High Output Management by Andrew S. Grove

High Output Management by Andrew S. Grove

I
The Breakfast Factory

1
The Basics of Production: Delivering a
Breakfast
(or a College Graduate, or a Compiler, or a
Convicted Criminal…)
The Three-Minute Egg
To understand the principles of production, imagine that you’re a waiter,
which I was while I went to college, and that your task is to serve a breakfast
consisting of a three-minute soft-boiled egg, buttered toast, and coffee. Your
job is to prepare and deliver the three items simultaneously, each of them
fresh and hot.
The task here encompasses the basic requirements of production. These are
to build and deliver products in response to the demands of the customer at a
scheduled delivery time, at an acceptable quality level, and at the lowest
possible cost. Production’s charter cannot be to deliver whatever the customer
wants whenever he wants it, for this would require an infinite production
capacity or the equivalent—very large, ready-to-deliver inventories. In our
example, the customer may want to have a perfect three-minute egg with hot
buttered toast and steaming coffee waiting for him the moment he sits down.
To fulfill such an expectation, you would either have to have your kitchen idle
and poised to serve the customer whenever he drops in, or have a ready-

toconsume inventory of perfectly boiled eggs, hot buttered toast, and coffee.
Neither is practical.
Instead, a manufacturer should accept the responsibility of delivering a
product at the time committed to—in this case, by implication, about five to
ten minutes after the customer arrives at our breakfast establishment. And we
must make our breakfast at a cost that enables us to sell it at a competitive
price and still make an acceptable profit. How are we going to do this in the
most intelligent way? We start by looking at our production flow.
The first thing we must do is to pin down the step in the flow that will
determine the overall shape of our operation, which we’ll call the limiting

High Output Management by Andrew S. Grove