Operations.

The Operations Operating Review

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The question

Without opening a spreadsheet, can you say where your operation is limited this week, how long one order takes from yes to delivered, and what fraction of that time anybody was actually working on it? Most people get the first right, guess the second, and have never measured the third. It's the third that pays for the other two.

The idea

Andrew Grove joined Intel in 1968, the year it was founded, and ran it as president and then chief executive through the years it became the world's largest chipmaker. In High Output Management (1983) he does something strange for a semiconductor boss: he opens in a breakfast factory, serving a three-minute egg with toast and coffee, and works out that the whole schedule has to be built backwards from the longest step — the limiting step, which is Grove's name for what this module has been calling the constraint. A manager's output is the output of the organisation beneath them, so managing is a production process, and a production process gets read with instruments rather than opinions. His sharpest instruction is about how you build the set. Pair your indicators, he says, so effect and counter-effect are measured together, because a number watched on its own gets moved — and it gets moved by honest people, since moving it is what you asked for. Watch inventory and inventory falls, along with your ability to serve anybody. Watch utilisation and utilisation climbs, dragging queues behind it. The trap is a page of single numbers all pointing the same flattering way, each one bought with something the page doesn't show. If you already run a monthly business review, this isn't a second one; it's the operations page that sits underneath it and sends a single line up.

The framework

01
Every number on this page needs its opposite beside it.
Grove's pairing rule is the construction rule for the whole page, so apply it to everything this module handed you. Utilisation goes next to flow time. Units out goes next to defects escaped. Inventory value goes next to the number of times you ran out of something. Changeover minutes go next to batch size. Left alone, each of those can be improved by damaging its partner, and it'll be improved that way by people acting in good faith, because a lone number on a page reads as an instruction. Write the review in pairs, one line each, and read both halves before anyone speaks.
02
Where is the constraint this month, and what is the cadence set to?
This block runs to three lines, in that order. The constraint moves, so find it the same way every time — walk the flow and mark where work waits rather than where people look busy, because the fix that worked last month is pointing at the wrong step now. Then set the cadence: available working time divided by the units demanded inside it gives the rate at which a finished unit has to appear, and staffing sits downstream of that one figure. The third line is what you release — levelled, or you're passing the order book's peaks straight through to the floor.
03
Flow time, the value-add ratio, and the buffer you're paying for.
The middle block carries three numbers and one piece of arithmetic. Flow time is order to delivered, and the check behind it is work in progress divided by throughput. If flow time stretched while everybody got busier, you released more work — you didn't get slower. Then the value-add ratio: minutes genuinely worked on against time sat in your building, both in the same unit before you divide, or the answer flatters you sixtyfold. It's humiliating the first time and belongs on the page anyway, because the waiting is where the money sits. Last, name the buffer you hold against variability: stock, spare capacity or time.
04
Close on defects, then on what you removed.
Quality is a spread against a tolerance, not a run of anecdotes: put the range your process actually produces beside the range your customer will accept, and record what escaped. Split last month's failures into ordinary variation and genuine one-offs, because treating the first kind as an event makes it worse. Trace each one-off until the answer stops being a person and becomes a condition — a name in that slot means the trace hasn't finished — then fix it with a device or a line on the standard. Finish with the stop list you already built in this elective, and the one sentence this page sends up.

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