The Way Things Were

"Hi, John. How are things going out on the line?"

"Hi, Fred. Not bad, not bad at all, though I had to be careful the last couple of days.

Someone from IE standards was following me around and I had to go back and work the way we used to do it. I didn't want to get him all upset by seeing the new way we go about our jobs." ·

"What do you mean? Have you found a new way to sandbag without them noticing?"

"Not at all. We're working smarter, thanks to our department manager, Monty. It all started several months ago when our output went way down even though all the efficiency measures said we were on target."

"How can that occur?"

"Basically, Monty discovered that most of our time was not spent working on producing good items. Let me give you an example. For one of our products we have to perform four welds to attach some metal parts together. We have detailed standards telling us how long it should take to do each step.

"One day, Monty watched Mike do these welds. Everything was done by the numbers.

Mike walked over to the WIP storage area, picked out enough parts to prepare 10 products, put them on a dolly, and wheeled them over to his workstation. Then he read the job card telling what he had to do and which tools were needed. He grabbed the right tools from his tool crib, set his jig to fixture the parts into place, and proceeded to weld the parts together into the 10 units. After finishing the 10 units, Mike inspected them all, rejecting one because the hole in one of the parts had been drilled incorrectly in a previous operation, put the nine good parts on the dolly, wheeled them to the next storage area, and then put the one rejected part into the rework area.

"The whole process took about 100 minutes from start to finish- I 00 minutes to produce nine good subassemblies. But then Monty watched what happened to the nine items Mike had just finished. An inspector in a white coat was testing the welds in some kind of new X-ray device we had bought and ended up rejecting two more subassemblies.

Then another guy came around to put tags on the two rejected items with a brief description of the problem and then took them to the rework area. And that wasn't all. Monty noticed someone counting inventory to make sure it corresponded to the job card attached to the batch and other people doing tests on tools and fixtures. There were more people checking work and moving parts than there were actually doing the work.

"Monty went bananas. He called over one of the IEs who (unfortunately for him)

happened to be walking by at the time. Monty yelled at him, 'I just watched one of my workers spend 100 minutes to weld parts for 1 0 subassemblies, and three of them were rejected after finishing, 100 minutes to get seven good parts, 28 good welds. Near as I can tell, each weld takes about one minute to do. Is this normal-to spend 1 00 minutes to get 28 good welds?'

"The IE attempted to explain to Monty about scientific management and how standards for work and productivity were·computed. First the IE confirmed Monty's observation.

The standard time to do one weld is 1 minute and 7 seconds. But there were standards for getting the parts and fixturing them into place, standards for assembling and preparing tools, standards for inspection and small repairs, and standards for moving the parts to the next storage area. They even had an allowance for break time and idle time due to line imbalances. Everything had been measured and accounted for. In fact, the total standard time for the 1 0 units that Mike had done came to 1 08 minutes, so Mike 's 100 minutes was considered good performance-about an 8% productivity improvement.

"This really got Monty riled up. Monty figured that he got 28 good welds from Mike which, according to the IE' s standards, should have taken a little over 30 minutes.

So right away, Monty figures that productivity was only around 30% of what's possible, not the 1 08% the IE was attempting to explain to him. Then he started thinking about all the other people who were standing around inspecting and moving things but who never did any work on the parts themselves. By the time he finished estimating the number of people he had in quality control, maintenance, and storing and handling things, he figured that there was at least one indirect worker for each guy like Mike who actually worked on products. Therefore actual productivity was only about half the 30% he computed initially."

"I can imagine he was upset. But what did he do about it?"

"Monty had the QC people analyze what caused the problems with the two parts that had been rejected after Mike had welded them. It turned out the materials were not exactly within specification and therefore didn't take the welds the way they were supposed to. So Monty took off down to the purchasing department to see why substandard materials had gotten through the system. He found out that this particular batch of materials had been bought from a new supplier. The purchasing guy was spending all his time trying to lower costs, and he had just uncovered this new vendor who agreed to supply parts 4% cheaper than the standard purchase price. I wish I had been there when the head of purchasing attempted to explain to Monty why it was cheaper to buy from this new supplier, when 20% of the subassem/blies eventually had to be reworked or scrapped."

"All that running around and screaming couldn't have made Monty very popular."

"Wait-he wasn't finished. A few days later, a rush job that was already several weeks late got delayed further when a machine broke down in the middle of the run. It took maintenance people several days to get replacement parts and another couple of days to install them and get the machine running properly again. During this time, when everyone was waiting for the repairs so that we could finish the job, Monty dispatched a couple of workers to find out when the machine had last been serviced. Apparently there is a schedule for preventive maintenance, but the shop had been so busy that no one wanted to interrupt work to do maintenance; so it had gotten delayed and eventually the maintenance department had apparently forgotten to reschedule it. This dido 't bother the maintenance foreman too much because his people were so busy responding to emergencies, like the one we had, that they didn't have much time to do regularly scheduled maintenance.

"Many of the foremen don't like to have maintenance done on their shift either.

They get evaluated by labor and machine efficiency; some kind of ratio of earned hours to hours actually paid. A sure way to get the plant accountants sending nasty letters to you is to stop producing items in order to grease the machines and replace some parts that haven't worn out yet. The accountants claim this kind of work lowers efficiency, since nothing is getting produced and the workers are idle."

"I bet Monty had his hands full doing battle with the purchasing and maintenance departments." "Not quite. He's a scrappy fellow who doesn't let a few disagreements stop him from doing what he thinks is right. Last month he took off after his monthly performance report. I don't understand all the details of what's in these reports or how they're calculated, but he started muttering about space charges. I think that lots of overhead costs get charged to departments on the basis of the space they take up in the factory. Monty wanted to know why the department occupied so much space. He dragged in one of the IEs and had him do a quick study on how much room was needed for the machines and the people who actually worked on the product. Less than 25% of the space was taken up for machines and workers. What really set him off again was learning that the testing and rework area took up about as much space as the productive workers and machines. Monty thought it dumb that as much space was used to test for and store bad items as to produce good items."

"Sounds like you've had an interesting few months here."

"You better believe it. I've seen more changes in the last few months than we've had in the past 20 years."

Required What operating changes do you think Monty instituted? What changes in the accounting and measurement system would be necessary to support the operating changes?