“If It Ain’t Broke…”

This article critiques narrowly focused improvement projects that optimize subprocesses at the expense of overall system efficiency. Using a case study of Department 13 and Department 14, the author demonstrates how isolated cost-cutting efforts can inadvertently harm broader organizational goals.

Key Points

Department 13’s “Success”

A project team reduced material costs per 100 pounds from 215.22 to 198.46 over three years through process changes, material formulation adjustments, and supplier switches.

Metrics like material costs and total production costs appeared favourable, earning the department an award.

Hidden Consequences

Productivity Decline: Man-hours per 100 pounds increased by 9%, and production volumes dropped, signalling declining productivity.

Impact on Department 14: Scrap rates in Department 14 (due to “will not mould” defects) spiked after each change in Department 13. This scrap, unaccounted for in Department 13’s metrics, raised the net cost of usable product.

Net Cost Increase: When adjusting for scrap, Department 13’s “improvements” actually increased total production costs (Figure 8).

Systemic Flaws

Siloed Metrics: Departmental boundaries obscured the interconnected effects of changes. Managers focused on narrow KPIs (e.g., material costs) while ignoring cross-departmental impacts.

Misguided Objectives: The project team was tasked with reducing material costs, not improving overall productivity or quality. This led to suboptimization—improving a part at the expense of the whole.

Lessons and Principles

Holistic Analysis: Process behavior charts (e.g., X charts, mR charts) revealed hidden trends, such as rising man-hours and scrap rates, that were masked by aggregated reports.

Dr. Deming’s Influence: The case underscores Deming’s emphasis on understanding variation and optimizing the entire system, even if some departments must operate suboptimally.

Change ≠ Improvement: The author warns against conflating change with progress. True improvement often lies in consistent execution rather than disruptive, uncoordinated changes.

Conclusion

The article advocates for system-wide thinking in process improvement. Managers must prioritize core process efficiency over narrow departmental goals and use simple, transparent data analysis (e.g., process behavior charts) to uncover unintended consequences. As Wheeler concludes:

“The optimization of each department will always result in a plant which is suboptimal. The optimization of the whole system will require that some departments be operated suboptimally.”

This Bulletin emphasizes that successful management transformation requires genuine commitment from top leadership, with a focus on continuous improvement, quality, and collaboration across all levels of the organization. It underscores the importance of innovation and creating a positive work environment to achieve sustainable success.

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