M
Michael T
Greetings all....
I thought I might start off this topic with a conundrum that I ran into today.
I just received the September 2001 edition of Quality Digest, in which Thomas Pyzdek, in his article "Six Sigma: Quality's Evolution?", tabulates the differences between Six Sigma vs. Quality. One of the differences listed under the Six Sigma column, he states, "Goals flow down from customers and senior leadership's strategic objectives. Goals and metrics are review at the entrerprise level to assure that local suboptimization does not occur."
Now, according to Dr. Deming, "The obligation of any component is to contribute its best to the system, not to maximize its own production, profit, or sales nor any other competitive measure. Some components may operate at a loss to themselves in order to optimize the whole system, including the components that take a loss." {The New Economics, page 100}.
My take on this is that Dr. Deming is correct in his ascertion, and I'll illustrate with an example:
Process "A" manufactures widgets that feed into Process "B" which transforms those widgets into thingama-jigs. The output capacity of Process "A" is 1000 widgets per hour. The output capacity of Process "B" is 750 thingama-jigs per hour. The capacity of Process "B" cannot be increased without significant capital expenditure. Market research has indicated that there is sufficient demand for thingama-jigs to warrent that expenditure, but the capacity of Process "B" can only be increased to 900 thingama-jigs per hour.
The money is spent on new equipment and Process "B" is now increased to 900 thingama-jigs per hour. Now if Process "A" is optimized, every hour there are 100 excess widgets sitting on the shop floor waiting to be moved into Process "B". At the end of an 8 hour shift, there will be 800 widgets in "work in process" inventory, or at the end of the week, there will be 4,000 widgets in "work in process" inventory. The cost of the widgets is now a "sunk cost" which ties up money which might be used elsewhere.
So, what benefit is derived from assuring that local suboptimization of Process "A" is not occuring?
Any thoughts, comments, critiques?
Cheers!!!
Mike
I thought I might start off this topic with a conundrum that I ran into today.
I just received the September 2001 edition of Quality Digest, in which Thomas Pyzdek, in his article "Six Sigma: Quality's Evolution?", tabulates the differences between Six Sigma vs. Quality. One of the differences listed under the Six Sigma column, he states, "Goals flow down from customers and senior leadership's strategic objectives. Goals and metrics are review at the entrerprise level to assure that local suboptimization does not occur."
Now, according to Dr. Deming, "The obligation of any component is to contribute its best to the system, not to maximize its own production, profit, or sales nor any other competitive measure. Some components may operate at a loss to themselves in order to optimize the whole system, including the components that take a loss." {The New Economics, page 100}.
My take on this is that Dr. Deming is correct in his ascertion, and I'll illustrate with an example:
Process "A" manufactures widgets that feed into Process "B" which transforms those widgets into thingama-jigs. The output capacity of Process "A" is 1000 widgets per hour. The output capacity of Process "B" is 750 thingama-jigs per hour. The capacity of Process "B" cannot be increased without significant capital expenditure. Market research has indicated that there is sufficient demand for thingama-jigs to warrent that expenditure, but the capacity of Process "B" can only be increased to 900 thingama-jigs per hour.
The money is spent on new equipment and Process "B" is now increased to 900 thingama-jigs per hour. Now if Process "A" is optimized, every hour there are 100 excess widgets sitting on the shop floor waiting to be moved into Process "B". At the end of an 8 hour shift, there will be 800 widgets in "work in process" inventory, or at the end of the week, there will be 4,000 widgets in "work in process" inventory. The cost of the widgets is now a "sunk cost" which ties up money which might be used elsewhere.
So, what benefit is derived from assuring that local suboptimization of Process "A" is not occuring?
Any thoughts, comments, critiques?
Cheers!!!
Mike