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Implementing Process Of On Going Improvement (POOGI) Part 3 - Introduction to Resource Utilization

During organization/system improvement you may face a dilemma of Resource Utilization. Common understanding of Resource utilization is that you should use resources to their fullest capacity, some managers set special policy such as 100% Utilization across organization for every single resource. Before I go ahead and say how stupid is such decision, I would like to first define Resource Utilization and Resource Activation. These two terminology are not synonym.
100% Capacity(or maybe this is 90%) - Regardless of the street all are full. Same will happen if you go to 100% Activation without knowing the resource state (Constraint vs non-constraint)

Utilizing a resource, as Dr. Goldratt defines, means making use of a resource in a way that moves the system toward the goal. (Check this Blog) Activating a resource is like pressing the ON switch of a machine, it starts no matter if there is any benefit that can be gained from the work it is doing. For example, activating a non-bottleneck resource to its maximum is an act of maximum stupidity, as described by Dr. Goldratt in the Goal business novel.

Therefore, utilization of 100%, or 90% or any other number is meaningless unless it is based on the constraint of the system. The questions you need to ask is; If I keep all resources busy to their maximum, will I move toward system/organization goal?

The idea of Utilizing a resource to its maximum may come from the belief that to improve a system , you need to optimize every resource and element in the system. However, Goldrat proves that such a Locale Optimum is in fact very inefficient and unnecessary.

Before resource utilization, you must first identify the type of the resources you have. Which resource is a constraint (bottleneck) and which resource is a non-constraint. As described briefly before a resource constraint is a resource that has lower capacity than demand and a non-constraint is a resource that has higher capacity than demand, and both are equally important for the entire system.

Activating a non-constraint resource ,that feeds directly or indirectly to a constraint resource, to its full capacity will cause the constraint resource to block the whole flow. On the other hand, not utilizing the constraint resource to its full capacity will cause the system to increase inventory and work in progress which it will result to lower throughput and higher operational expenses, and as result it take the system (organization) away from it's goal.

When you realize that dependent events and statistical fluctuation phenomenons impact system predictability and a system (or organization) always includes constraint and non-constraint resources, then 100% resource utilization type of polices will seem not only stupid but insane!

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