{"id":21046,"date":"2020-12-17T15:33:00","date_gmt":"2020-12-17T19:33:00","guid":{"rendered":"https:\/\/www.shortform.com\/blog\/?p=21046"},"modified":"2020-12-20T18:23:02","modified_gmt":"2020-12-20T22:23:02","slug":"average-production","status":"publish","type":"post","link":"https:\/\/www.shortform.com\/blog\/average-production\/","title":{"rendered":"Average Production Rates: A  Misleading Metric"},"content":{"rendered":"\n<p>What are the average production rates in manufacturing? Why are they unreliable and what should you use instead?<\/p>\n\n\n\n<p>Average production rates let you know, generally, how much you&#8217;re manufacturing. However, it is misleading, because you rarely produce exactly the average.<\/p>\n\n\n\n<p>Read more about average production rates and why you can&#8217;t rely on them.<\/p>\n\n\n\n<!--more-->\n\n\n\n<h2 class=\"wp-block-heading\"><strong>The Fallacy of Average Production Rates<\/strong><\/h2>\n\n\n\n<p>In manufacturing, a balanced plant tries to match the average production capacity of every resource exactly with market demand. Any resource beyond the average rate is seen as extraneous, so it is either put to use or eliminated. This is the traditional <a href=\"https:\/\/www.shortform.com\/blog\/modes-of-thinking\/\">mode of thinking<\/a> at the protagonist\u2019s company in <em>The Goal<\/em>.<\/p>\n\n\n\n<p>However, two interconnected concepts make the balanced plant backfire, thus decreasing throughput, increasing inventory, and increasing carrying costs:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Dependent events &#8211; <\/strong>one part of the chain depends on the upstream part.<ul><li>The speed of the downstream part is constrained by the upstream part &#8211; if the upstream part isn\u2019t delivering, the downstream part can\u2019t do any work.<\/li><\/ul><\/li><li><strong><a href=\"https:\/\/www.shortform.com\/blog\/statistical-fluctuations\/\">Statistical fluctuations<\/a> &#8211; <\/strong>many factors cannot be predicted precisely<ul><li>Even at an average steady state rate, there are fluctuations in production. Someone may produce 2 widgets per minute on average, but at times he produces 2.5 and at times he produces 1.<\/li><li>Larger events &#8211; machines may break down; workers many get sick; inclement weather may arrive.<\/li><\/ul><\/li><\/ul>\n\n\n\n<p>Fluctuations happen regularly at each part in the chain. However, <strong>each downstream part can only catch up to the extent that the upstream part permits it to.<\/strong> Negative fluctuations bring down every later step of the chain; positive fluctuations are constrained by the next bottleneck. Over time, this causes a lower than expected average throughput.<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Let\u2019s say there are three tools in a series &#8211; X \u2192 Y \u2192 Z. They can each work at an average of 5 units\/hour, with fluctuations around this average. Each hour, parts from one tool are moved to the next one.<\/li><li>If X suddenly produces 3 units in 1 hour, then in the next hour, Y can only produce 3 units from X, <em>even if<\/em> Y could actually work at 6 units\/hour in that hour.<\/li><li>For the system to make up time for every negative fluctuation, both X and Y need to work at above-average rates in synchrony.<ul><li>In a complex chain with many parts, this is difficult.<\/li><\/ul><\/li><li>In contrast, if X gets a boost. suddenly produces 10 units in 1 hour, Y can still only produce 5 units per hour, so the gain in X is stifled by the inability of Y to meet X\u2019s boost.<\/li><\/ul>\n\n\n\n<p>As explained in the next sections, the solution is not to balance average capacity with demand, but rather <strong>to balance <\/strong><strong><em>flow <\/em><\/strong><strong>or <\/strong><strong><em>throughput<\/em><\/strong><strong> with demand<\/strong>. The way to do this is a drum-buffer-rope system, where the bottleneck determines the throughput and inventory of the entire system.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>What are the average production rates in manufacturing? Why are they unreliable and what should you use instead? Average production rates let you know, generally, how much you&#8217;re manufacturing. However, it is misleading, because you rarely produce exactly the average. Read more about average production rates and why you can&#8217;t rely on them.<\/p>\n","protected":false},"author":6,"featured_media":9831,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[45,25],"tags":[171],"class_list":["post-21046","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","category-statistics","tag-the-goal-a-process-of-ongoing-improvement","","tg-column-two"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v24.3 (Yoast SEO v24.3) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Average Production Rates: A Misleading Metric - Shortform Books<\/title>\n<meta name=\"description\" content=\"Do average production rates matter? Not really, according to The Goal. Rely less on averages and more on getting output to match demand.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.shortform.com\/blog\/average-production\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Average Production Rates: A Misleading Metric\" \/>\n<meta property=\"og:description\" content=\"Do average production rates matter? Not really, according to The Goal. Rely less on averages and more on getting output to match demand.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.shortform.com\/blog\/average-production\/\" \/>\n<meta property=\"og:site_name\" content=\"Shortform Books\" \/>\n<meta property=\"article:published_time\" content=\"2020-12-17T19:33:00+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2020-12-20T22:23:02+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/s3.amazonaws.com\/wordpress.shortform.com\/blog\/wp-content\/uploads\/2020\/06\/getting-things-done-system-scaled.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"2560\" \/>\n\t<meta property=\"og:image:height\" content=\"1707\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Rina Shah\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Rina Shah\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"2 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/www.shortform.com\/blog\/average-production\/#article\",\"isPartOf\":{\"@id\":\"https:\/\/www.shortform.com\/blog\/average-production\/\"},\"author\":{\"name\":\"Rina Shah\",\"@id\":\"https:\/\/www.shortform.com\/blog\/#\/schema\/person\/d07435826f13a8f422d5d333dceac287\"},\"headline\":\"Average Production Rates: A Misleading Metric\",\"datePublished\":\"2020-12-17T19:33:00+00:00\",\"dateModified\":\"2020-12-20T22:23:02+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/www.shortform.com\/blog\/average-production\/\"},\"wordCount\":476,\"commentCount\":0,\"publisher\":{\"@id\":\"https:\/\/www.shortform.com\/blog\/#organization\"},\"image\":{\"@id\":\"https:\/\/www.shortform.com\/blog\/average-production\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/www.shortform.com\/blog\/wp-content\/uploads\/2020\/06\/getting-things-done-system-scaled.jpg\",\"keywords\":[\"The Goal: A Process of Ongoing Improvement\"],\"articleSection\":[\"Business\",\"Statistics\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\/\/www.shortform.com\/blog\/average-production\/#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.shortform.com\/blog\/average-production\/\",\"url\":\"https:\/\/www.shortform.com\/blog\/average-production\/\",\"name\":\"Average Production Rates: A Misleading Metric - Shortform Books\",\"isPartOf\":{\"@id\":\"https:\/\/www.shortform.com\/blog\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/www.shortform.com\/blog\/average-production\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/www.shortform.com\/blog\/average-production\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/www.shortform.com\/blog\/wp-content\/uploads\/2020\/06\/getting-things-done-system-scaled.jpg\",\"datePublished\":\"2020-12-17T19:33:00+00:00\",\"dateModified\":\"2020-12-20T22:23:02+00:00\",\"description\":\"Do average production rates matter? 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