… a tale of demand and capacity.
I have a hole in my bucket. This is quite deliberate. I use it to provide a steady stream of water into my water feature at home. I established this system as my water supply delivered too much water. A simple regulator valve, similar to that used in a domestic toilet, keeps the output from the bucket steady.
Don’t knock it – it works! The supply of water keeps pace with the demand of my water feature.
If I took away the valve and the flow of water into the bucket was too high then the bucket would overflow. In a service organisation this is akin to the demand outstripping capacity so customers experience longer waiting times. In a manufacturing environment this is the same phenomenon but the effect can be stock outs and long lead times.
If I reduce the water flow to below the rate at which the water flows out then the bucket will start to empty. In a service organisation this is great for the customers as waiting times reduce or disappear. But for the organisation it results in costly and inefficient use of resources.
In manufacturing for a period this may not be a bad situation as it gives time to build stocks, except where the product made is bespoke. But clearly if it goes on too long stock levels get too high, or people are idle or need to be laid off.
Service organisations or manufacturing organisations that can’t hold stock are also very vulnerable to a phenomenon that most people will recognise. Demand is always variable. Being able to understand this variability and then cope with it requires us to think differently.
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