Hi all,
Let's resume our recent examination of The Goal, Eliyahu Goldratt’s 1984 Business Bro classic. I think the best approach for the remaining ideas is to put them in the context of real-life examples. After almost no debate, I chose TOA favorite and Porter Square institution Sapporo Ramen as my example. Of course, I know nothing specific about the restaurant's operations, but I'm comfortable speaking knowledgeably from a foundation of best guesses, wild assumptions, and hunches about ramen lunches.
An organization should always have a simple answer to the question of what it is doing.
Easy – Sapporo Ramen serves bowls of ramen.
One way to start looking for a bottleneck is to learn which parts tend to always be in shortage. Whatever operation is responsible for the production is likely unable to keep up with demand.
There are two possibilities. The obvious bottleneck is seating (well, obvious if you've had to wait an hour for a seat). Restaurant capacity is somewhere between fifteen and twenty people, all in full sight of the five to ten waiting customers. In theory, adding seats would address the shortage. However, expanding capacity must be complex - leases, zoning, buying chairs - all that admin! It might be better to just work with seating as a constant for the purposes of this post. (Plus, there is an unstated assumption in The Goal that ‘bottlenecks’ refer to resource allocation.)
This leaves us with the ramen, a dish with several ingredients – noodles, broth, toppings, etc. There is also equipment (such as the bowl or the chopsticks). I bet only the broth requires any prep work - everything else is likely purchased Sapporo-ready. Therefore, if demand increased, the broth would fall short before any other ramen component.
There should never be idle time for a bottleneck because any lost work through this station is lost forever to the organization.
Sapporo Ramen optimizes revenue if all operational decisions first consider maximal ramen output. This means tools, resources, and staff do other tasks after maximizing ramen production. If a customer waits too long for a bowl, it represents a reduction in the organization’s maximum possible revenue that day.
Quality measurements on bottleneck parts should take place before the bottleneck step because a scrapped part pre-bottleneck is a part lost while anything scrapped post-bottleneck is a cost to the entire system.
There is no time for thorough post-ramen QA so Sapporo Ramen must cull bad ingredients before the chef turns on the stove. The broth presents a challenge because failed broth post-production could dramatically lower the revenue capacity for the next day. (It's possible for inventory to cover this loss but days-old broth is no ideal.) If I were seeking evidence of a robust QA process, I would expect the restaurant's biggest waste item to be discarded broth ingredients prior to preparation. This would mean Sapporo Ramen was as close to 100% certain as possible to producing broth in lockstep with the next day's expected demand.
Bottlenecks waste time if they remain idle, work on defective parts, or produce parts not within the current demand.
Overproduction is a subtle hint of a wasteful process. Ramen sitting on the counter is no good – waterlogged noodles, lukewarm broth, and sinking toppings attract tourists, not customers. Ramen containing 'defective parts' likewise disgusts diners.
Bottlenecks must be protected from supply shocks. Otherwise, there is a significant risk of reduced flow leading to the organization operating below potential.
The ideal inventory level allows the restaurant to meet demand without reducing quality. Storage is a tempting cause for next week's problem. I wonder if Sapporo Ramen has agreements with ingredient vendors, perhaps to pay a premium in exchange for being front of the line whenever sudden demand surges require an emergency infusion of backup seaweed.
The daily supply threat is broth. Sapporo Ramen's main focus should be on ensuring sufficient broth inventory to meet the highest possible demand level. All other ingredients could probably be bought at the local Star Market if needed but there is no equivalent plan for a broth shortage.
If the market is not a constraint, measure productivity and structure decisions based on what maximizes utilization of bottleneck resources. If the market is the constraint, use sales less materials divided by hours consumed.
If Sapporo Ramen sells what it makes, it must maximize ramen production. Otherwise, it must produce within the constraint of its ability to carry inventory costs for whatever goes unsold during business hours.
Someone working a non-bottleneck by definition has excess capacity. The utilization level of a non-bottleneck is determined not by its operating rules but by another constraint in the system.
Restaurant workers always move at top speed, implying a ceaseless contribution to the bottom line. However, not all activity generates value. At Sapporo Ramen, the general job description should read 'ensure order rate matches production rate' and the best employees would be those who contribute the most toward this ideal.
If Sapporo Ramen can produce twenty bowls per hour, the best employees would either generate a new order every three minutes or find ways to increase the production rate. This knowledge should help employees make otherwise arbitrary decisions. When the chef is overwhelmed, a server might top off water glasses to slow the order rate. On the other hand, during a slow period a server might seat a new customer, ignoring empty water glasses along the way, because new customers are more likely to place orders.
Saving time on setup at a non-bottleneck is an illusory way to save costs. By definition, non-bottlenecks have excess capacity.
The result of everyone wanting to optimize his or her own work is chaos. Local optimization must come as a secondary priority to system optimization.
Individual efficiency works unless it slows ramen production. Let's use dish washing as an example. If it takes one minute to wash one bowl by hand and ten minutes to wash one hundred bowls in the dishwasher, then it's obviously more efficient to use the dishwasher - the machine is ten times faster!
Well, not so fast, first this is only true when the dishwasher is full. If the dishwasher is half-full, an employee might wait until it's full before running the dishwasher to ensure maximum efficiency. But what if you need a bowl and no spares are to be found? It's time to wash by hand, inefficient like it's 1985, but if it frees up production capacity then it's the most valuable task.
