by Max Krug, Future State Engineering

Many companies are struggling to find qualified employees. Challenges include: few people are applying for the open positions, employees don’t show up for work or show up for a few days and don’t return, or the company’s wages aren’t competitive. Companies already have good people, but they aren’t utilizing their resources effectively.

Resources: Over- and Under-Utilized

Looking deeper into how resources are managed, what is often found is that most of the resources are over-utilized, and some of resources are under-utilized as related to customer demand. It’s not difficult to identify resources that are over-utilized when you look where there is excessive build-up of work in process, which is a good indicator that the resources before the excessive work in process are being over-utilized. However, to identify the resources that are under-utilized is not as easy to find. The best way to find these resources is to talk with the people that are responsible for expediting and ask them what resources they are constantly going to and expediting work. The resources where most of the expediting is happening are the candidates of potential resources where under-utilization is occurring.

To be able to properly address the issues that organizations are dealing with, let’s refer to two important lessons. The first lesson from Dr. W. Edwards Deming states: If a system is not stable, any improvement or changes that you try to make to improve it will not improve the system, and in some cases make it more unstable. The second lesson from Dr. Goldratt states: Striving to make every resource in the system efficient will result in making the system less efficient.

Stability in Organizations

Therefore, the approach to improving any organization is to first establish stability, and after this, work on making the system capable. To create stability in an organization, the first actions are simple in theory, but very difficult in practice, because it involves a major paradigm shift in thinking and behavior. To create stability, the first action is for all the resources that are currently over-utilized to stop overproducing (overproduction is one of the 8 wastes in Lean) as well as ask the resources that are under-utilized to stop multi-tasking (under-utilized resources is another of the 8 wastes in Lean). Bad multi-tasking is one of the biggest productivity killers, but in most organizations, very few people understand how devastating bad multi-tasking is on productivity.

By simply taking these two actions, something amazing happens, delivery performance begins to increase, expediting is reduced, work in flow reduces, overtime reduces, lead-times become shorter and more reliable, quality improves, and there is no longer a need to push to make the financial numbers at the end of the month. All these desirable effects happen because of the synchronization of the flow of work to be in line with customer demand. Organizations that are successful in taking these actions and synchronizing the flow will realize 20 to 25% increase in productivity with their current workforce.


Side Note: Max Krug will facilitate an Operational Excellence Workshop in Erie on November 9. Register your team of 4 here.