creating perfect harmony asq 2011

Bob Mendenhall

Senior Consultant

Avraham Y. Goldratt Institute

© 2008 Avraham Y. Goldratt Institute, LP 1

•  Since 1986, AGI (Goldratt Institute) has enabled organizations to better align the way they operate to achieve strategic bottom line results now and in the future. AGI is the birthplace of constraint-based techniques and solutions for business success.

•  AGI provides its clients with rapid bottom line results through the application of interdependency engineering to production, supply chain, project portfolio management, or business unique problems. Our engagement with a client is based on the SDAIS model.

® Real Solutions, Real Results…

Through Interdependency Engineering SM

Interdependency Engineering is a service mark and trademark of the Avraham Y. Goldratt Institute, a Limited Partnership

Customer demand frequently changes.

Parts are not always available when needed.

We have absenteeism problems with our workforce.

The workforce is not well trained and disciplined.

Our processes are not always reliable.

Our equipment frequently breaks down.

Our quality is not consistently good.

Data is not readily available and accurate.

Our policies don’t always make sense.


What if these problems did not exist…….. Customer demand doesn’t change.

Parts are always available when needed.

We don’t have any absenteeism problems with our workforce.

The workforce is excellently trained and disciplined.

Our processes are reliable.

Our equipment never breaks down.

Our quality is superb.

Data is readily available and accurate.

YOU CAN DECIDE ON WHATEVER POLICIES YOU WANT

IF:

THEN: Meeting commitments should be a piece of cake.


•  Business and operational strategies and designs are built upon a constraint-based architecture that identifies and configures the key interdependencies of the organization to achieve stability and improvement.

•  Strategic improvements are implemented and sustained through a focused system improvement architecture based on TOCLSS (TOC, Lean & Six Sigma).

•  The deployment framework integrates these two architectures in a holistic model called SDAIS: Strategy-Design-Activate-Improve-Sustain.

 A management science based on the hard sciences, i.e., rigorous cause-and-effect

 TOC views organizations as systems:   Made up of different parts, resources, processes, etc   That must work interdependently   To achieve a common purpose, or goal

 An organization achieving infinite performance has no constraint(s)

 Knowing where an organization’s constraint is enables focused improvements to maximize overall performance

A Process Of OnGoing Improvement

Do not allow inertia to become the system’s constraint!

WARNING

Theo

ry o

f Const

rain

ts

"   TOC is the foundational architecture for the System "   Establishes Process Control

"   Achieves Reliable Process Throughput

"   Provide focus for CSI

"   LSS is Implemented based on the focus TOC provides to Improve Process Effectiveness: "   Eliminate Waste

"   Reduce Variation

"   When the two methodologies are applied together Discord can occur.

"   The Discord must be understood to prevent undermining the TOC LSS integrated approach

12 © 2006 - 2008 Avraham Y. Goldratt Institute, LP All Rights Reserved

13

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TOC Only

•  Unbalanced line. •  Road Runner work ethic. •  DBR rope chokes materials. •  Time based replenishment.

LSS Only

•  Balanced line. •  Workers pace to Takt Time. •  Kanban signals release materials. •  Quantity based replenishment.

An aligned TOC-LSS approach is the best Continuous System Improvement (CSI) solution.

©2006 - 2008 Avraham Y. Goldratt Institute, LP All Rights Reserved ©2006 – 2008 Dynamics Research Corporation ©2006 – 2008 NOVACES, LLC

Unbalanced Line vs. Balanced Line


TOC and LSS take different approaches to process flow design (Unbalanced Line vs Balanced Line)


Protective capacity describes the amount of installed capacity that is necessary to overcome variation.

•  All Resources Work to Road Runner ROE •  A & B have Protective Capacity to protect Constraint •  Constraint C has Protective Capacity to Protect itself •  D & E have Protective Capacity to Protect Customer •  Goal is to Achieve Throughput in the presence of

Demand & Process Variation •  Protective Capacity ‘can’ be used to perform

‘Interruptible Work”

B C A D E

Drum Capacity

1 Part per

Hour

Production Capacity 1 part per hour

Unbalanced Line

The Operators cycle times are loaded to Takt Time.

•  Operations Improved over time & Balanced to Achieve TAKT Time

•  Surplus Capacity viewed as Waste & Removed from System

•  Dedicated Operators Working to TAKT

B C A D B C A D

Takt Time = 60 Minutes Cycle Time

1 Hour per Part

Production Cycle Time 1 hour per part

Balanced Line

16 ©2006 - 2008 Avraham Y. Goldratt Institute, LP All Rights Reserved ©2006 – 2008 Dynamics Research Corporation ©2006 – 2008 NOVACES, LLC

Protective capacity describes the amount of installed capacity that is necessary to overcome variation.

•  Emphasis on Reliable Throughput •  System Throughput Protected from Demand

Variation •  System Throughput Protected from Process

Variation •  Well suited for MRO systems which have high

variation in demand, repair time & work content •  Protective Capacity ‘can’ be used to perform

‘Interruptible Work” •  Manage the Constraint

B C A D E

Drum Capacity

1 Part per

Hour

Production Capacity 1 part per hour

Unbalanced Line

The Operators cycle times are loaded to Takt Time.

•  Works well with steady demand & repeatable workload

•  Requires consistent demand and repeatable work load over long time period to remove variation

•  Requires operators dedicated to specific tasks.

•  System Vulnerable to Variation •  Manage All Resources

B C A D B C A D


1 Hour per Part


Balanced Line


Road Runner Ethic vs. Work to Takt


TOC and LSS view resource behaviors differently (Road Runner work culture, Takt Time)


B C A D B C A D


1 Hour per Part


Rope B A E D C

•  Work Heads Down on Available Work until:

•  Work is complete •  Work is Blocked •  Higher Priority Arrives

•  Performance measured against Plan Goals – TRR performance

•  Manage the Line by Managing the Constraint

•  Interruptible Work accomplished without effecting Throughput

•  Work paced to TAKT Time •  Workers are Dedicated to Specific Tasks

•  Constraint and management focus can shift in an unpredictable way between resources as the constraint moves.

Road Runner Ethic Work to Takt


Rope B A E D C

•  Well suited for systems which have high demand, process time & work content variation

•  Road Runner Rules Of Engagement allows other low priority work to be performed

Road Runner Ethic

•  Works well with steady demand & repeatable workload

•  Requires consistent demand and repeatable work load over long time period to remove variation

•  Requires operators dedicated to specific tasks.

•  Encourages deadline driven behavior. •  Work expanding to fill time can mask

improvements

B C A D B C A D


1 Hour per Part


Work to Takt


Rope Signal vs. Kanban Signal


TOC and LSS take different approaches to the release and movement of materials (Takt Time, Kanban vs Rope)


Pull B A E D C

Rope B A E D C B A E D C

Produce Signal: Produce Signal: •  Theory of Constraints materials release

mechanism. •  Minimizes the Work In Process (WIP) in

the system. •  Most WIP accumulates in front of the

drum, protecting it from starvation. •  The rope signals what, when and how

much material is being processed.

DBR Rope Signal

B A E D C B A E D C B A E D C Pull

Produce Signal: Produce Signal: •  A system of visual signals that triggers or

controls material flow. •  Kanbans synchronize work processes across

a system. •  Limits the WIP in the system •  Kanban cards may contain:

•  What to produce. •  When to produce. •  How much to produce. •  How to transport and to store material.

Kanban Signal


Pull B A E D C

Rope B A E D C B A E D C

Produce Signal: Produce Signal: •  Linked to real-time customer demand. •  Works well in repetitive ,maintenance , and

job shop oriented environments. •  Chokes material release to the system

•  Maintains minimal WIP levels. •  Material is only released to the system a

(time) buffer length ahead of when it must arrive at the drum.

•  Time-based system.

DBR Rope Signal

B A E D C B A E D C B A E D C Pull

Produce Signal: Produce Signal: •  Kanban works well in repetitive

manufacturing environments. •  Less effective in most maintenance, repair

and overhaul and in job shop environments. •  Typically higher WIP levels in Kanban

system. •  Inter-process WIP not available in

maintenance repair and overhaul environment.

Kanban Signal


Time Based vs. Quantity Based Replenishment


TOC and LSS often take different approaches to the replenishment and sizing of materials buffers.


Top of Buffer

Replenishment time is bounded

Reorder amount consumed during

each fixed time interval

Replenishment order batch size is

variable

Time Based Replenishment

•  Less $ invested in inventory while providing consistent protection of Throuhput.

•  Process performance is more predictable. •  Focus is managing the flow of parts in time.

Don’t reorder until minimum replenishment

order batch size is reached

Replenishment time is unpredictable

MAX

MIN

?

Minimum Replenishment Order Batch

Size is fixed.

Quality Based Replenishment

•  More $ invested in inventory while providing highly variable protection of Throughput.

•  Process performance is less predictable. •  Focus is parts on the shelf.

28 © 2000 - 2008 Avraham Y. Goldratt Institute, LP All Rights Reserved

29

•  Fixes the time interval and lets the reorder batch size vary.

•  Has low variability between the time demand occurs and the time the part is reordered.

•  Provides a reliable relationship between the Time to Reliably Replenish and parts on the shelf.

Top of Buffer

Replenishment time is bounded

Reorder amount consumed during

each fixed time interval

Replenishment order batch size is

variable


•  Fixes the reorder batch size and lets the time interval vary

•  Has high variability between the time demand occurs and the time the part is reordered.

•  Does not provide a reliable link between the Time to Reliably Replenish and parts on the shelf.

Don’t reorder until minimum replenishment

order batch size is reached

Replenishment time is unpredictable

MAX

MIN

?

Minimum Replenishment Order Batch

Size is fixed.


©2000 - 2008 Avraham Y. Goldratt Institute, LP All Rights Reserved

Road Runner is a Core Principle of TOC Design. Prevents Parkinson’s Law & Ensures System Benefits from all Improvements. Allows Interruptible work without affecting Throughput

DBR is the TOC Material Release Mechanism. Ensures Constraint always has Material to Process. Minimizes WIP

Unbalanced Line is a Core Principle of TOC Design. Achieves reliable throughput in the presence of demand & process variation. Manage the Constraint vs. all Resources

MDP achieves predictable and bounded replenishment times in presence of demand variation. Focus : managing the flow of parts in time.



DBR Rope Signal

Kanban Signal

Road Runner Ethic Work to Takt

Unbalanced Line

Balanced Line


• The Goal: Maximize Throughput

•  Eliminate waste and reduce cycle time

•  Reduce variation and defects and increase process predictability


Lean

Integrate Theory of Constraints (TOC) and Lean Six Sigma (LSS) methodologies for improved enterprise performance consistent with achieving and sustaining more and more of the organization’s goal.

A fully integrated approach to CSI

TOC Six Sigma CSI

Continuous System

Improvement


• Ensures the system is stabilized so that the process of ongoing improvement can begin.

• Focuses improvement events on areas that will contribute the most to Business Success

• Tactical Plans and Actions are in alignment with the design. • Better integration of the improvement methodologies will achieve true bottom line results.

• Allows CSI Team to work in a tighter, more robust integrated way

© 2008 Avraham Y. Goldratt Institute, LP 36

creating perfect harmony asq 2011

Business

agi goldratt institute

time based

constraint constraint

line results

reliable process throughput

organizations constraint

systems constraint

toclss toc