Drum Buffer Rope Part 1

In this series of blog posts, I’m going to discuss a key component of the Theory of Constraints known as Drum Buffer Rope (DBR). Drum Buffer Rope is the Theory of Constraints scheduling process which focuses on improving flow by first, identifying the system constraint and then leveraging it.  The important assumption of DBR is that within any plant there is one or a limited number of scarce resources which control the overall output of processes within any facility.  And while many writings have associated DBR with manufacturing, the assumptions and principles even apply to service industries such as hospitals.  In fact, later on in this series, I will lay out examples of two very important service examples.

In his book The Goal, Dr. Eliyahu Goldratt effectively uses a story written in a business novel format to walk the reader through the steps necessary to move a manufacturing organization from the traditional manufacturing concepts, to a facility managed using the concepts of Drum-Buffer-Rope (DBR).  This nontraditional approach, through logical thinking, is masterminded by a character named Jonah.  Jonah is able to help Alex Rogo understand the invalid thinking and assumptions being used to manage his plant and the negative consequences associated with that type of thinking.  By helping Alex focus his thinking on how the plant is being managed, Jonah helps Alex logically discover a new and better way. And Drum-Buffer-Rope (DBR) is the centerpiece of this process.  

The thinking behind DBR is really quite simple, but mostly just logical in nature.  Thinking logically is really nothing new, but it’s not the way most people think in today’s world.  The fundamental understanding of DBR is to focus on the system as a whole rather than only a single segment of the system, at least until you have clearly identified your system constraint.  This idea of looking at the total system is a major shift in the way systems have previously been viewed and managed.  Prior to total systems thinking, the prevalent point of view was, and pretty much still is, that any systems improvement, at any location, would improve the overall system.  The idea being that the sum total of several isolated improvements would somehow equal an improved to the overall system.  But such is not the case.  The effects of employing the “shotgun” approach to systems management can cause a series of devastating systemic effects. 

So, just what is a system?  Typically, a system is a set of interacting or interdependent components a system that are somehow linked together to produce something as an end result.  With that definition in mind, it’s easy to understand how virtually everything can be linked, in some way, to some kind of a system.  In a nut-shell, a system is a collection of elements or components that are organized for a common purpose.

Engineering organizations have systems, banks have systems and even grocery stores have systems.  Almost anything you can think of is the product of a system.  By design, a system can be as small and unique as two processes linked together, where the output of one process becomes the input for the next process. Or systems can be very complex, with many processes linked together, maybe even hundreds or more.  It’s important to understand that just because a system is complex doesn’t mean it can’t be improved.  The key point when considering systems is that even in a system as simple as two linked processes, one of those two processes will typically constrain the other one.  It’s just the nature of how things work.

If a systems constraint didn’t exist, then the system should theoretically, be able to produce at infinite capacity.  But infinite capacity is not a level that is ever achieved from any system.  All systems are restricted, at some point in time, by some type of output limitation.  This limitation is usually determined by the presence of some kind of system-capacity limit.  No matter how good the system is, there is still only so much it can do.  Sooner or later whatever kind of system is being analyzed, it will reach its maximum system capacity and be unable to produce more.  If higher system outputs are required beyond the current capacity, then the system must be changed.

In my next post we will continue our discussion on Drum Buffer Rope will continue by looking at the impact of variation on the system.

Maximizing Profitability Part 35

In my last posting I told you I would tie Goldratt’s 5 Focusing Steps into Critical Chain Project Management (CCPM) and also provide a summary of what I’ve written on this subject. Let me refresh your memories on Goldratt's focusing steps while simultaneously tying them into Critical Chain Project Management:

1. Identify the system’s constraints: For a single-project environment this simply means identifying the Critical Chain or the longest chain of longest path of dependent tasks within a project determines the actual duration of the project. The critical chain is therefore the constraint. In a multi-project scenario, there is a drum resource that limits the number of projects that an organization can manage and deliver. This resource, more than any other controls the flow of projects and is considered the constraint.

2. Decide how to exploit the constraint: For a single project scenario, this simply means focusing on the critical chain tasks to make sure that the required work is done so without unnecessary delays. In a multi-project situation, this means that projects should be prioritized and then staggered according to the drum resource’s capacity, making sure it is not overloaded.

3. Subordinate everything else to the above decision: As you might have concluded, this simply means that non-critical chain tasks cannot and must not interfere with or delay work on the critical chain. In order to avoid this scenario, we have strategically placed feeding buffers to prevent delays on the critical chain. In a multi-project situations, non-critical resources may have to wait in favor of the critical chain resources.

4. Elevate the system’s constraint: For single and multi-project environments, this typically means investing in additional resources or even increasing the capacity of resources that impact both the critical chain or project throughput. Many times this might mean spending money or using non-critical resources to critical chain tasks.

5. Return to step 1: When one project is completed, identify/insert the next one and proceed to step 2.

Summary of Key Points

• In a fairly recent survey (The Chaos Report) by the Standish Group, studying nearly 10,000 IT projects across America, it was reported that 52 % of projects ended up costing greater than 189 % of the original budget, 31 % were cancelled and only 16 % of the projects were completed on time and on budget. The fact is, there are many other reports from numerous industry types, from all over the world, that all conclude the same thing, project completion rates are abysmal!

• Ninety percent of the Project Managers around the world are using a project management method called Critical Path Method (CPM) and have been doing so for many years. CPM uses a “fudge factor” to protect projects from inevitable uncertainty. That is, when developing the project plan, durations for each individual task are estimated by the resources responsible for executing them and then a safety factor is added to each of the tasks by the resource responsible for completing them. In Critical Chain Project Management (CCPM), individual tasks durations are removed and replaced with a project buffer.

• In traditional project management (CPM) tracking is done so by calculating the percentage of individual tasks completed and then comparing that percentage against the due date. CCPM tracks progress on the critical chain against buffer consumption.

• There are behavioral issues associated with traditional project management (CPM). These issues are the Student Syndrome (or procrastinating start of the project because of the built-in safety buffers), Parkinson’s Law (Work expands to fill the available time), and Multi-tasking (moving back and forth between multiple projects thus extending the duration of all of the projects). CCPM eliminates these behavioral issues by eliminating individual task durations, using the relay runner scenario (i.e. passing on a task as soon as it is completed), and staggering or pipelining the projects (i.e. delaying project starts)

• Whereas CPM completion rates are clearly abysmal, completion rates using CCPM are excellent (i.e. typically >90%) and the completion times are usually 40-50% faster. In addition, when comparing scope and cost, surveys of companies using CCPM, CCPM is a far superior project management method.

I hope you have enjoyed this series on Maximizing Profitability and that you have found it helpful. In my next series of postings, I will be discussing a variety of subjects which will include the Theory of Constraints Parts Replenishment Model. I will demonstrate how to virtually eliminate stock-outs while reducing your parts inventory in the neighborhood of 40-50%. In closing, if you have a specific subject you'd like me to focus on, just send me an email to ras8202@live.com.

Maximizing Profitability Part 34

Earlier, we explained that in traditional project management we track the progress of the project by calculating the percentage of individual tasks completed and then comparing that percentage against the due date. The problem with this method is that it is nearly impossible to know exactly how much time is remaining to complete the project. Using this method to track progress, many times you’ll see 90 % of a project completed only to see the remaining 10 % take just as long. In fact, looking at the number or percentage of tasks completed instead of how much of the critical path has been completed only serves to give a false sense of conformance to the schedule.

Critical Chain Project Management (CCPM) measures the progress of a project much differently and in so doing allows the project to make valuable use of early finishes. Critical chain uses something called a Fever Chart which is simply a run chart of % of Critical Chain Complete versus % of Project Buffer consumed. Figure 1 is an example of such a chart. In this chart we see that 20 % of the critical chain has been completed while only 8 % of the project buffer has been consumed, thus indicating that this project is actually ahead of schedule. Contrast this with Figure 2 which has completed 26 % of the critical chain, but has consumed 28 % of the project buffer, making it a bit behind schedule.

Figure 1

Figure 2

The green, yellow and red areas of the fever chart are visual indicators of how the project is progressing. If the data point falls within the green area of the chart, the project is progressing well and may even finish early. If the data point falls into the yellow zone, there is cause for concern and a plan on how to move the project forward should be developed, but is not to be implemented just yet. Contrast this with the vertical rise demonstrated in Figure 2 which indicates that buffer is being consumed at too fast a rate relative to how the project is progressing. If a data point falls into the red zone, as demonstrated in Figure 3, then the plan we developed should now be executed. In Figure 3 we see that only 35 % of the critical chain has been completed while almost half (49%) of the buffer has been used.  But even if the entire amount of project buffer is consumed at the completion of the project, the project is still on time and not late. That is, if 100 % of the project buffer is consumed, as long as 100 % of the critical chain has been completed, the project is exactly on time.

Figure 3

In addition to using the fever chart, we also recommend calculating a project index by dividing the % of critical chain completed into the % of the project buffer consumed. As long as this ratio is 1.0 or less, then the project will come in on-time or early. This means that the rate the buffer is being consumed is in step with the progress on the critical chain.  However, if the project index goes beyond 1.0, the project completion date could be in jeopardy.  Figure 3's project index is 1.4 indicating that significant action must be taken on the critical chain to assure an on time completion.

In my next posting I will define how Goldratt’s 5 focusing steps apply to project management and then summarize the key points made in this series of blogs on Critical Chain Project Management.