Efficiency at the Cost of Flexibility

During my discussions with clients in the past the focus was primarily efficiency rather than flexibility. I have to admit most of the clients that I worked with belonged to an asset intensive industry where millions of dollars were invested to install the asset. The focus of the operation was to keep these expensive asset running to reduce the unit cost (based on utilization) but sometimes at the cost of loosing control over unwanted inventory buildup.

We had a unique experience the other day at McDonald. Dallas was unusually cold during the holidays and we planned to take the kids to the neighborhood McDonalds to burn some calories (sounds like an oxymoron) – in the indoor play area. We had a bunch of 4 boys who wanted to play tag. The play area at a McDonalds is a colorful group of slides, walk-in pipes, climbing nets and steps combined together to form a pleasing area to play. The two 11 year olds formed a tag team and the two 6 year olds formed the other team.

At first thought it seemed that it was a slam dunk where the 11 year olds would win easily. They were stronger, faster and bigger. They could climb up easily, take bigger steps and could overpower their brethrens to surrender easily. What we did not realize that the walk-in pipes had a limited diameter. It was easy for the 6 year olds to run through them while the 11 year old had a tougher time and their movement was at best very sluggish. It was soon proven that the 6 year olds won the tag as a team – while being physically weaker of the two teams.

It is a good example where it was evident that flexibility is a key enabler to speed up the operation. Manufacturing philosophies have changed since Frederick Taylor promulgated the art of improving efficiency through mass production in his research on “Scientific Management”. Henry Ford and Andrew Carnegie were early adopters who took advantage of the philosophies building standardized massive installation to build the high efficacy machines. The role of manufacturing was based on push production and was thrived on low mix and less global competition. Ford could keep on building efficiently their black Model-T’s in dedicated lines, and still be able to sell them in the market. But in today’s market the role of customers have taken the center stage. Customers dictate the product requirement and the attributes. Customers have become accustomed to better customer service and have consistently challenged the producers to shorten their lead times. The discussion to shorten the lead times in a high product mix environment is itself a topic of discussion.

Flexibility is a virtue that manufacturers have learnt to adopt in the new developing global economy. There are several ways to improve flexibility in operations. One of the ways is installing several smaller machines instead of a single large machine. It might cost more during investment but will increase the flexibility. If the organization is based on a smaller machine environment, some of the machines will always be up while the others are being maintained. Flexibility aids producing several different kinds of products simultaneously through it manufacturing lines. Flexibility also improves if you are planning to your rated capacity based on past reliability records of the equipments. Plan based on the effective capacity instead of the rated capacity. The rule of thumb used by planners is to plan around 85% of capacity leaving some room to accommodate unreliability of machines and labor, machine setups due to product mix changes and customer order expedites.

Based on the observation, I think I would rather have the two 6 year olds in my team rather than the two eleven year olds. They are smaller and more agile in the given environment. One could argue that if the walk-in pipes bigger the results would be different – well “that” is the market demand – we have to learn to be flexible and adjust to it.