Lean manufacturing has fundamentally changed the way business leaders think about the production of
manufactured goods and services. Over the past three decades, firms have dedicated considerable resources
to reducing production setup times, shrinking inventories, and organizing work into cellular flows. Discrete
parts manufacturing has benefited from production planning schemes that smooth production and levelload
the plant to reduce idle time and overtime. But in the process industries, where production occurs 24
hours a day, seven days a week, what does it mean to level-load the production facility? In those industries,
capacity stabilization is defined as creating production cycles that are predictable, and level-loading consists
of stabilizing manufacturing lead times. In this article, we describe the differences between what we call
inventory-centric versus capacity-centric modes of production and inventory control, and we present data
collected from a large chemical plant operation that illustrates a mismatch between inventory policy and
capacity characteristics. We also describe policies appropriate for old economy firms in the face of increasing
consolidation and pressures to reduce costs and increase responsiveness
