Alex calls the marketing manager and bets he can reduce lead times to fill orders. Reducing lead times will allow the company to:
1. Respond more quickly to customer demand and gain a competitive advantage.
2. Increase throughput and productivity by reducing the time products spend waiting in the system.
3. Potentially increase sales and market share by fulfilling customer orders faster.
The document provides a detailed summary of the novel "The Goal" by Eliyahu Goldratt. It describes how the main character Alex Rogo, a plant manager, is facing issues with declining productivity and profitability at his factory. He learns about new concepts of throughput, inventory, and operational expenses from his old professor Jonah. Jonah teaches him that the bottleneck operations define the throughput of the whole system and should be optimized. Alex applies these lessons to identify and improve the bottlenecks at his plant, increasing throughput and turning the business around.
American Connector Company (ACC) faces competitive threats from Denso Japan Connector's (DJC) manufacturing strategies of standardized, continuous flow production and lower costs. DJC utilizes older, paid-off technology and achieves 100% capacity through 24/7 production, while ACC uses flexible batch processing at only 50-85% capacity. If DJC opens a US plant, it could attract ACC customers with even lower costs from standardized products and more efficient delivery. To compete, ACC must improve technology, productivity, utilization and standardization while reducing inventory, depreciation and other costs.
The Blue team purchased additional machines to eliminate bottlenecks and increase production capacity. They took on debt to quickly process a backlog of over 100 jobs. The team determined re-order quantities based on cash on hand, historical demand, and minimizing inventory levels while maintaining high probability of meeting demand. Re-order points were set using statistical analysis of demand and a goal of 99% probability of meeting an arrival rate of 18 jobs per day. The end strategy focused on being risk averse while maximizing profit by experimenting with lower inventory levels that reduced shipment costs and inventory holding losses.
Challenges
Inaccurate forecasts of retailer demand has become a major issue at Obermeyer. The two major factors that made this task more difficult was the increase in product variety and intense competition in market. Second challenge the company had faced was to allocate production between Hong Kong and China. Although Obermeyer had 1/3 of Parka production in China for 1992, this year the organization insisted on increasing the sales to half. There was difference in quality and labor rate at China and Hong Kong which made allocation decision more difficult.
Another challenge the company faced was the larger lead time. The company had supplies of raw materials from various countries which resulted in delayed production time. Organization challenges along with competition from competitor companies were major challenges the company had faced.
Analysis
From the sales predictions that the six managers forecasted, a coefficient of variation (COV) was determined, which indicated the level of spread of the forecasted data. The COV values were broadly divided into two levels, the low risk group and the high risk group. Every value below 0.2 were considered to be among the lower risk items and all the items above COV value of 0.2 were considered to be of higher risks. Once the risk levels of each item were determined, the quantities of items to be produced in first and second production cycles could be calculated with least risk. 70% of the entire sales forecast for the lower risk items were ordered to be produced. Only 30% of higher risk items were ordered to be produced in the first production cycle. The quantities which amounted to 1200 were manufactured in China and that which were close to 600, were manufactured in Hong Kong in the first production cycle.
Once the 80% of the orders were received from the retailers from the Vegas show, a clear picture of the demand forecast could be obtained, according to which the rest of the items could be manufactured either in China or Hong Kong. Referring to exhibit 1, the four products to be produced in China in the first production cycle are: Assault, Seduced, Entice and Electra. These four products have COV less than 0.2. However Gail, Daphne, ISIS, Anita, Teri, Stephanie are produced in Hong Kong for the first production cycle as they have a high level of risk associated with it.
Conclusion
Short term operational changes
o Decrease lead time by obtaining raw materials from geographically closer locations to ensure timely delivery
Long term operational changes
o Cross scaling Chinese labors which would help the company produce quality and reliable goods at a cheaper price
The document discusses Sports Obermeyer, a skiwear manufacturer founded in 1947. It provides details on the company's structure, sales figures, market share, and a joint venture called Obersport.
It then presents a sample problem asking how many units of each style Wally Obermeyer should order from its Hong Kong production. Using forecasting data and calculations, it recommends production quantities for 10 styles that meet the minimum order of 10,000 units.
Recommendations are made to improve Obermeyer's forecasting accuracy, reduce lead times, increase Chinese worker efficiency, and source non-standard zippers closer to reduce lead times. Long-term, shifting more production to Hong Kong is suggested due to lead
Southwest Airlines operates many flights through Baltimore-Washington International Airport (BWI). Flight F110 from Nashville to Baltimore was delayed, arriving at 8:55 instead of the scheduled 8:15. This caused some passengers to miss connecting flights. The document outlines the process for unloading and reloading bags from F110 and getting passengers to their connecting flights. It also discusses Southwest's culture of employee empowerment and teamwork compared to other airlines. Recommendations include improving the process for deciding whether to hold connecting flights, delegating cargo responsibilities, and enhancing new employee training.
This case study analyzes Benihana of Tokyo, a Japanese restaurant chain known for its hibachi-style cooking experience. Some key points:
- Benihana introduced Americans to hibachi cooking and transformed how they viewed Japanese food. It focused on high quality ingredients, freshness, and interactive cooking shows.
- While food was not entirely traditional Japanese cuisine, the experience centered around entertainment from the chef's cooking skills and customer interaction.
- Benihana had more efficient space and labor costs compared to typical restaurants but invested heavily in chef training to ensure quality and authenticity.
- As it grew popularity, issues like long wait times and high costs from importing all materials from Japan challenged
The receiving plant faces issues with long truck wait times, high overtime costs, and inaccurate berry grading. To address these problems:
1) Plant operations should start at 7 AM instead of 11 AM on peak days to reduce truck wait time from 511 to 127 hours and limit overtime costs.
2) Installing a berry grader would save the cooperative $112,500 annually by properly grading berries, though it may reduce farmer incomes.
3) The storage bins hold berries between processes. Since more berries will be water-harvested, 8 additional bins need converting to wet bins to reach the needed total of 19 wet bins.
The document provides a detailed summary of the novel "The Goal" by Eliyahu Goldratt. It describes how the main character Alex Rogo, a plant manager, is facing issues with declining productivity and profitability at his factory. He learns about new concepts of throughput, inventory, and operational expenses from his old professor Jonah. Jonah teaches him that the bottleneck operations define the throughput of the whole system and should be optimized. Alex applies these lessons to identify and improve the bottlenecks at his plant, increasing throughput and turning the business around.
American Connector Company (ACC) faces competitive threats from Denso Japan Connector's (DJC) manufacturing strategies of standardized, continuous flow production and lower costs. DJC utilizes older, paid-off technology and achieves 100% capacity through 24/7 production, while ACC uses flexible batch processing at only 50-85% capacity. If DJC opens a US plant, it could attract ACC customers with even lower costs from standardized products and more efficient delivery. To compete, ACC must improve technology, productivity, utilization and standardization while reducing inventory, depreciation and other costs.
The Blue team purchased additional machines to eliminate bottlenecks and increase production capacity. They took on debt to quickly process a backlog of over 100 jobs. The team determined re-order quantities based on cash on hand, historical demand, and minimizing inventory levels while maintaining high probability of meeting demand. Re-order points were set using statistical analysis of demand and a goal of 99% probability of meeting an arrival rate of 18 jobs per day. The end strategy focused on being risk averse while maximizing profit by experimenting with lower inventory levels that reduced shipment costs and inventory holding losses.
Challenges
Inaccurate forecasts of retailer demand has become a major issue at Obermeyer. The two major factors that made this task more difficult was the increase in product variety and intense competition in market. Second challenge the company had faced was to allocate production between Hong Kong and China. Although Obermeyer had 1/3 of Parka production in China for 1992, this year the organization insisted on increasing the sales to half. There was difference in quality and labor rate at China and Hong Kong which made allocation decision more difficult.
Another challenge the company faced was the larger lead time. The company had supplies of raw materials from various countries which resulted in delayed production time. Organization challenges along with competition from competitor companies were major challenges the company had faced.
Analysis
From the sales predictions that the six managers forecasted, a coefficient of variation (COV) was determined, which indicated the level of spread of the forecasted data. The COV values were broadly divided into two levels, the low risk group and the high risk group. Every value below 0.2 were considered to be among the lower risk items and all the items above COV value of 0.2 were considered to be of higher risks. Once the risk levels of each item were determined, the quantities of items to be produced in first and second production cycles could be calculated with least risk. 70% of the entire sales forecast for the lower risk items were ordered to be produced. Only 30% of higher risk items were ordered to be produced in the first production cycle. The quantities which amounted to 1200 were manufactured in China and that which were close to 600, were manufactured in Hong Kong in the first production cycle.
Once the 80% of the orders were received from the retailers from the Vegas show, a clear picture of the demand forecast could be obtained, according to which the rest of the items could be manufactured either in China or Hong Kong. Referring to exhibit 1, the four products to be produced in China in the first production cycle are: Assault, Seduced, Entice and Electra. These four products have COV less than 0.2. However Gail, Daphne, ISIS, Anita, Teri, Stephanie are produced in Hong Kong for the first production cycle as they have a high level of risk associated with it.
Conclusion
Short term operational changes
o Decrease lead time by obtaining raw materials from geographically closer locations to ensure timely delivery
Long term operational changes
o Cross scaling Chinese labors which would help the company produce quality and reliable goods at a cheaper price
The document discusses Sports Obermeyer, a skiwear manufacturer founded in 1947. It provides details on the company's structure, sales figures, market share, and a joint venture called Obersport.
It then presents a sample problem asking how many units of each style Wally Obermeyer should order from its Hong Kong production. Using forecasting data and calculations, it recommends production quantities for 10 styles that meet the minimum order of 10,000 units.
Recommendations are made to improve Obermeyer's forecasting accuracy, reduce lead times, increase Chinese worker efficiency, and source non-standard zippers closer to reduce lead times. Long-term, shifting more production to Hong Kong is suggested due to lead
Southwest Airlines operates many flights through Baltimore-Washington International Airport (BWI). Flight F110 from Nashville to Baltimore was delayed, arriving at 8:55 instead of the scheduled 8:15. This caused some passengers to miss connecting flights. The document outlines the process for unloading and reloading bags from F110 and getting passengers to their connecting flights. It also discusses Southwest's culture of employee empowerment and teamwork compared to other airlines. Recommendations include improving the process for deciding whether to hold connecting flights, delegating cargo responsibilities, and enhancing new employee training.
This case study analyzes Benihana of Tokyo, a Japanese restaurant chain known for its hibachi-style cooking experience. Some key points:
- Benihana introduced Americans to hibachi cooking and transformed how they viewed Japanese food. It focused on high quality ingredients, freshness, and interactive cooking shows.
- While food was not entirely traditional Japanese cuisine, the experience centered around entertainment from the chef's cooking skills and customer interaction.
- Benihana had more efficient space and labor costs compared to typical restaurants but invested heavily in chef training to ensure quality and authenticity.
- As it grew popularity, issues like long wait times and high costs from importing all materials from Japan challenged
The receiving plant faces issues with long truck wait times, high overtime costs, and inaccurate berry grading. To address these problems:
1) Plant operations should start at 7 AM instead of 11 AM on peak days to reduce truck wait time from 511 to 127 hours and limit overtime costs.
2) Installing a berry grader would save the cooperative $112,500 annually by properly grading berries, though it may reduce farmer incomes.
3) The storage bins hold berries between processes. Since more berries will be water-harvested, 8 additional bins need converting to wet bins to reach the needed total of 19 wet bins.
Home Depot was founded in 1978 and initially focused on the do-it-yourself home improvement market. By 1985, Home Depot had grown to 50 stores across 15 markets. However, from 1983-1985 Home Depot experienced negative cash flow from operations and increasing inventory levels due to its aggressive expansion strategy. While sales per store remained steady, earnings per store and employee declined significantly during this period. Given constraints on its stock price and debt covenants, Home Depot needed to improve operating performance and consider changes to its growth strategy.
- Edgar Newell started Newell Company in 1902 through the acquisition of a curtain rod manufacturer.
- Dan Ferguson crafted a growth strategy of acquiring companies to expand Newell's product line.
- In the late 1990s, Newell faced challenges from increased customer buying power and consolidation in the retail industry.
- Newell acquired Calphalon and Rubbermaid but integrating the large Rubbermaid presented challenges due to its size, reputation, and operations that could impact Newell's strategy.
Aqualisa Quartz - Simply A Better Shower (HBR Case Study)Arjun Parekh
The document discusses Aqualisa's Quartz shower valve which was intended to improve on existing shower technologies but struggled initially. It provides details on the UK shower market, Aqualisa's distribution channels, and the development of the Quartz valve. While the Quartz valve had technological advantages, plumbers were wary of innovation and it was priced too high. As a result, few units sold in the first few months through trade shops and showrooms.
The document describes a queuing system of an online legal service that receives customer emails and has lawyers respond to them. Key details:
- Emails arrive at a rate of 10 per hour with a coefficient of variation of 1.
- One lawyer responds to emails, taking on average 5 minutes with a standard deviation of 4 minutes.
- The average customer wait time is calculated to be 20.5 minutes.
- With a 10 hour work day, a lawyer would receive about 100 emails.
- The lawyer would have 1.66 hours for other work when not responding to emails.
- Reducing the standard deviation of response times to 0.5 minutes would not change average wait or lawyer work time.
Donner Company accepts orders of varying sizes, from small to large. This causes issues for their shop floor and performance. Taking both small and large orders leads to inefficient scheduling and idle workers as manual and automated processes require different staffing levels. It also increases returns and delays, as larger orders are more difficult for Donner to complete accurately due to incomplete operations and quality issues. Accepting both small and large orders makes it hard to assess worker performance and impacts key metrics like average flow time, on-time shipment, and quality levels.
Coke introduced New Coke to compete with Pepsi on taste, despite Coke's strong brand equity and cultural symbolism. This ignored that taste was never the main issue, and played into Pepsi's strategy of using taste tests to show Pepsi was better. Consumer reaction showed symbolic value was more important than taste. Coke quickly withdrew New Coke, but it was a case of short-sighted marketing myopia as they failed to recognize they were more than just a beverage. While initial data showed New Coke beating Pepsi, Coke may have rushed its decision to withdraw so quickly without more advertising or patience for consumers to adjust.
Sport Obermeyer was founded in 1947 in Aspen, Colorado to design and produce skiwear. It sources materials from around the world and produces garments in factories in Hong Kong and China. It faces challenges in forecasting demand accuracy and allocating production given long lead times and little market feedback until trade shows in March. Production in China has lower costs but higher minimums and risks from trade relationships, while Hong Kong has higher costs but more flexibility.
The cola wars between Coke and Pepsi continued into the 21st century with both companies facing new challenges. While CSD consumption had grown steadily in the US from 1970 to 2000, growth slowed in the 2000s. Both companies relied on brand extensions like Diet Coke and Diet Pepsi to boost sales. By 2004, Pepsi had gained market share over Coke, but both remained the top two brands. To sustain profits, Coke and Pepsi expanded their product portfolios beyond carbonated soft drinks into non-carbonated beverages, bottled water and juices.
Nucor is considering building a new steel mill. The CEO is concerned about committing to the project given resource constraints and whether CSP technology will remain viable long-term. An analysis of Nucor's strengths in administration, employee relations and operations was presented. Weaknesses, opportunities, and threats in the US steel market were also reviewed. Nucor will decide on the project based on criteria requiring 100% commitment of previous capital, 25% ROA within 5 years, and maintaining debt-equity below 30%.
Apple INC.: Managing a Global Supply ChainAyesha Majid
As part of her analysis of Apple’s stock, she wanted to look at the company’s supply chain to see if she could gain some insight into the pros and cons of Apple as a key holding in BXE’s fund. When. Apple Computer was founded on April 1, 1976, by Steve Jobs, Steve Wozniak and Mike Markkula to manufacture and distribute desktop computers.
Sport Obermeyer Ltd is a skiwear manufacturer founded in 1947 that produces a broad line of ski apparel, with estimated sales of $32.8 million in 1992. The company has production facilities in Hong Kong and China through a joint venture partner called Obersport Ltd to handle sourcing and production. The document outlines Sport Obermeyer's production process, challenges, issues, and recommendations to improve demand forecasting and flexibility to better meet orders.
Classic knitwear and Guardian: A Perfect Fit?ArielJimenez36
This document discusses a decision facing Classic Knitwear about whether to partner with Guardian to launch a new line of insect repellent knitwear. Classic Knitwear specializes in manufacturing unbranded casual knitwear, while Guardian is a brand of insect repellent popular with outdoor enthusiasts. The partnership could help Classic differentiate its products and improve its low gross margins of 18%. However, there are risks around whether the new product line would sell well and whether it aligns with Classic's strategy. The document analyzes different options for the partnership and their pros and cons.
Benihana of Tokyo was founded in 1964 by Rocky Aoki who saw an opportunity to bring Japanese cuisine to Americans in an interactive way. He started with $10,000 in savings and $20,000 in loans, growing the business to 15 restaurants worth $12 million. Benihana's unique hibachi table concept allowed customers to watch their food being prepared, reducing kitchen space needs. Their limited 3-item menu and focus on high traffic locations helped lower food costs and drive sales. Through well-trained chefs and creative advertising, Benihana was able to achieve industry-leading labor costs of 10-12% of sales and grow successfully while differentiating from typical American restaurants.
This document analyzes Apple Inc.'s strategy, hardware, software, supply chain, and provides a summary. It discusses Apple's $532 billion market capitalization and the success of the iPhone, noting competition from Samsung and suggestions to invest more in R&D and integrate new technologies. The iPad is analyzed along with the need to improve the iPad Mini and add more enterprise features. Issues with iOS maps are also summarized. The document reviews Apple's acquisitions and supply chain, including Foxconn factories. It concludes with recommendations to invest cash in R&D, address CSR issues, expand into emerging markets, and maintain collaboration across devices.
Manzana Insurance's Fruitvale branch is experiencing declining profits due to high turnaround times, uneven workload distribution, rising late renewals, increased renewal losses, inconsistent departmental priorities, and outdated completion time standards. This has allowed competitor Golden Gate to capture more market share by announcing a one-day turnaround time. Recommendations include revising how turnaround time is calculated using mean times rather than outdated standards, balancing workloads, prioritizing renewals, standardizing departmental processes, and potentially automating parts of the underwriting process.
Sport Obermeyer produces skiwear and uses a combination of qualitative forecasting techniques to estimate demand for initial production. They forecast demand for 10 styles and determine the optimal order quantity for each by balancing the risks and costs of under- and over-estimating demand. The summary recommends operational changes like reducing style complexity, shortening lead times, developing supplier relationships, expanding distribution, and collecting historical data to improve forecasting. For sourcing, Hong Kong is best for flexibility and quality on smaller orders and higher risk styles, while China is better for larger volumes and lower risk styles, but long term quality improvements in China could leverage both countries' advantages.
This document outlines the process flow for a cranberry operation and identifies bottlenecks. It analyzes adding additional equipment like dryers and dumpers to increase throughput. The key constraints are the destoning and drying capacities. Adding one new dryer initially and two more later could increase drying capacity to 1200 bbls/hr and reduce processing time. Investing in a dumper previously did not address the bottleneck and was a mistake.
Dell was facing increasing costs in its L5 desktop manufacturing supply chain due to motherboards being air freighted to the US for integration. The BPI team evaluated 6 options to address this, including keeping the existing 3PI model or moving integration to Dell facilities. After assessing factors like costs, complexity, quality and capital requirements, the team recommended Option 3A of establishing an offline integration facility at Dell's Supplier Logistics Center. While this would make cost accounting more complex, it offered low capital costs and improved supplier quality management. However, the sustainability of this approach could be impacted by further chipset supply issues.
Eliayahu Goldratt through The goal is th Master in Indusry Teaching with his...veerabadramr
The document summarizes the key events and lessons learned in the book "The Goal" by Eliyahu M. Goldratt. It describes how the main character, Alex Rogo, is struggling to prevent his factory from shutting down due to lack of productivity. He meets his former professor Mr. Jonah who helps him identify the bottlenecks hindering productivity and implement changes to improve throughput, reducing inventories and on-time shipping. As a result, Alex is able to significantly increase sales and productivity, saving his factory from closure.
The document summarizes the key events and lessons from the book "The Goal" by Eliyahu M. Goldratt. It describes how the main character Alex Rogo is tasked with turning around a struggling manufacturing plant within 3 months. With help from his former professor Jonah, Alex learns that productivity and efficiency don't necessarily achieve the company's true goal of making money. Jonah teaches Alex about throughput, inventory, and constraints to help optimize flow and profitability. Applying these lessons, Alex is able to turn the plant around and meet its financial targets.
Home Depot was founded in 1978 and initially focused on the do-it-yourself home improvement market. By 1985, Home Depot had grown to 50 stores across 15 markets. However, from 1983-1985 Home Depot experienced negative cash flow from operations and increasing inventory levels due to its aggressive expansion strategy. While sales per store remained steady, earnings per store and employee declined significantly during this period. Given constraints on its stock price and debt covenants, Home Depot needed to improve operating performance and consider changes to its growth strategy.
- Edgar Newell started Newell Company in 1902 through the acquisition of a curtain rod manufacturer.
- Dan Ferguson crafted a growth strategy of acquiring companies to expand Newell's product line.
- In the late 1990s, Newell faced challenges from increased customer buying power and consolidation in the retail industry.
- Newell acquired Calphalon and Rubbermaid but integrating the large Rubbermaid presented challenges due to its size, reputation, and operations that could impact Newell's strategy.
Aqualisa Quartz - Simply A Better Shower (HBR Case Study)Arjun Parekh
The document discusses Aqualisa's Quartz shower valve which was intended to improve on existing shower technologies but struggled initially. It provides details on the UK shower market, Aqualisa's distribution channels, and the development of the Quartz valve. While the Quartz valve had technological advantages, plumbers were wary of innovation and it was priced too high. As a result, few units sold in the first few months through trade shops and showrooms.
The document describes a queuing system of an online legal service that receives customer emails and has lawyers respond to them. Key details:
- Emails arrive at a rate of 10 per hour with a coefficient of variation of 1.
- One lawyer responds to emails, taking on average 5 minutes with a standard deviation of 4 minutes.
- The average customer wait time is calculated to be 20.5 minutes.
- With a 10 hour work day, a lawyer would receive about 100 emails.
- The lawyer would have 1.66 hours for other work when not responding to emails.
- Reducing the standard deviation of response times to 0.5 minutes would not change average wait or lawyer work time.
Donner Company accepts orders of varying sizes, from small to large. This causes issues for their shop floor and performance. Taking both small and large orders leads to inefficient scheduling and idle workers as manual and automated processes require different staffing levels. It also increases returns and delays, as larger orders are more difficult for Donner to complete accurately due to incomplete operations and quality issues. Accepting both small and large orders makes it hard to assess worker performance and impacts key metrics like average flow time, on-time shipment, and quality levels.
Coke introduced New Coke to compete with Pepsi on taste, despite Coke's strong brand equity and cultural symbolism. This ignored that taste was never the main issue, and played into Pepsi's strategy of using taste tests to show Pepsi was better. Consumer reaction showed symbolic value was more important than taste. Coke quickly withdrew New Coke, but it was a case of short-sighted marketing myopia as they failed to recognize they were more than just a beverage. While initial data showed New Coke beating Pepsi, Coke may have rushed its decision to withdraw so quickly without more advertising or patience for consumers to adjust.
Sport Obermeyer was founded in 1947 in Aspen, Colorado to design and produce skiwear. It sources materials from around the world and produces garments in factories in Hong Kong and China. It faces challenges in forecasting demand accuracy and allocating production given long lead times and little market feedback until trade shows in March. Production in China has lower costs but higher minimums and risks from trade relationships, while Hong Kong has higher costs but more flexibility.
The cola wars between Coke and Pepsi continued into the 21st century with both companies facing new challenges. While CSD consumption had grown steadily in the US from 1970 to 2000, growth slowed in the 2000s. Both companies relied on brand extensions like Diet Coke and Diet Pepsi to boost sales. By 2004, Pepsi had gained market share over Coke, but both remained the top two brands. To sustain profits, Coke and Pepsi expanded their product portfolios beyond carbonated soft drinks into non-carbonated beverages, bottled water and juices.
Nucor is considering building a new steel mill. The CEO is concerned about committing to the project given resource constraints and whether CSP technology will remain viable long-term. An analysis of Nucor's strengths in administration, employee relations and operations was presented. Weaknesses, opportunities, and threats in the US steel market were also reviewed. Nucor will decide on the project based on criteria requiring 100% commitment of previous capital, 25% ROA within 5 years, and maintaining debt-equity below 30%.
Apple INC.: Managing a Global Supply ChainAyesha Majid
As part of her analysis of Apple’s stock, she wanted to look at the company’s supply chain to see if she could gain some insight into the pros and cons of Apple as a key holding in BXE’s fund. When. Apple Computer was founded on April 1, 1976, by Steve Jobs, Steve Wozniak and Mike Markkula to manufacture and distribute desktop computers.
Sport Obermeyer Ltd is a skiwear manufacturer founded in 1947 that produces a broad line of ski apparel, with estimated sales of $32.8 million in 1992. The company has production facilities in Hong Kong and China through a joint venture partner called Obersport Ltd to handle sourcing and production. The document outlines Sport Obermeyer's production process, challenges, issues, and recommendations to improve demand forecasting and flexibility to better meet orders.
Classic knitwear and Guardian: A Perfect Fit?ArielJimenez36
This document discusses a decision facing Classic Knitwear about whether to partner with Guardian to launch a new line of insect repellent knitwear. Classic Knitwear specializes in manufacturing unbranded casual knitwear, while Guardian is a brand of insect repellent popular with outdoor enthusiasts. The partnership could help Classic differentiate its products and improve its low gross margins of 18%. However, there are risks around whether the new product line would sell well and whether it aligns with Classic's strategy. The document analyzes different options for the partnership and their pros and cons.
Benihana of Tokyo was founded in 1964 by Rocky Aoki who saw an opportunity to bring Japanese cuisine to Americans in an interactive way. He started with $10,000 in savings and $20,000 in loans, growing the business to 15 restaurants worth $12 million. Benihana's unique hibachi table concept allowed customers to watch their food being prepared, reducing kitchen space needs. Their limited 3-item menu and focus on high traffic locations helped lower food costs and drive sales. Through well-trained chefs and creative advertising, Benihana was able to achieve industry-leading labor costs of 10-12% of sales and grow successfully while differentiating from typical American restaurants.
This document analyzes Apple Inc.'s strategy, hardware, software, supply chain, and provides a summary. It discusses Apple's $532 billion market capitalization and the success of the iPhone, noting competition from Samsung and suggestions to invest more in R&D and integrate new technologies. The iPad is analyzed along with the need to improve the iPad Mini and add more enterprise features. Issues with iOS maps are also summarized. The document reviews Apple's acquisitions and supply chain, including Foxconn factories. It concludes with recommendations to invest cash in R&D, address CSR issues, expand into emerging markets, and maintain collaboration across devices.
Manzana Insurance's Fruitvale branch is experiencing declining profits due to high turnaround times, uneven workload distribution, rising late renewals, increased renewal losses, inconsistent departmental priorities, and outdated completion time standards. This has allowed competitor Golden Gate to capture more market share by announcing a one-day turnaround time. Recommendations include revising how turnaround time is calculated using mean times rather than outdated standards, balancing workloads, prioritizing renewals, standardizing departmental processes, and potentially automating parts of the underwriting process.
Sport Obermeyer produces skiwear and uses a combination of qualitative forecasting techniques to estimate demand for initial production. They forecast demand for 10 styles and determine the optimal order quantity for each by balancing the risks and costs of under- and over-estimating demand. The summary recommends operational changes like reducing style complexity, shortening lead times, developing supplier relationships, expanding distribution, and collecting historical data to improve forecasting. For sourcing, Hong Kong is best for flexibility and quality on smaller orders and higher risk styles, while China is better for larger volumes and lower risk styles, but long term quality improvements in China could leverage both countries' advantages.
This document outlines the process flow for a cranberry operation and identifies bottlenecks. It analyzes adding additional equipment like dryers and dumpers to increase throughput. The key constraints are the destoning and drying capacities. Adding one new dryer initially and two more later could increase drying capacity to 1200 bbls/hr and reduce processing time. Investing in a dumper previously did not address the bottleneck and was a mistake.
Dell was facing increasing costs in its L5 desktop manufacturing supply chain due to motherboards being air freighted to the US for integration. The BPI team evaluated 6 options to address this, including keeping the existing 3PI model or moving integration to Dell facilities. After assessing factors like costs, complexity, quality and capital requirements, the team recommended Option 3A of establishing an offline integration facility at Dell's Supplier Logistics Center. While this would make cost accounting more complex, it offered low capital costs and improved supplier quality management. However, the sustainability of this approach could be impacted by further chipset supply issues.
Eliayahu Goldratt through The goal is th Master in Indusry Teaching with his...veerabadramr
The document summarizes the key events and lessons learned in the book "The Goal" by Eliyahu M. Goldratt. It describes how the main character, Alex Rogo, is struggling to prevent his factory from shutting down due to lack of productivity. He meets his former professor Mr. Jonah who helps him identify the bottlenecks hindering productivity and implement changes to improve throughput, reducing inventories and on-time shipping. As a result, Alex is able to significantly increase sales and productivity, saving his factory from closure.
The document summarizes the key events and lessons from the book "The Goal" by Eliyahu M. Goldratt. It describes how the main character Alex Rogo is tasked with turning around a struggling manufacturing plant within 3 months. With help from his former professor Jonah, Alex learns that productivity and efficiency don't necessarily achieve the company's true goal of making money. Jonah teaches Alex about throughput, inventory, and constraints to help optimize flow and profitability. Applying these lessons, Alex is able to turn the plant around and meet its financial targets.
I gave this talk at the Budapest University of Technology and Economics to psychology students about the philosophies we use to build and improve a workplace. I covered a wide range of topics (Taylor, Kanban, staff liquidity, cynefin, etc.)
Monkeys in Lab Coats: Applying Failure Testing Research @NetflixC4Media
Video and slides synchronized, mp3 and slide download available at URL http://bit.ly/1RMrvo0.
The authors present their experience in collaboration between industry and academia, describing how a “big idea” -- lineage-driven fault injection -- evolved from a theoretical model into an automated failure testing system that leverages Netflix’s state-of-the-art fault injection and tracing infrastructures. Filmed at qconlondon.com.
Kolton Andrus is the founder of Gremlin Inc. He is passionate about building resilient systems, primarily as it lets him break things for fun and profit. Peter Alvaro is an Assistant Professor of Computer Science at the University of California Santa Cruz. He is the creator of the Dedalus language and co-creator of the Bloom language.
This SolidWorks World 2006 presentation from Paul Gimbel of Razorleaf Corporation focuses on how to redesign your engineering design processes to leverage the use of 3D CAD tools like SoildWorks.
Ross Snyder, Etsy, SXSW Lean Startup 2013500 Startups
1. Etsy moved from a waterfall deployment process with long development cycles and infrequent deployments to a continuous deployment model with small code changes deployed frequently by engineers.
2. Continuous deployment allows Etsy to experiment continuously and make small iterative improvements, reducing the risk of outages and allowing issues to be addressed quickly.
3. Etsy now deploys code changes over 25 times per day on average, every day, with the goal of keeping deployments fast and low-risk through techniques like feature flags and extensive monitoring.
Continuous Deployment at Etsy: A Tale of Two ApproachesRoss Snyder
1. Etsy has transitioned from infrequent deployments that took weeks of work and often broke the site, to deploying up to 25 times per day with near effortless deploys.
2. By deploying frequently with small code changes and thorough testing, the probability and severity of degradations is reduced, allowing issues to be detected and resolved quickly.
3. Etsy's continuous deployment approach enables rapid experimentation and improvement through frequent analysis of deployment outcomes and re-examination of assumptions.
Continuous Delivery: Delivering Client Value at Light Speed - DevCon 2015Aaron Blythe
This document discusses continuous delivery and DevOps. It emphasizes that getting the culture, workflow, and tooling right are key to continuous delivery. Culture can change for the better with patience and persistence. The document recommends automating processes to achieve quality. It also provides examples of companies like HP and Microsoft that took years to fully implement continuous delivery.
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The document discusses estimates and managing uncertainty in projects. It argues that estimates are often blamed for project failure, but the real issue is variance between estimates and actual outcomes. The document advocates for keeping work items small to reduce uncertainty and variability. It suggests splitting work into predictable chunks and using frequent learning from small changes to continually improve estimates. An activity demonstrates that humans can more accurately estimate small numbers of items. The key takeaway is to keep tasks, batches, cycles, timescales, changes, and planning small to reduce context switching costs and improve predictability.
A Journey to Lean , Make America great again , brief journey of Appliances manufacturing , re-shoring , Value chain ,and operatinal excellence througfh lean transformation , lessons o management at Nummi factory
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Starting over requires us to do at least two things: re-learn the principles and practices, and look for examples on how others recovered. I believe that understanding the pull system, the WIP limits, and the difference between manufacturing and software development will give us enough to recover faster from failures and accelerate the learning process. Moreover, I assume that I did more wrong than right during my journey in Kanban land, and it cost me a lot. I believe that if I share these stories with you, it will save you a great deal of trouble for yourself, and if not, at least you'll have some ideas on how to recover.
This workshop explores three important Lean concepts - Kanban, Flow and Cadence (KFC) - which can be combined to generate a more pipeline-based approach to software development, as opposed to the more common timebox-based approaches of more traditional Agile methods. The presenters will describe their experiences implementing these ideas at Yahoo! and explain the concepts using examples, simulations and games. In addition, because this is a new and emerging way of working, there will be an opportunity for discussion between the participants about how the ideas might be applied in their own situations, in order to advance the art. - See more at: http://conferences.agilealliance.org/sessions/20082311#sthash.QqTFKRkG.dpuf
Theory Of Constraints - Agile Tour 2013 Craig Strong & Daryn Holmesstrongandagile.co.uk
These slides are from the presentation at http://www.agiletourlondon.co.uk 1/11/2013. They are based on simulated results using a basic Kanban workflow. The goal of the presentation was to explain the Theory Of Constraints by example and show how this can be applied to make effective changes and
to provoke thinking about the wider system we work within
The team found a bug in their code related to parsing datetime values. They thanked the developer who reported the bug and worked to reproduce and understand the root cause. They added a failing test case, fixed the code, and reran all tests to confirm the fix worked. Based on their analysis, they identified ways to improve testing practices and prevent similar bugs. They searched the code for other similar datetime parsing issues, finding two additional bugs. The team is committed to continuously improving their processes to deliver high quality code.
The document discusses silos in organizations and how they are a reflection of organizational structure. It notes that silos form due to processes like Parkinson's Law where work expands to fill available time. This leads to multiplication of subordinates and work. The document suggests that cross-functional teams and DevOps teams are attempted solutions but can still result in new silos forming or missing the underlying issues. It argues that the focus should be on improving manufacturing processes, communication, education and collaboration between teams to solve the problems created by silos rather than trying to eliminate the silos themselves.
DevOps Army of One - DevOps Days Silicon Valley 2015funjon
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At DevOps Days Silicon Valley 2015, I shared a series of unfortunate events that led to my current status: the Human SPoF; I also discussed some of the tactics I've used to survive. Automation, tools, and code-as-infrastructure are a force multiplier applied correctly, allowing one engineer to do the work of many. However, these wonders come with a price tag. I also covered some strategies to grow a team, and ways to maintain sanity while keeping the lights blinking and the disks spinning in a 24x7 real-time environment with over 2000 servers.
5 - Day Kaizen Event focusing on AR Changeover to:
- Lead time reduction
- Cycle time reduction
- Improve workflow
- WIP reduction
- Improve ergonomics, housekeeping & safety
- Clear SOPs & training materials
Achieved
- 81% Lead time reduction
- 37% Cycle time reduction
- 80% WIP reduction
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"Of course, you prefer to take players who are fully fit, but that's okay. We want to wait and be patient for some players even if they cannot play in those first matches," he told a press conference. The 37-year-old Vertonghen, Belgium’s Euro Cup 2024 most-capped international with 154 appearances, is struggling to shake off a groin injury.
"He will be there normally. This also applies to Youri Tielemans and Arthur Theate. The latter's position is very sensitive. We don't have many choices at left back. "It will only change if it turns out that they will only be available when, say, the final of the Euro 2024 Championship comes around. That's too long to wait. "However, I am confident that the injured boys are on track for the Euros.
Belgium vs Romania: Radu Dragusin Prepares for Crucial Role in Euro Cup Germany
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But is crucial to his country's cause at UEFA Euro 2024 where his aerial ability, physicality and hard graft make him a standout player. The 22-year-old moved to North London from Italian side Genoa in January but was kept on the sidelines by the form of another new arrival for the season, Mickey van de Ven, something Romania coach Edward Iordanescu admitted was a concern.
It will mean limited game-time going into the finals, but Dragusin, who cites Netherlands defender Virgil van Dijk as a role model, started every Euro Cup Germany qualifier as Romania went through the campaign unbeaten in their 10 games. He will be among their most important players in their first game in Germany against Ukraine in Munich on June 17, taking the right centre-back role in what is likely to be a back four.
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The goal
1. The Goal
A Process of Ongoing Improvement
Eliyahu M. Goldratt and Jeff Cox
2. The Goal
Characters:
Alex Rogo – Plant Manager
Jonah – Physicist/Production Consultant
Bill Peach – Division VP of Manufacturing
Bob Donovan – Plant Production Manager
Lou ____ - Plant Controller
Stacey Potazenik – Production Control Manager
Ralph Nakamura – data processing manager
3. The Goal
Setting:
City of Bearington – location?
Pennsylvania, Ohio, Indiana manufacturing
town
UniCo Corporation Manufacturing Plant –
– probably 15 years old
– other impressions?
4. The Goal
Introduction: What’s your first impression of the
manufacturing plant?
• Plant out of control
• VP of manufacturing expediting an order
• New robots
• Controlled chaos
• Good at “fighting fires”
• Excellent at getting order filled when pressed
• Lots of inventory
5. The Goal
Alex travels to corporate meeting with a
bunch of “corporate speak”.
Alex begins daydreaming.
6. The Goal
Alex/Jonah Chance Meeting in Airport
Alex – “Robots increased productivity by 36% in
one department”
Jonah – “Are plant inventories down?” : No
“Is employee expense less?” : No
“Shipping more product?”: No
Alex – “Must keep robots running to maintain
efficiencies”.
Jonah – Then “Inventories must be sky high and
orders must be late.”
7. The Goal
Alex/Jonah Chance Meeting in Airport –
cont.
Jonah – “In your own words, what is productivity.”
Alex – “ Accomplishing your goals”.
Jonah – “Correct, then what is the goal of your
company?”
Alex – “To be more productive?” : No
“To produce products?” : No
“To increase market share?”: No
Jonah – “How can you be productive? You don’t
know the goal.”
8. The Goal
What does Alex determine “The Goal” is?
To make money!!
How do you know you are making money (Alex
and Lou)?
• Net profit (Income-Expenses)
• Return on Investment
• Cash Flow
Why are each of these important?
9. The Goal
How do the “making money” measures
translate to the production environment?
(Jonah’s translation)
• Throughput – Is the rate at which the
system generates money through “Sales”
• Inventory – all the money that the system
has invested in purchasing things which it
intends to sell.
• Operational Expenses – all the money the
system spends in order to turn inventory
into throughput.
10. The Goal
What was the common word in all three
measurement definitions?
• Money going into the system
• Money stuck inside the system
• Money flowing out of the system
11. The Goal
• Throughput – Is the rate at which the system generates
money through “Sales”
• Inventory – all the money that the system has invested
in purchasing things which it intends to sell.
• Operational Expenses – all the money the system
spends in order to turn inventory into throughput.
Where do the following fit?
• Raw materials
• Direct labor
• Indirect labor
• Tooling, machines, building
• Knowledge gained by employees
12. The Goal
Alex meets Jonah in New York seeking help
to determine steps to take in achieving
the goal:
Jonah – “Do you run a balanced plant? Do
you have any idle workers and is it good
or not?”
Alex – “We try to keep all our employees
productive”
13. The Goal
Jonah – “Impossible to perfectly balance capacity
to demand, there even exists a mathematical
proof showing if you did, inventories go through
the roof?”
Alex – “How’s this possible”
Jonah – “Due to two phenomenon:
1. Dependent events – a series of events must
take place before another begins.
2. Statistical Fluctuations – the length of events
and outcomes are not completely deterministic.
The combination of these phenomenon are the
issue.”
14. The Goal
Dependent events – Statistical Fluctuations
Q. - Where does Alex first come to grips with this
(i.e. sees this first hand)?
A. – During the boy scout hike.
15. The Goal
Analyzing the boy scout hike
Observations:
• the walking speed of individuals fluctuate
• All may have the same average walking speed,
but gaps continue to lengthen, why?
• There is no limit to how much an individual can
slow down, but your top speed is dependent on
the person in front.
• Fluctuations are accumulating over time, and
the slow fluctuations tend to accumulate faster
because they are not limited like the fast ones.
16. The Goal
Boy scout hike –> Manufacturing Plant
Observations:
• Each boy is an operation
• The product is “walk the trail”
• Each boy/operation is dependent on the one in front.
• A “sale” is when the last operation/boy walks the trail.
• Throughput is the rate at which the last person walks the
trail.
• Operating expense is the energy output of each boy.
• Inventory (material inside the plant) is the distance
between the first and last boy.
• Fluctuations in operating speed is causing inventory to
increase and causing throughput to decrease. Attempting
to reduce gaps is increasing operating expense.
17. The Goal
Play the matches game?
• Setup: 5 players, 5 bowls, matches, 1 die
• Dump all matches in bowl #1
• Roll one die (starting with player #1) and pass that many matches
from your bowl to the next person down the line
• Pass die to next player who rolls die and moves that number of
matches from their bowl to next player, cannot pass more matches
than what is in your bowl.
• Continue for each player, with last player handing die back to player
#1.
• What is the average number rolled on a die?
• After 20 rounds, how many matches should the last player
“produce”?
18. The Goal
Back to the Boy scout hike
After lunch the boy scouts “self-arrange” so that the fastest is
up front and so on until Herbie is at the rear.
Q. What was the result?
A. Line got even longer.
Q. Did throughput improve (completing more miles)?
A. No, completed miles still dependent on last scout walking
the trail, plus “inventory” has increased.
Observation: however, everyone is always walking (no one is
idle). But goal is not being achieved.
19. The Goal
Continuing with the Boy scout hike
Q. How does Alex fix the boy scout hike?
A. Puts kids in order from slowest first to fastest last. The line
then stays compressed (i.e. inventory has gone down and
progress has improved because Herbie is setting the
pace and doesn’t have to exert energy to catch up).
Q. How do they further improve throughput?
A. Off-loaded Herbie’s backpack. In oherwords, they
improved Herbie’s throughput so the entire boy troop’s
throughput improved.
20. The Goal
Alex’s First Chance to Test the Boy Scout Theory
Hilton Smyth’s order
• needs 100 parts by end of day
• Parts require 2 operations, fabrication then weld by robot
• Each department averages 25 units per hour, with robot
working at almost exactly 25 unit pace.
• Start fabrication at noon, transferring parts on the hour,
every hour.
Fabrication Transfer Weld
(25/hour) (once/hour) (25/hour)
21. The Goal
Alex’s First Chance to Test the Boy Scout Theory
Fabrication Transfer Weld
(25/hour) (once/hour) (25/hour)
Expectation:
noon 1:00 2:00 3:00 4:00
Fabrication 25 25 25 25
Welding 25 25 25 25
Hourly Part Count
22. The Goal
Alex’s First Chance to Test the Boy Scout Theory
Fabrication Transfer Weld
(25/hour) (once/hour) (25/hour)
Realization:
noon 1:00 2:00 3:00 4:00
Fabrication 19 21 28 32 100
Welding 19 21 25 25 90
Hourly Part Count
23. The Goal
Q. So what have they learned to this point?
A. Have more capacity at downstream operations.
24. The Goal
Q. What does Jonah suggest they do next?
A. Distinguish between bottleneck and non-bottleneck
resources.
Definition:
Bottleneck – any resource whose capacity is equal to or less
than the demand placed upon it.
Non-bottleneck – any resource whose capacity is greater
than the demand placed upon it.
25. The Goal
Jonah then suggests balancing the flow of product through
the plant with demand from the market. Not to balance
the capacities of operations with demand.
Q. What determines the flow of product through the plant.
• The bottleneck resources.
26. The Goal
The next step for Alex and company is to identify the
bottlenecks (i.e. find Herbie).
Q. So how do you find a bottleneck in a manufacturing plant?
A. Go out on the floor and find the operation with the most
inventory sitting in front of it.
Q. Is having a bottleneck a bad thing?
A. Not necessarily, all plants have to have a bottleneck.
27. The Goal
The next step for Alex and company is to identify the
bottlenecks (i.e. find Herbie).
Q. Once the bottleneck is identified, can you simply move the
machines/operations around like Herbie was moved to
the front of the line?
A. No, production steps often cannot be reorganized.
Q. So how do you solve the problem of “moving Herbie to the
front”?
A. Find more capacity for the bottleneck, don’t try to move
them. Have enough capacity to meet demand.
28. The Goal
The next step for Alex and company is to identify the
bottlenecks (i.e. find Herbie).
Q. How do you find more capacity?
• Make sure it is never idle (focus your attention on it).
• Increase cycle time on the machine
• Add another duplicate machine
• Outsource to another vendor
• Reduce the demand (process change)
• Inspect part quality before bottleneck (make sure bottleneck only
works on good parts)
• Ensure process controls on bottleneck are good so bad parts aren’t
produced
• Don’t let it work on parts that aren’t needed.
29. The Goal
Back to the story:
Q. Where does Alex and company find the bottleneck?
A. They find two bottlenecks, NCX-10 and Heat Treat
Q. What is thier first approach to improving the flow through
the bottlenecks and ultimately improving productivity.
1. Move QC in front of bottlenecks.
2. Make a list of all late jobs and what components from those
jobs flow through the bottleneck machines. They then
create a schedule/list in due date order and instruct the
bottleneck operators to only work on those jobs in that
order.
30. The Goal
Back to the story:
Q. Does this scheduling system work (e.g. get late jobs completed
while always keeping bottleneck running)?
A. No, because the late job components are not always waiting in
front of the bottleneck machines.
Q. What do they do to rectify this?
A. Create a red tag (parts that travel through the bottleneck) / green
tag system for all jobs throughout the plant such that any job
with a red tag which arrives at a machine is given priority. If
they are in the middle of a run, then if the run takes longer than
30 minutes to complete, stop that job and start the red tag job.
If no red tags, then ok to process green tag jobs. If more than
one red (or green tag), then process job with lower number on
tag.
31. The Goal
Back to the story:
Q. What do they do next to further off-load the Herbies / bust the
bottleneck?
1. Gold tags placed on parts that have traveled through the
bottleneck everyone extra careful not to damage.
2. Dedicate personnel at NCX-10 and Heat Treat even though
they are idle much of the time, just don’t let machine idle.
3. Send out some portion of heat treat parts to vendor in town.
4. Found old equipment (that is less efficient) to run in parallel to
NCX-10.
5. Fully load furnace when possible (e.g. mix batches).
6. Reduce setup time with new fixtures.
7. Were able to process some parts differently so heat treat
wasn’t required.
32. The Goal
Back to the story:
Q. What were the results of these bottleneck busting tactics?
1. New monthly shipping record from old record of 2 million to
new record of 3 million.
2. 57 customer orders shipped versus old record of 31.
3. WIP Inventories reduced 12%.
33. The Goal
What happens next?
The bottlenecks are apparently expanding… material is backing up
at the milling machines, and non-bottleneck parts (green tags)
are not reaching assembly even though all bottleneck parts
(red tags) are available at assembly.
34. The Goal
What happens next?
Jonah revisits plant and discusses relationship between
bottleneck(X) and non-bottleneck(Y) machines.
1) Y X 3) Y A 4) Y Product A
2) X Y X S X Product B
S
E
M
B
L
Y
35. The Goal
Jonah believes the “new bottlenecks” are not real bottlenecks, but
self-created bottlenecks. Why?
A. Material is being “released” to the plant just to keep the non-
bottleneck machines busy. This improves these machines
efficiency measures, but does not help the goal.
Jonah: “A system of local optimums is not an optimum system at all;
it is a very inefficient system”.
Lesson: Do not try to make non-bottlenecks work all the time. They
should be idle some of the time!
36. The Goal
So how do you go about fixing the problem of keeping the non-
bottleneck machines working at the same rate as the
bottleneck?
Recall the boy scout hike: Herbie is in the middle of the line and
cannot be moved, so how do you keep the kid in the front
walking at the same pace as Herbie?
Alex’s kids: use a rope and a drum.
Rope: Attach a rope from Herbie (bottleneck machine) to the kid at
the front (assembly). The length of rope represents inventory.
Drum: Herbie tells the kid at the front to slow down or speed up
(beats the drum). Need some kind of signaling or
communication between assembly and the bottleneck.
37. The Goal
How is the rope and drum concept implemented in the plant?
• Identified it takes about 2 weeks from when parts are released
to the floor until they get to bottleneck.
• Setup system that monitors when inventory is processed at the
bottleneck. Material required 2 weeks later is then released to
the floor.
• Non-bottleneck parts are released according using the same
principle but tied to assembly.
Communicate release
Material Release Bottleneck
2 weeks lead time
38. The Goal
What is the result of this new release system?
• WIP is down.
• Revenues are up.
• Efficiencies dropped initially, but have come back up.
• The backlog of orders is completely gone (satisfied customers).
How does management respond?
• Happy
• Somewhat skeptical success will last
• Wants 15% more revenue next month!!
39. The Goal
In order to improve by another 15% what does Jonah suggest as the
“next logical step”?
• Cut batch sizes for non-bottleneck parts in half.
What is the impact of reducing these batch sizes?
• WIP for non-bottleneck parts reduced by half.
• Significantly reduce time parts spend in plant. Leads to
increased responsiveness (from 6-8 weeks to 3-4 weeks).
What about the time to handle increased number of setup? Doesn’t
matter if occurs on non-bottleneck operations.
Process Time Setup Time Queue Time Wait for Assembly Time
Time parts spend in the plant
40. The Goal
Also to help get the 15%, Alex calls the marketing/sales
manager and bets him he can reduce lead time to fill
orders. What does Alex expect to gain by reducing
lead times to ship from what used to be 4 months to
4 weeks?
• Increased sales!!
• The bottleneck had moved to customer demand.
Quick response on promised due dates should
translate to a competitive advantage.
41. The Goal
Everything is going good now except it looks like part costs are
going up. However, in reality all costs have gone down. How
can this be?
The accounting rules:
• Cost per part = raw material + direct labor + burden cost
• Burden cost is all the indirect labor costs.
• Burden = direct labor x burden factor
Cost per part has risen because more setups are occurring because
of smaller batch sizes.
However, workers were idle, so the increased number of setups
didn’t really increase costs.
42. The Goal
What other performance measure made them not look as
good as they actually were.
Answer: Inventory
Inventory is counted as an asset on the balance sheet.
When the plant worked hard to reduce inventories to
improve their throughput and responsiveness, it
looked as if their assets had fallen.
43. The Goal
Sacred Cows Slaughtered:
• Worker efficiency
• Optimal batch size
• Releasing work to the floor to keep people busy
• Accounting rules
44. The Goal
Why Alex’s plant was successful:
Change in Focus
from the “cost world” to the “throughput world”
Cost Throughput
Throughput Inventory
Inventory Cost
45. The Goal
What process did they use to shift their focus to the “throughput
world”?
The Theory of Constraints
Step 1: Identify the system’s constraints (NCX10 and oven)
Step 2: Decide how to exploit the system’s constraint (don’t take
lunch break on bottleneck machines)
Step 3: Subordinate everything else to the above decision (red tags
and green tags)
Step 4: Elevate the systems constraint (bring back old Zmegma
machine, outsource heat treat)
Step 5: Warning!! If in a previous step, a bottleneck has been
broken, go back to step 1 (material release
system, marketing), but do not allow inertia to cause a
system’s constraint (red and green tags eventually caused
problems).
46. The Goal
Final words from Alex on “how to be an effective
manager”:
Help people to identify:
• “what to change?”
• “what to change to?”
• “how to cause the change?”
47. The Goal
Finally some Philosophy:
What approach did Jonah use to help Alex and the plant succeed?
Find the answers/solutions by asking questions, the Socratic
approach. Let others convince themselves of the answers,
don’t just give it to them.
Also used a “common sense” approach which went against
“common practice”. In other words, think!!