Factory Physics is one of the most influential operations management frameworks ever written–and in this conversation, co-author Dr. Mark Spearman explains why it still matters.
Listen to the Episode:
For Episode #25, I'm pleased to have Dr. Mark Spearman, Founder and President/CEO of Factory Physics, Inc. You may know Dr. Spearman from his book, co-authored with Dr. Wally Hopp, Factory Physics. If there is ONE operations management textbook to own, this is it (it's well worth the cost).
I was fortunate, as an Industrial Engineering undergrad at Northwestern, to take Dr. Spearman's operations course. The introduction given about Lean and the Factory Physics / Little's Law concepts (among others) have served me very well during my career. In the Podcast, we talk about his company, Factory Physics, and the work he is doing today in the manufacturing world.
Show Notes, Links, and Keywords Episode #25
- Keywords: Throughput, Lean Six Sigma, Lean, WIP, work in process, continuous improvement, variation, flow, Dell Computer
- Dr. Spearman explains The 3 Buffers: Inventory, Time, and Capacity
- Article Link (from The Manufacturer)
- Software Portal link (Lean Physics)
If you have feedback on the podcast, or any questions for me or my guests, you can email me at leanpodcast@gmail.com or you can call and leave a voicemail by calling the “Lean Line” at (817) 372-5682 or contact me via Skype id “mgraban”. Please give your location and your first name. Any comments (email or voicemail) might be used in follow-ups to the podcast.
Click here for the main LeanBlog Podcast page with all previous episodes.
A Deep Dive into Factory Physics: A Conversation with Dr. Mark Spearman
The Origins of Factory Physics
Mark Graban: Our guest today is Dr. Mark Spearman from Factory Physics Inc. While many listeners are familiar with the book Factory Physics, could you discuss the transition from the book to the company?
Mark Spearman: It started when I was an assistant professor at Northwestern University working with Wally Hopp. We noticed “teaching moments” while working with plant managers regarding basic relationships between equipment utilization, WIP (Work in Process), cycle time, throughput, and variability.
Around 1992, Northwestern started the Master of Management and Manufacturing program. We realized there wasn't a course that described how all these operations concepts worked together–much like how a civil engineer takes a course on statics before building bridges. We designed a course to teach the basic body of knowledge–MRP, JIT (now Lean), and quality–and then introduced “factory physics” to explain how it all works. Those course notes eventually became the book Factory Physics.
I later moved to Georgia Tech but became frustrated with academia's focus on research papers rather than industry application. I saw a need for more “handholding” to help people use these concepts. In 2000, I took a leave of absence, secured a small business innovative research grant, and began developing a framework similar to DMAIC in Six Sigma, along with software tools–essentially the “Minitab of Factory Physics.”
Common Manufacturing Challenges
Mark Graban: What specific problems do clients bring to Factory Physics?
Mark Spearman: We work with everything from discrete parts manufacturing to process manufacturing, chemical companies, pharmaceuticals, and even hospitals. The laws of factory physics apply to all production and service systems.
The four biggest problems companies want to solve are:
- Reducing inventory
- Increasing throughput
- Reducing cycle time
- Improving on-time delivery
Mark Graban: Do you find companies are “addicted” to their WIP?
Mark Spearman: Not so much anymore; people know too much WIP is bad. The problem is that they pick up Lean techniques, like Value Stream Mapping, and make initial improvements. However, when they try to marry Lean with Six Sigma, they struggle to see how it all fits together. The Factory Physics framework helps merge the two and identifies where you get the best return on your continuous improvement investment.
The Laws of Factory Physics: Variability and Buffers
Mark Graban: I recall learning about the impact of variation on a system. That concept seems very aligned with Six Sigma.
Mark Spearman: Absolutely. In any supply chain or value stream, you have two essential components: Demand and Transformation. Transformation consists of flows and stocks.
If you had perfect alignment–meaning your takt time is constant and a customer shows up the instant you finish a part–you would have zero lead time, 100% on-time delivery, and no inventory. However, variability always exists. When there is misalignment between demand and transformation due to variability, you require a buffer. Factory Physics teaches that there are only three types of buffers:
- Inventory
- Time
- Capacity
Mark Graban: So, you can't have a system with zero buffers?
Mark Spearman: No. While Six Sigma focuses on variability in transformation, one of the largest sources of variability is demand.
Example: Dell Computers has no inventory buffer between demand and transformation (they don't make to stock). They also don't want to use a time buffer because speed is their value proposition. Therefore, they must use a capacity buffer. A Dell plant must have enough capacity to meet peak demand, meaning they have idle capacity the rest of the year.
The Dangers of Dogmatic Lean
Mark Graban: Are there cases where companies go too far in trying to eliminate buffers?
Mark Spearman: Yes. We worked with a company that was pushing down cycle time. To reduce cycle time, you must reduce WIP. However, every line has a Critical WIP level–the amount needed to get maximum output with minimum cycle time in a system with no variability.
If you have variability, you need more than the Critical WIP. This company pushed WIP so low that they began starving the line. By reintroducing a small WIP buffer between machines, we increased the line's output by over 20%.
Mark Graban: Does Factory Physics help isolate the causes of variation so companies can eventually reduce those buffers?
Mark Spearman: We take a two-step approach. First, given your current configuration and variation, what is the optimal set of buffers to make the most money? Get on the efficient frontier of your current system first. Then, look for where to reduce variability to improve the system further.
Mark Graban: It sounds like stopping the corporate bleeding before worrying about cholesterol levels.
Mark Spearman: Exactly. We had a client with 20-week lead times and poor customer service. Rather than doing numerous Kaizens, we actually increased inventory by putting a buffer between fabrication and assembly. This reduced the customer-facing lead time to two weeks and increased productivity by 7%.
Toyota's Approach to Buffers
Mark Graban: Even Toyota puts buffers between zones on the assembly line.
Mark Spearman: If people understood the Toyota Production System as it was actually implemented, they wouldn't do a lot of things they do today. Toyota pushed down on the inventory buffer using Kanban. When you push down one buffer without removing variability, another must rise.
Toyota utilized a capacity buffer: they ran two 12-hour shifts but only scheduled 10 hours of work. That two-hour makeup shift is a 20% capacity buffer. This allowed them to identify and eliminate root causes of variability, eventually allowing them to reduce that capacity buffer.
Software and Tools
Mark Graban: Could you tell listeners where they can learn more about the software side of Factory Physics? We didn't get to talk much about how it integrates with systems like SAP.
Mark Spearman: The best place to start is factoryphysics.com. We offer a web-based software suite designed to help organizations understand, design, and manage flow across complex systems. The tools fall into three main categories.
First, we provide benchmarking tools. This isn't traditional benchmarking where you compare yourself to other companies. We focus on absolute benchmarking–comparing your current performance to what your system is theoretically capable of achieving. That gap is where the opportunity lies.
Second, we offer analyzers and optimizers. These include tools for analyzing flow, demand, and variability, as well as optimizers for inventory levels, flow rates, demand smoothing, and batch sizes. For example, the demand optimizer helps organizations understand which product mix is actually making money, rather than assuming all volume is equally profitable.
Third, we have execution tools. These include ConWIP and flow controllers that work alongside existing ERP or MES systems. They help control pull levels, manage work-in-process, and track throughput in real time–without replacing the systems companies already rely on.
We think about the software, and really about improvement more broadly, in three layers:
- Design: How should the system be structured to perform better? This is where Lean and Six Sigma thinking should start.
- Planning: How do we plan effectively within that system? This is typically the domain of ERP.
- Execution: How do we run the system day to day? This is where Lean practices come into play.
One thing we emphasize strongly is that organizations should start with design, not execution. If the system itself is poorly designed, no amount of execution discipline will fix the underlying problem.
Closing Thoughts
Mark Graban: Mark, thanks again for joining us on the Lean Blog podcast. This has been a fascinating discussion, and I really appreciate you taking the time to share your insights.
Mark Spearman: Thanks, Mark. I enjoyed the conversation and appreciate the opportunity to be here.
Why This Matters in 2026
In 2026, organizations face relentless pressure to move faster, cut costs, and “do more with less.” AI, automation, and real-time dashboards haven't changed the laws of systems–they've only made the consequences of misunderstanding them show up faster.
Factory Physics remains essential because it explains why well-intended efficiency efforts still produce burnout, shortages, long waits, and brittle operations. Leaders who design systems around flow, variability, and the right buffers don't just improve performance–they build resilience, protect their people, and avoid the false tradeoff between efficiency and reliability.
The fundamentals haven't changed. The stakes have.
If you’re working to build a culture where people feel safe to speak up, solve problems, and improve every day, I’d be glad to help. Let’s talk about how to strengthen Psychological Safety and Continuous Improvement in your organization.
