Creating perfect harmony asq 2011

Bob Mendenhall
Senior Consultant
Avraham Y. Goldratt Institute
© 2008 Avraham Y. Goldratt Institute, LP 1

® Real Solutions,
Real Results…
Through Interdependency Engineering SM
• 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.
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

WARNING
Do not allow inertia to become the system’s constraint!
A Process Of OnGoing Improvement
Theory of Constraints

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

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)

Unbalanced
Line
Protective capacity describes the amount of installed
capacity that is necessary to overcome variation.
Production Capacity
1 part per hour
Drum
A B C D E
Capacity
1
Part
per
Hour
• 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”
Balanced
Line
The Operators cycle times are loaded to Takt Time.
Production Cycle Time
Cycle Time
1 hour per part
Takt Time = 60 Minutes A B C D
1
Hour
per
Part
• Operations Improved over time & Balanced to
Achieve TAKT Time
• Surplus Capacity viewed as Waste & Removed
from System
• Dedicated Operators Working to TAKT
©2006 - 2008 Avraham Y. Goldratt Institute, LP All Rights Reserved 16

Unbalanced
Line
Protective capacity describes the amount of installed capacity
that is necessary to overcome variation.
Production Capacity
1 part per hour
Drum
A B C D E
Capacity
1
Part
per
Hour
• 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
Balanced
Line
The Operators cycle times are loaded to Takt Time.
Cycle Time
1 hour per part
1
Hour
per
Part
• 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

Road Runner Ethic vs. Work to Takt

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

Takt Time = 60 Minutes Cycle Time
A B C D
1
Hour
per
Part
1 hour per part
Rope
A B C D E
• 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
Road Runner
Ethic
A B C D E
• 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
Work to Takt
Cycle Time
1 hour per part
1
Hour
per
Part
• 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

Rope Signal vs. Kanban Signal

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

Pull
DBR Rope
Signal
A B C D E
Rope 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.
Kanban
Signal
A B C D E Pull
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.

Pull
DBR Rope
Signal
A B C D E
Rope
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.
Kanban
Signal
A B C D E Pull
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.

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 order
batch size is
variable
Reorder amount
consumed during
each fixed time
Replenishment time is bounded
interval
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.
Quality Based
Replenishment
Minimum Replenishment
Order Batch
Size is fixed.
Don’t reorder
until minimum
replenishment
order batch size
is reached
MAX
MIN
?
Replenishment time is unpredictable
• More $ invested in inventory while providing
highly variable protection of Throughput.
• Process performance is less predictable.
• Focus is parts on the shelf.
© 2000 - 2008 Avraham Y. Goldratt Institute, LP All Rights Reserved 28

Quality Based
Replenishment
Minimum Replenishment
Order Batch
Size is fixed.
Don’t reorder
until minimum
replenishment
order batch size
is reached
29
Top of
Buffer
Time Based
Replenishment
Replenishment order
batch size is
variable
Reorder amount
consumed during
each fixed time
Replenishment time is bounded
interval
• 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.
MAX
MIN
?
Replenishment time is unpredictable
• 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.
©2000 - 2008 Avraham Y. Goldratt Institute, LP All Rights Reserved

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
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
MDP achieves predictable and bounded
replenishment times in presence of demand
variation. Focus : managing the flow of parts in
time.
Unbalanced
Line
Time Based
Replenishment
Balanced
Line
Quality Based
Replenishment
DBR Rope
Signal
Kanban
Signal
Road Runner
Ethic Work to Takt

• The Goal: Maximize Throughput
• Eliminate
waste and
reduce cycle
time
• Reduce variation
and defects and
increase process
predictability

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.
CSI
Continuous
System
Improvement
TOC Lean
Six Sigma
A fully integrated approach to CSI

• 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

Creating perfect harmony asq 2011

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