Goldratt’s Golden Nugget #15
Freezing in projects
The significance of freeze
As we all are very well aware, bad multi-tasking is a big sore evil that has major negative effects on performances in any environment, and in particular in projects environment. To diminish bad multi-tasking in projects environment we use, as an integral part of the Critical Chain Project Management (CCPM) solution, the freeze mechanism. This is the hardest step to get collaboration for. If we wish to get the full collaboration of all relevant functions on the freeze – and at the same time to accelerate performance – it behooves us to sharpen our understanding regarding the freeze mechanism.
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Above and Beyond the Competition: A Conversation with Eli Goldratt
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by Dr. Eliyahu M. Goldratt Dr. Goldratt shares his latest and most significant realization on how the real value in the power of TOC allowing a company to become “ever flourishing” relies not on the results but on its ability to remove the engines of disharmony. |
Goldratt Lectures – Thinking Globally
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by Dr. Eliyahu M. Goldratt Dr. Eli Goldratt speaks on thinking globally, and on the hazards of doing otherwise. A true thinker, Eli shares his philosophy on how to utilize Cause and Effect thinking, especially in times of trouble – to achieve even better results. |
Goldratt’s Golden Nugget #14
Sustaining Continuous Growth
Sustaining Continuous Growth
It is common to see, in mature TOC production implementations, that once sales have increased and the CCRs were elevated, the number of red orders might start to increase. If no corrective actions are taken, further increase in sales will cause the DDP performance to deteriorate (number of blacks increase) which endangers the decisive competitive edge of the company. Since in a VV implementation we want to continuously increase sales, the S&T guides us to put in place the mechanisms that should be used for further increase of capacity and for adjusting the buffers. The intention of this nugget is to deepen our cause and effect understanding that underlie those mechanisms.
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Reaching the plateau of the U-curve, or:
When the 4 colors are not enough (part 2)
(RRR)
First, let’s remind ourselves the reason for the fact that in so many environments that claim to have no excess capacity, once DBR (and more so when BM) is implemented a considerable amount of capacity is revealed. The answer is that in the conventional mode of operation, which is dominated by the desire of people to look busy (and the need for high level of management interventions), the free capacity cannot be estimated by observing – or even measuring – the time that the relevant resources are standing idle. The only effective way to reveal the capacity is to change the mode of operation from pushing to be on the right hand side of the “U curve”, to operating within the plateau.
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The TOC Insights into Operations will deepen the understanding of TOC beyond the knowledge available in any other material for Production. They were carefully produced to ease its usage and maximize the learning experience. The users can learn at their own speed and easily review any of the material, as they need. |
Reaching the plateau of the U-curve, or:
When the 4 colors are not enough
(RRR)
The audit process is based on investigating “mysteries”; or as Eli Schragenheim had called them in his landmark presentation in Cambridge – surprises. A mystery is an effect in reality that contradicts a predicted effect of the S&T tree. In a recent audit of an MTO company (producing metal cables of the kind that is used for holding elevators), two mysteries were evident. But first a little background:
The company had already implemented, to the letter, the left part of the RRR tree and had quickly improved its DDP from around 50% (which is typical to its industry) to the satisfactory level of 98%. They proceeded by properly exploiting the resulting competitive edge of this extreme reliability, to the extent that the market is no longer the constraint. Actually they are winning so many orders that the “load control” pushed their promised due-dates to be later than the market lead time. Since it takes a long time to add capacity (about a year) they are now contemplating a mechanism that would enable them to safeguard their preferred clients (“When given delivery lead times are (much) longer than the industry standard lead time, not only may orders be lost, but clients may be lost.” – RRR S&T step 4.13.2 – Capacity Elevation).
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Goldratt’s Golden Nugget #12
Light blue 2, or: A way to exploit the protective capacity using orders (as opposed to using stock)
(MTA combined with MTO)
In MTA environments there is a need to hold protective capacity. The problem is that in order to use the protective capacity when needed, this capacity is on average idle. In the previous nugget (“light blue 1″, no. 11) we discussed a way to directly exploit the protective capacity; to use this idle capacity to satisfy more sales. The first light blue method is based on the use of protective capacity to produce to stock, which is then offered in segmented markets – dumping markets. The nugget ended with a warning not to use this method if the company cannot find suitable dumping markets. In cases where the company can’t find enough such markets, and consequently a part of the protective capacity is left unutilized, there is another possible method that can enable exploitation of the remaining free protective capacity. This method is based on processing clients’ orders by the protective capacity and therefore it is applicable only in mixed MTA+MTO environments.
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Goldratt’s Golden Nugget #11
Light blue 1, or: A way to exploit the protective capacity – Have your cake and eat it too.
(MTA)
One of the crucial elements required in any MTA environment is maintaining high enough a level of protective capacity1. Practically, it means that the work centers are not allowed to operate 100% of the time. In fact, the most loaded resource will be, on average, about 20% idle2. However, as we all know, people feel very uncomfortable with the idea of idle capacity. This is especially true in environments that utilize highly expensive equipment, and even more prominent in environments where full activation of resources is theoretically possible, since they have saleable products at many different intermediate stages of the production process. Such environments do exist, and are evident in many V environments.
The reluctance to hold capacity idle may cause companies to dip into the protective capacity, especially when we bear in mind that most companies are not used to operating with a decisive competitive edge and therefore, at least in the early stages of implementation, are not fully aware that having a decisive competitive edge does not only help in getting more sales, but is the foundation for stable growth. How can we make sure that the proper amount of protective capacity will be maintained?
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Theory of Constraints Golden Nugget
#10 MTA + MTO Mixed environment
In many companies, some SKUs are consumed on a regular basis, whether by one or multiple clients, while other SKUs have a sporadic consumption pattern, either because the demand is rare, or because the SKU is customized for a particular order of the client. In these environments, regular consumption should be supplied immediately from stock (MTA), while sporadically consumed SKUs (as well as exceptionally big orders of regular SKUs1) should be made only to clients’ orders (MTO); in other words, they should operate as a partly MTA, partly MTO environment.
The mechanisms to control both the MTA and the MTO in a mixed environment are the same mechanisms used in an environment of pure MTA or pure MTO. The only difference is that when using load control for providing promised due-dates and for determining the time to release the material for MTO, we regard only the MTO production segment instead of taking into consideration the total capacity and load. More explicitly, the way to allocate the capacity in such mixed environments is as follows: first assign capacity for MTA based on the current coverage; then add 20% protective capacity (Note: The needed protective capacity is not 20% of the total capacity, but only 20% of the capacity required by MTA). The capacity remains is allocated for MTO.
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People resist change! Really? Check this out…
| Overcoming Resistance | |
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People resist change! Really? 6 min, English |