My earliest role at a small business revealed a fundamental truth that has informed my approach to the various challenges encountered throughout different organizations. That truth? Even the smallest of organizations can thrive when employees approach business challenges with curiosity and persistence. It wasn’t until many years later that I had names for the concepts that were learned through the timeline of these first professional experiences.

This story starts with the realization that a consistent source of frustration for production staff was due to lack of information about available material stocks, and that a simple sign could solve the problem.

The Problem: We are running out of a component.This is impeding our ability to manufacture a business critical product.

First, analysis. How does our replenishment process work? A visual cue.

There was a certain elegance to the process. The office manager would walk by the component once a day. The entrance of the facility was in the front of the building, while the office was in the very back of the building. All employees had to make their way through to the back of the facility to clock-in and start their shift.

The office manager in charge of ordering material, when and if they walk past the component’s storage area, would notice that the levels of the component are low. This would trigger a replenishment order from the manufacturer.

As contracts were reviewed, the office manager would mentally query this “component quantity” value that had been observed in the morning at the start of the shift. The realization that the amount of components required to fulfill the contract was below the amount required to produce the product triggered a replenishment order from the manufacturer. This would also trigger the command to be given for “someone” to go count the amount of components in stock. I would regularly volunteer.

What did I learn? The replenishment trigger was a visual cue that could be triggered multiple times a day, and would be triggered at minimum once per day, and this was effective for a period of time.

What changed? Demand increased! With an increase in contracts, the assumptions that underpinned the previous replenishment process were disrupted, the brittleness of the system made it increasingly susceptible to disruption if for example the office manager missed a shift or the pallet of components was obscured.

Now, could you not simply order more components? Isn’t running out more than once a choice?

Space is expensive! Like any other resource, the space in a manufacturing facility should be assigned an economic value. Along with space constraints, financially, it is not feasible to place large component orders unless you can guarantee it will be consumed. Components in storage are a liability that a small business may find difficult to afford. In an ideal scenario, your components are consumed, invoiced, and fully paid for under contract before payment to creditors is due. Most importantly, it may not be safe to have excess material in a manufacturing space.

If you are interested in understanding how and why things work they way they do, it is imporant to participate in the actions that power the process fully and without reservation. Otherwise you’ll experience the difficulty of getting the more experienced and senior members of the team to explain how and why things work the way they do. In their mind, this knowledge is tantamount to job security. Participation was involuntary at the time, as my job was to assist in the production process, so I would naturally have to analyze the process from end to end.

Components were delivered from the manufacturer in a wooden pallet, each pallet would have eighty-six units of the component. The team would grab two components from the pallet and assemble it into one product. I assembled this product hundreds of times, repeating the same motions for hours on end. As I put the components together, a simple formula sprang to mind:

production capacity = (component stock / 2)

The experiment? I put a sign by the component storage area, instructing the reader that when two pallets of components are physically/visually in the storage space, the reader should alert the office manager that the material must be ordered.

What had I realized over my first few weeks participating in production? No one other than the office manager knew the visual cue that triggered the ordering of the component. No employee responsible for manufacturing had a comprehensive understanding of the number of contracts in progress, the required production volume, manufacturer lead times, or available components stock.

My role was not one where I could direct the work of others. At this facility, a new employee was told what to do, what to produce, and how they should spend their time. If there was free time, you were expected to find something to produce. The initial reaction to the sign was discouraging, amounting to “did everyone see the new guys sign?” commented loudly as the production team clocked in the day after it was put in place. Why was I compelling anyone to do anything? I had no such authority. However, the sign remained in place.

What changed? On Wednesday, when only two pallets of the component remained, an employee alerted the office manager. An order was placed. Two weeks later, on a Wednesday afternoon, a shipment of the component arrives before the visual cue to replenish the component had been triggered. Now there were three pallets of components. Two contracts are acquired, a pallet of components is consumed, the office manager is told by an employee to order material as the sign instructs.

Team members responsible for production adhered to the instruction on the sign because they noticed components no longer arrive late on Fridays, eliminating the weekend rush to manufacture products for Tuesday deadlines.

What did I do next? I started to count!

One of my key observations, that two components are required to manufacture the product, enabled our understanding of the relationship between components and Finished Goods. I had stumbled upon the relationship between Finished Goods and the various components they are comprised of. I was curious, and a question came to mind. How many of each Finished Good could I produce with the component stock currently in the facility? I counted every component that was important to production in an attempt to quench my curiosity.

So I counted components. I then took these counts, and asked the office manager for invoices of the previous months component orders and Finished Good contracts. I then worked with the production employees and asked a simple question “how many of these components are required to manufacture this Finished Good”.

With the collected data, I compiled a list of the total count of components in the building, and the input of components required to manufacture a Finished Good. These two data points would allow me to build a model of production capacity for the various Finished Goods manufactured in the facility.

As I was counting and consulting with the production team, the production capacity formula was generalized to apply to a broader range of Finished Goods resulting in:

Production Capacity = (Component Stock / Component Input Required)

Through consultation with the production team, I noticed that if a Finished Good is comprised of three components, and one component is unavailable, the facility is unable to manufacture the Finished Good. This was the root cause of our original problem, the constraint in production was the lack of an input component for a Finished Good.

Therefore, each input component for a Finished Good will generate a Production Capacity value. Each Finished Good was comprised of a list of components, each component was assigned an individual Production Capacity.

This Production Capacity List will dictate the production constraint and ultimately the total capacity of production for a specific Finished Good:

Real Production Capacity = minimum(Production Capacity List)

I input these simple formulas into Microsoft Excel, and learned the “=SUM()” formula. This gives you a glimpse of how rudimentary my understanding of the program was, and where I started.

The end result was an Excel Table, arranged so that the Real Production Capacity was indicated for each Finished Good. This was feasible primarily due to the simple nature of the Finished Goods produced. Most Finished Goods were comprised of the same basic components, which allowed us to explore these concepts in a low-stakes environment.

While not an official part of my job description, I was able to start communicating accurate counts of component stock to the General Manager, resulting in an increase in the business’s ability to quickly understand if we had enough components to service a contract. I also noticed the Real Production Capacity allowed us to pro-actively replenish components if we assigned a minimum Production Capacity threshold to individual components. Replenishment would be triggered when a threshold was met, eliminating the need for visual cues.

On reflection, these first attempts at understanding how production works seem quaint with the hindsight of experience acquired over the years. My drive to improve the status quo was validated with a role that allowed me to expand on my success, along with a significant increase in income. I remained focused on my efforts centered around organization, standardization, and space modifications that better enabled higher production capacity. A formative part of my experience was being given the autonomy to exert a small but meaningful influence on the processes and systems that powered the production process. Through my time at this facility, I learned how to collect, parse, and apply the conclusions drawn from data to solve a business problem.