A Conversation on Overburdened Factory Operations: Ohno Meets Goldratt
Setting: A quiet corner at an international manufacturing conference. Taiichi Ohno is meticulously observing the flow of people around the exhibition hall, while Eli Goldratt paces thoughtfully.
Ohno: (Nodding gently) Interesting. So much movement, yet does it all contribute to the smooth flow of value to the customer? I see much that resembles muda – wasted motion, wasted waiting.
Goldratt: (Stops pacing, turns to Ohno) Indeed. Many organisations are excellent at generating activity, but not necessarily at generating throughput – the rate at which the system generates money through sales. An overburdened factory is a prime example of this disconnect.
Ohno: Precisely. When the operation is burdened, it signifies a breakdown in the smooth flow. We must ask, what impedes this flow? Is it an excess of work-in-progress masking inefficiencies? Are resources working without a clear pull from the subsequent process? Overburdening is a symptom of failing to see the interconnectedness of the entire value stream.
Goldratt: I concur. The overburdening often occurs because managers are striving for local efficiencies everywhere. They push material into the system, trying to keep everyone busy, believing that high utilisation equates to high productivity. This leads to a build-up of inventory – what we call investment – and often obscures the real bottleneck that limits the entire system's capacity.
Ohno: Yes! Like adding more and more water to a river already clogged with rocks. The water simply backs up, creating stagnant pools of inventory. Our focus at Toyota was always on the flow. We used the Kanban system as a practical mechanism to signal the need for production, ensuring nothing was made prematurely. This pull system inherently limits overburdening.
Goldratt: The Kanban system is an elegant way to control the release of work. In the Theory of Constraints, we use the concept of the Drum-Buffer-Rope. The ‘Drum’ sets the pace based on the capacity of the bottleneck, the ‘Buffer’ protects the bottleneck from disruptions, and the ‘Rope’ prevents the premature release of materials into the system, much like your Kanban. The key is to synchronise the entire flow with the constraint.
Ohno: I see the similarity. Our focus on reducing lead time also inherently manages overburdening. By continuously striving to eliminate waste and improve the speed of each step, we naturally reduce the amount of work-in-progress accumulating in the system. We empower the gemba – the actual place where the work is done – to identify and solve the problems hindering flow through continuous improvement, Kaizen.
Goldratt: Kaizen aligns well with the need for ongoing improvement. However, TOC emphasizes the need for a focusing process. Not all improvements are equal. Improving a non-bottleneck resource has little impact on the overall throughput of the system. Our priority is to identify the constraint – the one thing limiting the system's ability to achieve its goal of making money – and then to exploit and elevate its capacity.
Ohno: (Slightly furrowed brow) While focusing on the constraint is important, I believe a holistic view of waste elimination throughout the entire system is crucial. Neglecting waste in non-bottleneck areas can still lead to inefficiencies and increased operating expense. Also, what if the constraint shifts? Our continuous improvement efforts aim to create a more flexible and responsive system overall.
Goldratt: A valid point. Constraints can indeed shift, especially after successful improvement efforts. TOC addresses this through the ongoing Step Five of our five-step focusing process: “If a constraint has been broken, go back to Step One.” Continuous monitoring and identification of the new constraint are essential. However, in an overburdened factory, there is almost always a significant bottleneck whose impact far outweighs the cumulative waste in non-critical areas. Addressing the bottleneck provides the biggest leverage for immediate improvement in throughput.
Ohno: Perhaps our emphasis differs slightly. We strive for a balanced flow, where ideally, all resources work in harmony to meet customer demand efficiently and without waste. Overburdening signals an imbalance. While identifying and addressing the most critical blockage, as you suggest, makes sense for immediate relief, we must not lose sight of the need for continuous improvement across all processes to prevent future bottlenecks and ensure long-term efficiency.
Goldratt: I agree that a balanced flow is the ultimate aim. However, attempting to balance capacity with demand at every resource is a fallacy that leads to overburdening in the first place. Instead, we must balance the flow of product with demand, accepting that non-bottleneck resources will have idle time. Trying to keep everyone busy only creates more inventory and obscures the true limitations.
Ohno: (Sighs gently) It is disheartening to see how many companies today approach competition. They focus solely on cutting costs across the board, often leading to workforce reductions and neglecting the root causes of inefficiency. They also pursue ever-increasing production volumes in the belief that economies of scale will allow them to reduce prices and capture market share. This often leads to significant overproduction and the very overburdening we are discussing.
Goldratt: Absolutely. This obsession with cost-cutting as a primary strategy, often driven by flawed cost accounting practices, blinds them to the real drivers of profitability: increasing throughput and managing inventory. Producing more than the market demands simply creates more waste and ties up valuable capital. True competitiveness comes from our ability to deliver value to the customer efficiently and effectively, not just by offering the lowest price through unsustainable cost-cutting measures.
Conclusion:
Ohno: So, while our methodologies might have different emphasis – a holistic elimination of waste for smooth flow versus a focused management of constraints to maximise throughput – we both agree that the common modern practices of indiscriminate cost-cutting and pursuing high production volumes without a clear understanding of flow and demand are fundamentally flawed and contribute significantly to the problem of overburdened factory operations.
Goldratt: Precisely. Companies are often mistaking activity for productivity and cost reduction for increased profitability. Until they shift their focus to the principles of flow, constraint management, and truly understanding what creates value for the customer, they will continue to struggle with overburdening and fail to achieve their true potential.