Tuesday, April 16, 2013

Focus and Leverage Part 200



In this posting we will continue building our Conflict Resolution Diagram (CRD) by surfacing our assumptions and injections for our remaining entities (i.e. B to D, and A to C) and then we’ll begin looking at the conflict that exists between D and E.

We start once again by using our necessity based logic syntax, “In order to have Production scheduled to utilize available capacity (Box B), I must have Production scheduled based on the “push” system (Box D), because…?”

1.  Production needs to be busy ALL the time.  If they aren’t are efficiency metrics will drop outside of an acceptable range.

2.  Company policy mandates the efficiency measure.  Following company policy is important.  If it wasn’t important we would not have to follow any policies.

3.  Production management bonuses are tied to efficiency.  If we didn’t use efficiency as a bonus measure management would not be motivated to get better.

4.  Higher efficiency generates higher ROI.  The Returned On Investment must there.  Otherwise is was a poor investment.

Transfer these assumptions to the CRD
 
 
 
These assumptions are the reasons why the arrow between B and D seems valid.  Either why you, or someone else, thinks the necessary condition “must” be there.   Now look for the possible injections, ask yourself “What must exist in current reality for the assumption to no longer exist, or to go away?” 
Possible injections:
1.  Production Maximized to synchronize throughput.  If efficiency is eliminated and the system is synchronized for throughput then, system benefits will be achieved.
2.  Company policy changed to a throughput/profit measure.  Companies create policies and they can also change them.
3.  Bonuses are determined based on throughput.  Just like polices and procedures the company measures can also be changed.  Measure the right thing to get the right results!
4.  Change from cost measure to throughput.  A radical change in measures from Cost Accounting to Throughput accounting.  Eliminate efficiency and measure system throughput.
Transfer these assumptions to the CRD
 
Again, these assumptions are the reasons why the arrow between A à C seems valid.  Either why you, or someone else, thinks the necessary condition “must” be there.  Now look for the possible injections, ask yourself “What must exist in current reality for the assumption to no longer exist, or to go away?” 
Possible injections:
1.  The right product mix equal maximum profit. Scheduling the right products at the right time will enhance profitability.
2.  Maximize throughput to increase profits.  Maximizing throughput will generate the most profit in the least amount of time
3.  Measure management on throughput.  Measuring system throughput will still give management a measurement, it just focuses on the right measure.
Transfer these injections to the CRD
 
 


We will continue this process and surface assumptions for C à E.  This will be the last two entities on the second leg (bottom) of the CRD.
Now we will continue this process and surface assumptions for C à E.  This will be the last two entities on the second leg (bottom) of the CRD.  Following our necessity based logic we say, “In order to have Production generate the maximum number of products (entity C), I must have Production scheduled based on the “pull” system (entity E), because…?”
1.  Because a “pull” system decrease the production lead-time.  The more synchronized the flow is the faster is will move through the system.
2.  Pulling slows the release.  Synchronized pull system
3.  WIP will go down.  Synchronizing the pull system to the DBR will cause WIP to be reduced..
Transfer these assumptions to the CRD
 

 
 
Again, these assumptions are the reasons why the arrow between C à E seems valid.  Either why you, or someone else, thinks the necessary condition “must” be there.  Now look for the possible injections, ask yourself “What must exist in current reality for the assumption to no longer exist, or to go away?” 
Possible injections:
1.  No injection required. This is probably a valid assumption that does not need to be broken with a suitable injection.
2.  Implement a Drum-Buffer-Rope (DBR system.  DBR provides an excellent pull system scenario to control the release of work based on the system drum beat.
3.  WIP will go down.  A natural output from a DBR system is the reduction in system WIP
 
Transfer these injections to the CRD.
 

This completes the Assumptions and Injections and in our next posting we will look at the conflict that exists between entities D and E and surface ways to break this conflict.
Bob Sproull

 


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