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Implementing Process Of On Going Improvement (POOGI) Part 3 - Introduction to Resource Utilization

During organization/system improvement you may face a dilemma of Resource Utilization. Common understanding of Resource utilization is that you should use resources to their fullest capacity, some managers set special policy such as 100% Utilization across organization for every single resource. Before I go ahead and say how stupid is such decision, I would like to first define Resource Utilization and Resource Activation. These two terminology are not synonym.

Utilizing a resource, as Dr. Goldratt defines, means making use of a resource in a way that moves the system toward the goal. (Check this Blog) Activating a resource is like pressing the ON switch of a machine, it starts no matter if there is any benefit that can be gained from the work it is doing. For example, activating a non-bottleneck resource to its maximum is an act of maximum stupidity, as described by Dr. Goldratt in the Goal business novel.

Therefore, utilization of 100%, or 90% or any other number is meaningless unle…

Implementing Process Of On Going Improvement (POOGI) Part 2 - Introduction to Bottleneck

At the first part of Implementing POOGI , I described that in order to balance a system, market demand should not be matched to resource capacity because of the relationship of two phenomenons: Dependent Events and Statistical Fluctuation. However, you should balance the capacity of the production "flow" to market demand. In this case, some resources may have idle time and some may turn into system constraint. In fact, the capacity of the flow should be little bit less than the demand, so if demand goes down you do not loose money.

In balancing the flow, you may realize that some resource have less capacity than market demand and are impacting the entire flow. These resources are bottlenecks or to put it in a better term,system constraints. So, bottleneck is a resource whose capacity is equal to or less than demand placed upon it. And a non-bottleneck is any resource whose capacity is greater than the demand placed on it.

Here are couple of facts on bottleneck / Constraint:

B…

Implementing Process Of On Going Improvement (POOGI) Part 1 - Introduction To Goal, Throughput Accounting and Balanced System

What is the Goal of the business?

This is the first question to answer in order to establish a process of on going improvement (POOGI). The goal must be clear, simple and measurable, and it must be understood by all players in the organization, who are involve somehow in improving the system. A general goal could be something like this "To make money by increasing net profit, while simultaneously increasing return on investment, and simultaneously increasing cash flow." as told by Alex to his team members in The Goal novel written by Dr. Eliyahu M. Goldratt. Therefore, any action that moves the organization toward this goal is productive and any action that takes the organization away from it is non-productive.

Actually, such a goal can be applied to many for profit organizations. Let's take an Advertising Agency as an example. For such an agency Customer Satisfaction is critical but it can not be the main goal. In fact, main goal (similar to the goal above) is dependent…

Waste Reduction in Project Environment - A Lean View

Dr. Taiichi Ohno identified seven category of waste in manufacturing and production that can be applied to project management, to make project environment Leaner. Overproduction, Waiting, Transportation, excess inventory, excess motion, non-value-added processing and defects are the seven categories of waste in Lean manufacturing. Here is a brief translation of  7 categories of waste in project management environment, especially in multi-project environment or/and project management system of systems:

1- Overproduction in project environment happens:

when a task is assigned to a resource before the task is available!or when a task is assigned to a resource because the resource is available and not because the task needs to be performed.or doing a task as part of the project, but in fact it is not part of delivering the value of the project.2- Waiting in project environment is one of those killers;
when a task is half way through, and a resource is pulled away to work on another task at t…

Escalate, Escalate, Escalate!

What is escalation at organizations? Is it a way to solve problems? Is it a way to report things? Is it a way to put more pressure? Is it a CYA technique? What is it? How do you use it at your organization? How other colleagues of yours use escalation? Really, think about it and observe.

At IT service companies, leadership measures the performance of IT Help Desk by number of escalated work items over a period of time. The less escalation the better. The reasons are simple:

It is cheaper for companies if an IT Help Desk Specialist resolves an issue than an experienced technical specialist at one or two level higher. This is simple math, one gets $X and the other get $X*2And when client gets result fast, he/she will be happier. So, less escalation equals happier client in IT Services. Client raise an issue, IT Help Desk Specialist resolve it, BOOM, Next!

At organizations, It is amazing (sadly) to see how much lower level managers escalate problems, that they and their fellows can resol…