Sub-optimization occurs when...

Sub-optimization occurs when each individual function runs at peak performance without considering the overall system's needs or the performance of other functions. This approach can lead to local optimizations that do not contribute to – and may even detract from – the overall efficiency and effectiveness of the entire process. In many systems, particularly in manufacturing and project management, different functions or departments might focus on maximizing their output or efficiency. However, if they do so in isolation, it can result in conflicts or inefficiencies elsewhere in the organization, leading to suboptimal outcomes when viewed from a broader perspective.

For example, if a production department maximizes its output without coordinating with logistics, it may produce more than can be stored or shipped efficiently, leading to bottlenecks and waste. The key point of sub-optimization is that while individual functions may be performing well in isolation, the overall system suffers due to a lack of integration and collaboration across functions.