Policies, Measurements and Behaviors

The Paper Industry An article by Rudi Burkhard 

Many paper companies all over suffer from poor profits, excess inventories and high costs. Customers are dissatisfied with service – it takes too long to get the product they need and promised delivery dates are unreliable. The industry as a whole is suffering – over-capacity aggravates the situation for all and is probably seen as the cause by many in the industry. Is it the real cause?

We believe the cause is different. The cause is likely to be the Policies (or business rules), Measurements and Behaviors (PMBs) of the organization. PMBs are the likely cause because a paper company or factory is probably not capacity constrained. Lets look at common industry measures – something that most paper companies use.

I remember, from the days of my childhood, going to the paper plant to collect my father after work. In the courtyard stood a big sign that showed the plant performance – how many tons they produced the day before and the record production. Tons-per-day was what drove the entire plant – from the technical section to the workers at the machines. This plant was very successful – they went from record to record as their technical section made upgrades to the machines – allowing them to run faster and faster. Tons-per-day was (and still is) important because the company must use its very expensive paper machines effectively. The more tons produced in a day, the more effectively the machines are used.

“Tell me how you will measure me, and I will tell you how I will perform.”

Eli Goldratt

If you believe the statement to the left and a paper factory’s primary measure is tons/day (or a similar measure of effective use of equipment), then tons/day will determine how every manager, supervisor and employee will behave. What will be the consequences?

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