Back to Basics – Part 1 by Martin Powell

In this series of articles we intend to start with a basic assumption and then using simple logic to derive the operational rules of operations or a manufacturing organization. By the way, when we are talking about a manufacturing organization, we do not talk about the section that actually manufactures – we are talking about the entire organization that its survival depends on manufacturing parts. Many of the principles also apply for any for profit business.
Let’s start with something we think we can all agree on – in many businesses from many managers we have heard the following statement:

“A company’s long term survival depends on its ability to ever increase productivity”

Productivity – what is productivity? Today we find this word in articles, papers, lectures, books – all over the place – but can any one of you define precisely “what is productivity?” If we turn to a dictionary definition, we find out that they define this word in a manner that does not match with our understanding in manufacturing organizations. One dictionary even says – “Productivity; see Productive” and for “Productive; see Productivity!” No so helpful.

Under TOC we believe that Productivity is the act of bringing the company closer to its Goal. Every action that brings a company closer to its Goal is “Productive” – every action that does not bring the company closer to its Goal is not “Productive”. At first glance it looks like this definition did not add very much. We just substituted one buzz word – “Productive” – for another – “Goal”. But this is not valid, because if we examine it carefully, we see that now we understand that “Productivity” is a buzz word unless we first define:

"What is the Goal [ongoing purpose] of a for profit business (manufacturing or otherwise)?"

Continue reading >

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