working, we’ll have idle time, and idle time will lower our efficiencies.”
“So what?” asks Jonah. […] “Take a look at the monster you’ve made. It did not create itself. You have created this mountain of inventory with your own decisions. And why? Because of the wrong assumption that you must make the workers produce 100 percent of the time, or else get rid of them to ‘save’ money.”
“If we don’t go ahead with a system to withhold inventory and release it according to the bottlenecks, we’ll be missing a major opportunity to improve performance and save the plant. And I’m not about to stand by and let that happen just to maintain a standard that obviously has more impact on middle management politics than it does on the bottom line. I say we go ahead with this. And if efficiencies drop, let them.”
“It’s perfectly okay to have more setups on non-bottlenecks, because all we’re doing is cutting into time the machines would spend being idle. Saving setups at a non-bottleneck doesn’t make the system one bit more productive.”
“Things start to be connected to each other. Things that we never thought were related start to be strongly connected to each other. One single common cause is the reason for a very large spectrum of different effects. You know Julie, it’s like order is built out of chaos. What can be more beautiful than that?”