The main reason organizations don’t realize maximum output from their capacity is that planning and execution behavior is not aligned with the global purpose of the organization. There are two behaviors that account for this misalignment. They are:
- Over-production; Making more than the customer (or the next step) requires. Usually manifested as batching behaviors and
- Releasing work too early into the system (allowing overproduction); resulting in high work in process inventory.
These two deeply embedded behaviors are the result of management’s beliefs about the proper way to deploy resources to the work. There are countless policies, procedures and measurements that reinforce the erroneous idea that in order to manage well means to keep workers and/or machines producing as much as possible, as fast as possible. We have been taught that idle resources are major waste. Those that have implemented ToC (and Lean) realize this thinking is fundamentally flawed.
Managers must change their processes, policies and measurements to reinforce behaviors that lead to more flow, not greater resource efficiency. The very nature of efficiency must be redefined, from the resource level to the system level, from individual production to system production.
How do you get managers to realize that this deeply held definition of efficiency (the sum of local improvements is equal to improving the system as a whole) is leading to shortages of capacity? It’s not a small task. The thinking is institutional; managers are not even aware of this hidden assumption. Beyond the realization that the assumption is wrong, how do you get changes in behavior? Despite conventional wisdom, behavioral research demonstrates that people don’t necessarily act from the beliefs they have, but from the reinforcements they receive. Therefore, in order to get people to change behavior, you must not only find the erroneous assumption(s) and kill it, you must also identify the reinforcement mechanisms that drive the undesirable behaviors and change those, too.
Many companies think they at capacity because their delivery performance is suffering. This is a logical conclusion, but most organizations waste at least 20% (I think it’s really closer to 50%, but I’m being conservative) of their available capacity through synchronization mistakes and poor policy choices . Managers must remember that the output a system generates is a function of how resources are managed, not just the total number resources it owns. To find this lost production capacity, managers often use lean manufacturing techniques to increase their output. However, when applying these techniques the results are uncertain. A recent study (see related article on this blog) demonstrated that only 2% of companies implementing lean techniques fully achieve their objectives and less than a quarter (24%) achieve significant results.
While Value Stream Mapping looks at behavior, it doesn’t look at the causes of the behavior. It does not identify the root causes for organizations losing output from their capacity. Without eliminating the causes for behaviors, you cannot eliminate them. For example, you cannot stop people from eating unless you can eliminate the cause of it – hunger. You can remove the food to prevent people from eating, but once food appears, they’ll eat again. In the same way, we must address the behavioral causes for lost capacity and create new reinforcements for the correct behaviors.
With a few changes focused on identifying the causes of behavior, you can improve the results of your VSM efforts.
- Create a process map of the value creation process
- Identify excess and shortages of inventory
- Identify the behaviors that create the inventory, delay and shortages
- Identify the formal behavior reinforcement mechanisms
- Identify the informal reinforcement mechanisms
- Identify process activity errors that waste capacity
- Assess information quality for decision making
- Assess decision processes for downstream impact
To make the most of the system’s capacity one must ensure management is reinforcing behaviors that maximize flow. Flow behaviors are most often blocked by local efforts to achieve high efficiency, but there are deeper manifestations of the efficiency concept that must be identified and rooted out before a process can be transformed.
By modifying the existing tools of process mapping and value stream mapping, one can get an understanding of the main behaviors that hide system capacity. This can result in an early stage transition from efficiency behaviors to flow behaviors, providing a systems level guide to process capability and development of the “to-be” state of the value creation process. By increasing the understanding of current capacity utilization and finding the behaviors that block systems level improvement, one can reduce the capital risk associated with adding additional fulfillment infrastructure.