High Output Management

by Andrew S. Grove

We may learn that output performance is spread evenly throughout the course of the month or that it is concentrated in the last week of the month. If the latter is the case, the manager of the unit is probably not using manpower and equipment efficiently. And if the situation is not remedied, one minor breakdown toward month’s end could cause the unit to miss its monthly output goal entirely. The linearity indicator will help you anticipate such a problem and is therefore quite valuable.

trend indicators.

These show output (breakfasts delivered, software modules completed, vouchers processed) measured against time (performance this month versus performance over a series of previous months)...

A display of trends forces you to look at the future as you are led to extrapolate almost a...

Another sound way to anticipate the future is

stagger chart, which forecasts an output over the next several months.

chart is updated monthly, so that each month you will have an updated version of the then-current forecast information as c...

the improvement or deterioration of the forecasted outlook from one month to the next provides the most valuable indicator of business trends that I have ever seen.

build to order.

you will have to build to forecast, which is a contemplation of future orders.

A manufacturing flow must occur in which the raw material moves through various production steps and finally enters the finished goods warehouse, as illustrated below. Simultaneously, a salesman finds a prospect and sells to that prospect, who eventually places an order with the manufacturer. Ideally, the order for the product and the product itself should arrive on the shipping dock at the same time.

What works better is to ask both the manufacturing and the sales departments to prepare a forecast, so that people are responsible for performing against their own predictions.

neither the sales flow nor the manufacturing flow is completely predictable, we should deliberately build a reasonable amount of “slack” into the system.

inventory is the most obvious place for it.

Ideally, inventory should be kept at the lowest-value stage,

the lower

the value, the more production flexibility we obtain for a gi...

good idea to use stagger charts in both the manufacturing a...

lowest-value-point inspection where we inspect raw material is called incoming material inspection or receiving inspection.

inspections that occur at intervening points within it are called, logically enough, in-process inspections.

the last possible point of inspection, when the product is ready to be shipped to the customer, is called final inspecti...

one should never let substandard material proceed when its defects could cause a complete failure—a reliability problem—for our customer.

one should approach the need to inspect recognizing that a balance exists between the desired result of the inspection, improved quality, and minimum disturbance to the production process itself.

gate-like inspection

monitoring step.

In the latter, a sample of the material is taken, and if it fails, a notation is made from which a failure rate is calculated.

What is the trade-off here? If we hold all the material, we add to throughput time and slow down the manufacturing process. A monitor produces no comparable slowdown but might let some bad material escape before we can act on the monitor’s results and shut things down, which means that we might have to reject material later at a higher-value stage.

we should lean toward monitoring when experience shows we are not likely to encounter big problems.

to lower the cost of quality assurance is to use variable inspections.

when a manager digs deeply into a specific activity under his jurisdiction, he’s applying the principle of variable inspection.

productivity of any function occurring within it

is the output divided by the labor required to generate the output.

one way to increase productivity is to do whatever we are now...

second way to improve productivity. We can change the nature of the work performed: what we do, not how fast we do it.

a very important way to increase productivity is to arrange the work flow inside our black box so that it will be characterized by high output per activity, which is to say high-leverage activities.

work simplification.

first need to create a flow chart of the production process as it exists.

Second, count the number of steps in the flow chart so that you know how many you started with.

Third, set a rough target for reduction of the number of steps.

To implement the actual simplification, you must question why each step is performed.

stressing output is the key to improving productivity,

while looking to increase activity can result in just the opposite.

A manager’s output

The output of his organization

The output of the neighboring organizations und...

“manager” should be broadened: individual contributors who gather and disseminate know-how and information should also be seen as middle managers, because they exert great power within the organization.

They are absolutely my job—not my entire job, but part of it, because they help add to the output of Intel.

My day always ends when

I’m tired and ready to go home, not when I’m done.

I am neve...