Monday, April 1, 2019

New Book Part 15

In my last post we completed our discussion on TOC's scheduling method, Drum Buffer Rope (DBR) by presenting a graphic of what DBR looks like.  As a reminder, the figure below is that graphic.

We also discussed the impact of buffers on the flow of products through the system.  In today's post we will discuss the next steps in the Ultimate Improvement Cycle (UIC). As a reminder, this material is taken from my newest book, The Focus and Leverage Improvement Book - Locating and Eliminating the Constraining Factor of Your Lean Six Sigma Initiative. published by Routledge/Productivity Press.

Steps 3a, 3b, and 3c
Just as a reminder, here is the layout of the Ultimate Improvement Cycle and as you can see, step 3a instructs you to develop a plan on how to subordinate non-constraints to the current constraint.  In step 3b you are instructed to execute the plan you just developed while in step 3c you are instructed to implement your Drum Buffer Rope management system.

In Step 3a, which is a very important step, we must put together and document a coherent plan on how we are going to synchronize flow through the system.  This will include our DBR plus Buffer Management.  In Step 3b and 3c, we must come away with a well-functioning and optimized safety buffer that results in WIP being minimized throughout the total system, in order to optimize the flow of parts through our processes and system.

Steps 4a, 4b, and 4c
Step 4a states that we must develop a plan for elevating the current constraint if necessary and then define protective controls using Throughput Accounting.  In Steps 4a, our deliverable is the development of a coherent sustainment plan that optimizes our process capability and control.  Goldratt’s fourth step tells us, if necessary, we must elevate the constraint. Increasing the capacity of the constraint can be done in a variety of ways like, using overtime, adding resources, purchasing additional equipment, etc. One thing you must keep in mind when you are elevating the constraint, is what will happen when you are successful with this elevation. Remember back in Step 1, we said that you should identify both the current and next constraint? We did this for a reason.

Suppose you have decided that in order to elevate the constraint, you must purchase a new piece of equipment. Your justification should only demonstrate the throughput improvement up to the limit of the next constraint. That is, if your current constraint is currently producing 5 parts per hour, and you are purchasing a new machine that will double that to 10 parts per hour, then this improvement is only correct, if the next slowest resource is at 10 parts (or above) per hour. If, for example, the next constraint in the process is only producing 7 parts per hour, then you really can only claim a gain in throughput of 2 parts per hour for the new equipment.  All we are saying is that you must make sure you consider the total process, when making you decision on how to elevate the current constraint.

What we should end up with from Step 4b is a complete understanding of our new capacities and financial gains from using Throughput Accounting.  Finally, in Step 4c, we should have our sustainment actions in place and functioning well, with sound financial decisions being made.  The final step, Step 4c, in the UIC, is to Implement controls to sustain the gains. Sustaining the gains is the hallmark of great organizations, so how do we do this.

Of course, if you have chosen the right performance metrics, and you’re tracking them religiously, this is one way, but is it the best way? One of the most effective tools to protect and preserve your accomplishments is by using a simple process audit. A typical process audit is a series of questions asked to the line leader and/or supervisor to demonstrate the status of the process. These questions should be focused upon how elements of your new process are working and to demonstrate that they are being used as intended. 

With any luck, by following the steps I’ve presented, you will have increased the capacity of your constraint to meet the demands of the marketplace. If this is not the case, then other more extreme actions must be taken which usually involve spending some money. You have eliminated much of the waste and reduced variation, both of which have had a positive impact on cycle time and throughput, but you’re not quite there yet as far as producing enough product. 

You have just completed one revolution of the Ultimate Improvement Cycle and things should be greatly improved. Your throughput has increased, your cycle times are reduced, your quality is better, there is less variation and uncertainty, your on-time deliveries are much better, and your bottom line is much healthier. Don’t stop here!  Move on to your next revolution and start the process all over again. This is your new Process of On-Going Improvement…your POOGI. Good luck!

In this series of posts, I have laid out the foundation of the Ultimate Improvement Cycle. In my next post I will begin a discussion on how to implement the UIC.
Bob Sproull

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