Reader Note

This article uses a fictional narrative to illustrate flow-based principles relevant to Engineer-to-Order (ETO) manufacturing. The characters and situations described are illustrative and not based on real organisations or individuals. Everyday work-life examples are used as parallels to highlight underlying system dynamics such as flow, prioritisation, and work-in-progress control. These analogies are not intended to oversimplify ETO environments, nor to suggest that the solutions originated from these settings, but to make the core principles more accessible and intuitive.

When Murali Prasad Sharma walked into Paramount Turbomachinery as its new Head of Operations, he quickly realised he hadn’t joined a company, but had stepped into a system on the brink.

A complex business built on precise coordination

Paramount Turbomachinery designed and manufactured complex, custom-engineered industrial equipment like turbines, motors, and other critical assets, built to the exacting and highly specific requirements of its clients. These clients were OEMs supplying equipment to large, complex oil and gas refineries, where even minor deviations from global standards were unacceptable. Every order was different; every project was unique.

While design and fabrication were executed entirely in-house, successful delivery depended on a fragile network of domestic and international vendors supplying critical bought-out components. With customers spread across geographies and each contract tied to fixed delivery commitments, execution demanded tight coordination across engineering, manufacturing, and supply partners.

The consequences of failure were severe. Any delay at Paramount could push back the commissioning of the end client’s multi-billion-dollar refinery project, triggering heavy financial penalties, contractual disputes, and reputational damage. In such an environment, the company was meant to operate like a finely tuned project engine, running multiple programs in parallel, each synchronised to a precise clock.

But was that the reality at Paramount?

The reality beneath the surface

By the end of his first week, Murali found himself in a quiet lunch conversation with Mr. Asthana, the Head of Production Planning, and Mr. Kelkar, the CFO. The setting was calm. The reality about the firm was not.

The company was receiving orders at a healthy rate, but of late nearly 90% of projects were delivered late. Worse, three out of four were delayed by more than three months, pushing delivery timelines from an already long 9–12 months to well beyond 15 months. Customer patience was wearing thin.
On the shopfloor, the plant operated six to seven days a week, not to accelerate throughput, but merely to cope with the growing backlog. This constant firefighting took a toll on employees and was a key contributor to rising attrition.
The operational strain translated directly into financial pressure. Output was uneven and heavily skewed toward quarter- and year-end closures, trapping cash in receivables. At the same time, high levels of work-in-progress locked up additional capital in inventory, even as new orders required fresh investment in raw materials. As a result, cash flow was tight, and profitability was stagnating.

Intrigued and disturbed, over the next few days Murali decided to understand the business processes and all the challenges in the daily activities of the company.

Paramount's business process

Any project undertaken by the firm progressed through three major stages, Engineering , Procurement, and Production, with each playing a distinct role in translating a customer order into a finished product.

Once an order is secured by the sales team, Engineering defined the solution based on requirements shared by developing detailed drawings, specifications, and material indents required for execution
Procurement converted these indents into reality by sourcing and securing the required materials and bought-out components from vendors.
Production then assembled, fabricated, and integrated these components to deliver the final equipment ready for inspection and dispatch.

A designated project manager is assigned to each project to ensure ownership and accountability.

Current reality: Challenges faced in operations

As teams realised that the market-demanded lead time of 12 months was insufficient for their internal activities, management and the project owners pushed the engineering teams to start projects immediately upon order receipt. This early start was expected to create enough downstream buffer to absorb future uncertainties.

To monitor progress and enforce accountability, the company relied on intermediate milestones, such as drawing completion, start of production, and finished-goods readiness, to track and evaluate individual projects. Missing a milestone was frowned upon.

However, this way of operations had some consequences for different functions of the firm.

Engineering challenges: The flow of incoming projects was continuous, creating a persistently large pool of both ongoing work and new orders. This gave engineers wide latitude to choose what to work on, and work was often selected opportunistically. Newer orders were frequently picked to show early progress, advanced just enough to release drawings or indents to procurement and then set aside in favour of the next task. In many cases, drawings and indents were issued based on assumptions because order transfers were incomplete. When these assumptions later proved incorrect, procurement returned the indents for rework.
At the same time, since inflow of projects was uneven, sometimes multiple projects demanded milestones within the same time window from the limited engineering capacity, causing priorities to shift constantly based on which milestone was approaching, or which project owner was applying the most pressure. This again forced engineers to switch back and forth between projects.
Procurement challenges: Procurement teams increasingly complained of late and incomplete inputs from engineering. As a result, long-lead items were often ordered late. Being caught up in frequent back-and-forth to clarify missing or incomplete information for major items also led to small but critical items often being missed altogether, only to surface much later during manufacturing or, worse, during customer inspections, amplifying rework and delays.
Manufacturing challenges: Manufacturing faced similar pressures. In some cases, aggressive project owners constantly pushed for progress; in others, customer inspections and delivery milestones loomed. As a result, work was frequently initiated without complete inputs, missing drawings, incomplete bills of material, inadequate space, or, at times, insufficient manpower.
The impact was visible on the shopfloor. Partially completed units occupied every available inch - machines, aisles, even walkways. Inventory for future jobs continued to arrive, but finished equipment did not move out.

Under this way of working, even when a unit was finally completed and presented for customer inspection, a large number of punch points were typically identified. These punch points triggered significant rework, further extending already delayed delivery timelines.

As project delays mounted, liquidated damages clauses in customer contracts were sometimes invoked, adding direct financial penalties for the company. In turn, Paramount’s customers, who were facing delays in their own system commissioning, were exposed to liquidated damages from their end clients. What emerged was a cascading chain effect, where delays at one stage propagated downstream, amplifying cost, conflict, and reputational damage across the entire value chain.

It was clear that the company’s way of working was creating operational chaos, with cascading effects on customer delivery performance, employee morale, and working capital, ultimately manifesting as the firm’s most visible and persistent problems.

When Murali spoke to people across the organization, many explained these problems as “just how the industry works”, “everyone has the same problems, not just us...”

Murali did not want to accept this answer. His mind kept returning to a different question: when load is uneven and high compared to capacity, should the system itself respond differently?

Evolving a direction of solution

The next morning, Murali observed his wife manage her household routine like waking their young son up, laying out his uniform, bathing him, preparing tiffin and getting him ready for school. Despite the number of tasks, everything was being done flawlessly. Was it just experience? He wondered.

On closer observation, he noticed her method. Despite all that she needed to get done, his wife handled only a few tasks at a time. While the boy brushed his teeth, she chopped vegetables. When the vegetables were cooking, she bathed him. When the boy was wearing his uniform, she packed the tiffin box into his school bag. Questions or requests from Murali were mostly ignored during this time as she focused on her immediate tasks at hand. She would come back to those only after the boy was ready and waiting for his school bus.

Murali felt there something his firm could learn from his wife. She was clear about what tasks needed to be done and the order in which it should be done. More importantly, she did not try to start everything at once. By limiting her work-in-progress to just what she can get done at a time and completing tasks fully before taking up new, lower-priority ones, such as responding to his requests, she ensured that each task was finished quickly and correctly.

But his wife’s tasks were simple and had a natural flow. Will it work in a more complex workflow, Murali pondered while he climbed into his car and started it. He recollected his visit to a specialist doctor’s clinic as he eased his car out of the garage and drove to the factory. He thought, “even that doctor was loaded with more than his capacity”.

Here, junior doctors conducted the initial assessments, recommending tests, reviewing results, and completing preliminary evaluations, before a patient met the specialist. This sequencing of presenting the specialist with a full kit of information and tests ensured that the specialist’s time was used efficiently and that consultations proceeded without interruption.

Murali recalled how even a single deviation disrupted the entire flow. On one occasion, a patient met the specialist without the required tests or preliminary evaluation and had to be sent back. While the junior doctors dropped work in hand and scrambled to complete the missing work, the specialist sat idle. Meanwhile, the queue of waiting patients continued to grow, compounding delays for every one of them.

Murali recognised his firm was not doing what even a doctor’s clinic had figured. Frequent incomplete upstream work in engineering and incomplete handovers was triggering a cascade of rework, downstream delays in purchase and manufacturing, and constant switching between tasks.

Putting together what his wife did instinctively and what the doctor practiced deliberately, Murali arrived at a clear insight: both focused not on staying busy, but on ensuring uninterrupted flow and quick completion of work. This kind of flow without interruption can be possible with clear and same priority for everyone in the system, WIP limits and clean handovers.

However, during flow of work in his firm, they had yet another entity that can cause interruptions by changing priority, especially on shopfloors where assembly is happening- the project owners!

As Murali’s car came to a halt in the traffic jam, his thoughts drifted back to the factory floor. The choked shopfloor, he realized, was no different from the traffic gridlock around him. The congestion was not the result of a single bad decision, but of hundreds of uncoordinated ones, just like how project managers were pushing their own projects forward without regard for the system as a whole, much like drivers acting in self-interest in the absence of traffic control. Each project managers’ action made sense in isolation, yet together they brought everything to a standstill. Projects, like vehicles in the jam, ended up stranded, with no clear path to restore flow.

Challenging the current paradigm

These musings made the answer obvious. Just as traffic clears only when movement is regulated to protect overall flow, the factory needed a system that governed how work was released and progressed—one that prioritised completing projects.

Limiting the number of projects executed concurrently

Making a presentation to the senior leadership, a few days later, Murali urged that the real problem was starting all projects as soon as they were secured without full readiness. Limiting the WIP in all teams and especially engineering was important to ensure that each task got the required attention and was completed fully (like Mrs. Sharma performing daily morning tasks for the child).

He used a parallel with how hospitals with multiple surgeries scheduled for the same day deliberately limit the number of operations in progress at any one time “Even if several patients are ready, surgeries are sequenced based on urgency, theatre availability, staff, and pre-op readiness. New surgeries are only started once the previous ones are completed and the theatre is cleared and cleaned. This prevents bottlenecks, reduces delays, and ensures that surgical teams work efficiently without overloading resources” He explained.

Murali convinced his colleagues that Paramount needed the discipline of limiting WIP and regulating the release of projects into development to prevent congestion. By restricting the number of open projects, while others waited in queue, and ensuring full readiness before work began, teams could operate without interruption and complete projects faster.

Global and sequential priority

“We agree that this way of working will help us complete individual projects faster. But none of customers, if they were to learn about it would accept being excluded from work-in-progress after they give us an order,” his colleagues protested. “Moreover, some projects must be delivered on much shorter lead times. These are often strategically important and cannot wait in queue.”

Murali suggested that all projects, both ongoing and new, be classified as regular and urgent, much like the passport office distinguishes between routine and Tatkal services.

For regular orders, the management team could agree on and enforce a token-based, one-out–one-in priority mechanism, similar to airport or bank queues. Projects would be prioritized based on the nearness of their committed due dates and arranged into a single, sequential priority list. No team would be allowed to work on a lower-priority project while higher-priority work remained unaddressed. This would ensure organization-wide alignment on priorities and reduce task switching, along with the resulting errors, omissions, and rework. This will speed up projects and deliver them on time- no reason then for customers to complain.

For projects requiring shorter lead times,akin to the Tatkal passport service, where urgent applicants are given protected priority slots, a dedicated capacity could be allocated. “Call it the Tatkal lane or the ambulance lane,” he said. This protected capacity would ensure that urgent projects were completed without waiting in the regular queue.

Full kit

This sounds doable, Murali. But there is a problem,” his colleagues added thoughtfully. “If WIP is limited, and work cannot start without full readiness and a complete handover from the previous team, there may be periods of idleness for teams. Many times, projects in the WIP may simply not be ready for all needed information or parts, etc.”

Murali agreed that this was a valid concern. As an avid Formula 1 fan, he drew an analogy from how a pit crew operates. In a race, every tool, tyre, and component is staged and ready before the car enters the pit lane. Each crew member has a clearly defined role, and execution happens without interruption, ensuring that not even a few seconds of valuable race time are lost.

Applying the same principle, Murali suggested forming dedicated teams by redeploying available capacity to pre-stage work for upcoming project phases. These teams would ensure that all required materials, components, and approvals were in place, strictly following the project sequence, before execution began. Work would be released only when a complete kit was available, ensuring that once a project phase started, it progressed without stoppages caused by missing inputs or resources.

High frequency management

Many projects also stall because critical decisions and budget approvals don’t arrive on time,” added a manager from the procurement team. Heads nodded around the room. Everyone had experienced work coming to a halt simply because issues had to wait for the monthly review with top management.

Drawing inspiration from daily morning huddles in hospitals, where doctors, nurses, and support staff align on patient priorities, bed availability, operating theatre schedules, and capacity constraints, Murali proposed introducing a similar operating rhythm. In hospitals, these brief meetings surface potential bottlenecks early, and any issue requiring senior intervention is escalated immediately, preventing delays in treatment and patient discharge.

Applying the same principle, Murali suggested short, daily reviews within each department to align on project priorities, allocate work for the day, assess available capacity, and resolve issues in real time. Decisions and approvals would be escalated as soon as they were needed, rather than waiting for monthly forums. This cadence, he believed, would sustain momentum across projects and prevent small impediments from compounding into major delays or extended lead times.

PMO

“What, then, would project owners do in this system?” one of the senior HR leaders asked. “The current practice seems to be creating more problems than it solves.”

Murali responded with an insight that had struck him while sitting in a traffic jam. The issue, he explained, was not that the drivers, or project owners, were incompetent, but that each was trying to optimise their own movement without visibility of the larger system. In such conditions, individual acceleration only worsened congestion.

“What we need,” Murali said, “is not more people pushing projects, but a PMO that manages flow.”

He proposed establishing a Project Management Office with a system-wide view of the entire project pipeline. The PMO’s role would be to manage priorities centrally, balance demand with available capacity, and proactively regulate the release of work. Instead of firefighting, the focus would shift to planned, predictable resource allocation across engineering, procurement, and manufacturing.

This would be enabled through simple, visual dashboards, station-wise and function-wise capacity dashboards, that showed where every project stood. At a glance, the organisation could see whether a project was progressing smoothly or getting stuck, and why.

“With this visibility,” Murali added, “we can intervene early, before delays cascade, and we can also give customers realistic, data-backed updates on when their equipment will be ready.”

He wrapped up the presentation to clear signs of agreement across the room.

Three months later: Results!

Once WIP limits, a single global priority system, and full-kitting discipline were enforced, projects began to complete faster. With shop-floor execution given precedence, existing work was flushed through the system first significantly decongesting the factory. Daily flow meetings were adopted rigorously across departments. This ensured that issues were surfaced early and resolved quickly participation was enthusiastic.

These changes dramatically reduced project lead times. Equipment that had previously occupied the shopfloor for over a year was now dispatched within three to six months,. Inventory turns improved by nearly 30%.

Overall output increased by approximately 60%-65% across divisions without adding headcount. This allowed Paramount to take on more projects without expanding capacity and to shift from a six-day workweek to a five-day schedule. With workloads now manageable and execution smoother, employee stress reduced significantly and attrition declined sharply. As output not increased but also stabilised month-on-month rather than bunching toward year-end, cash flows became predictable, easing working-capital pressure and enabling timely investment in raw materials for new projects

The operational gains translated directly into higher on-time delivery performance, improved customer satisfaction, and an increase in incoming orders.