We are all programmed to believe that, “A resource standing idle is a major waste.” If a resource is not working, a manager will make sure that it has something to do. Employees also feel the same pressure – with little to do they feel they may not be needed and look for more work. There is the added pressure of, ‘the sooner we start, the sooner we will finish’. Many things are started far too early resulting in significant traffic jams in production and project environments.
Little’s Law (John Little is a professor at MIT, USA http://web.mit.edu/sgraves/www/papers/Little's Law-Published.pdf) proved that the flow of goods is much faster when there is LESS work in process (WIP). Our experience tells us that with less work in process, a factory will get shorter lead times and is able to produce at least as much as it did with high amounts of WIP. In many factories one can easily cut lead-times in half by cutting WIP by the same amount. Cutting lead-times can lead to a significant competitive advantage. However the suggested change goes against common practice and is often difficult for production management to accept!
In projects the situation is not much different. Project times can be cut by 25% while due date performance increases to about 90% while any late project is much less late.
Cutting work in process is just one simple tactic. There are several more that enhance these results. Several of them fly in the face of common practice – but they are just common sense. (Lean and 6-sigma are two commonly used improvement methodologies. What we are proposing here is a focusing technique that together with Lean and 6-Sigma makes them far more powerful. The combination of the Theory of Constraints, Lean and 6-Sigma has been shown to be far more powerful than any one on its own.)
Why are such Solutions Difficult to Copy?
The simple explanation is that the changes necessary, while they are very much common sense, go almost 100% in the opposite direction to common practice.
It is usually very difficult for a production manager to accept to have some of his resources standing idle. It goes so much against the grain that competitors will not copy changes such as those suggested above – at least it will take quite a long time until they do. Offering high enough penalties increases the hurdle for competitors.
The Impact
The current economic crisis has forced many companies to resort to short workweeks. This practice is a transfer of funds from employees and the population as a whole to support companies in difficulty. The cost of such operations must be repaid sometime in the future and will be borne by the country, through higher taxes (or inflation) or by postponing other needed expenditures – for education, infrastructure, healthcare etc.
If what has been indicated is true, then companies could weather the storm of many economic crises without having to resort to short workweeks or the reduction of their workforce. They will have prepared for such an event by their focus on those few but essential things rather than trying to improve everything. A company can soften the blow by finding those effective strategies and tactics that give it a decisive competitive advantage.
What could be your Focus to achieve decisive competitive advantage?
