2018 tocico webinar basic toc time buffers, stock buffers ...€¦ · 2018 tocico webinar...

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2018 TOCICO Webinar

BasicTOC Timebuffers,Stockbuffersand

bufferManagementThekeyinsightsandtheiruniversal

usePresentedby:EliSchragenheimBlog:[email protected]:February28,2018


2018 TOCICO Webinar

Who needs buffers?

•  Definition(Merriam-Webster):ameansordeviceusedasacushionagainsttheshockof

fluctuationsinbusinessorfinancialactivity–  Mydefinition:aprotectionagainstthenegativeimpactofuncertainty

•  Everybodyusesbuffersallthetime!–  Weaddabuffertoourestimationofcompletingamission

–  Wegotooearlytotheairporttocatchaflight

–  Wehavestockoffoodinourhomefor‘justincase’

–  Wecarrycash,notjustacreditcard,inaccessofwhatweneed

•  Buffersareseldomusedofficiallyinorganizations!–  Isitcommontorecruitanemployeeorbuyamachinebecause“wemight

needit”?


2018 TOCICO Webinar

Drum-Buffer-Rope

•  Thekeymethodologyformanagingproductionandmissionsconsistsofthreeparts:–  TheDrum:Thekeyplanningforaperiodoftimebasedonthe

‘exploitation’schemefortheconstraint–  Buffer:thetimegiventocoverasequenceofoperationsfromthestart

uptotheprotectedarea–  Rope:Notlettingthebuffertobelongerthanitsdecidedsize.

Practicallyitmeansstartingtheordernotearlierthan:due-dateforcompletionminusthetime-buffer.Itisoftencalled:chokingtherelease


2018 TOCICO Webinar

More on time-buffers

•  Time-buffersprotectthetimecommitmentwehavetomake–  Thetimebufferisaliberalestimationofthetimeitmightberequired

tomeetthetimecommitment

•  Itisdefinitelyandknowinglylongerthantheaveragetimethesequenceofoperationsmighttake!

•  Itconsidersacertainlevelofuncertaintythatcouldimpactthelead-timetofulfillthecommitment

•  Theuncertainimpacthastoincludeotherworkthatmightcompeteonthetimeoftherelevantresources,downtimeandqualityproblems

•  ItdoesNOTconsiderveryrareeventsthathavehugeimpactoneverythingwedo,likeanactofterror

•  Mostbuffersaredesignedtoprotectfromcommon-and-expecteduncertainty


2018 TOCICO Webinar

Visibility as a unique feature of TOC buffers

•  Buffershavetobeanintegralpartofanyplanning!–  Becausenoplanningforthefuturecanbedeterministic

–  Andbecauseachievingtheplanningobjectivesistrulyimportanttous

–  ThebuffershavetobeVISIBLEaspartoftheplanning

•  Withoutvisibilityofthebuffers–theytendtobewasted!–  Becausehiddenbuffersmeanstheplannerdoesnotwanttorevealthe

existenceofbuffersandthusthebuffershavetobefullyconsumed

–  Thereasontohidebuffersisthatstrivingforefficiencyeverywhereinterfereswithusingformalbuffers

–  Theactualresultofintroducinghiddenbuffersandthenconsumingallofthemispartoftherealityofthevastmajorityofallorganizations


2018 TOCICO Webinar

Placement of the buffers

•  Whatneedstobeprotected?–  Certainlythecommitmentstotheclients

–  Possiblyensuringtheproperexploitationofcapacityconstraints–  Possiblytheavailabilityofmaterials

–  Possiblyensuringtheavailabilityofcapacityofresourceswhentheyaretrulyneeded

–  Possiblytryingtorestraintheimpactoffluctuationsthatdirectlyconsumethekeybufferprotectingthecommitment

•  Thereisnoneedtoprotecttheefficiencyofnon-constraints•  Theaboveneedsleadtowherebuffersaretrulyneeded

–  Certainlynoteverywhere,whichistheregularcasewhenthebuffersarehidden,aseverystepisprotected


2018 TOCICO Webinar

Time buffers in Production and in Projects

•  Timebuffersprotecttime-commitments•  InProductiontheaccumulativetouch-timeisasmallpart

(<10%)ofthetotalproduction-lead-time–  Mostofthelead-timeisspentwhentheproduction-orderswaitfor

resourcestobecomeavailable–  Thereisnogaininseparatingthenettouch-timefromthebuffer–  Thetime-bufferistheoveralllead-timegivenbytheplanningfrom

order-releasetothedue-date•  Anditshouldbeenoughtoovercomeallregularfluctuations

•  InProjects–theProjectBufferisaddedtothelongestchainoftasksfromthestarttotheend–  Wherethetasksareestimatedas50%confidenceofcompletion–  ThenwehaveFeedingBufferstoprotecttheProjectBufferfrom

disruptionsofshorterchainsthatconnecttothelongestchain


2018 TOCICO Webinar

Shipping buffer in Simplified-DBR

TheShippingbuffercoversallthetimefromorderrelease,includingalltheassemblylegsuptocompletion

TheCapacity-Constraint-Resource(CCR)doesnothaveaspecialtime-bufferinSimplified-DBR


2018 TOCICO Webinar

Time buffers in projects

TheCriticalChain–thelongestchain TheProjectBuffer

Feedingbuffers


2018 TOCICO Webinar

Stock buffers

•  Whyweneedstockbuffers?–  Whynottranslateintotime?

•  Likemaintainingthreeweeksofstock

–  Translatingstockintotimemeansusingforecast•  Thetranslationthroughforecastincreasestheoveralluncertainty•  Oneresultingeffectisthattheinventorylevelchangesevenwhenthestockhasnotchanged

•  Usingstockbuffersisfocusedonprotectingtheimmediatedemand–  Allowingtheofferingofperfectavailability

•  ThereareTWOseparateimpactsonthelevelofon-handstock:1.  Themarketdemand.Boththeaverageandtheleveloffluctuations2.  Thesupply.Boththeaverageandtheleveloffluctuations


2018 TOCICO Webinar

The new angle of stock buffers

•  TheideaoftheTOCstockbuffersisthattheyencompassboththeon-handstockANDthestockinthepipeline–  Thatmeansproductionorpurchasingordersarepartofthebuffer!!!

•  Theaccumulationofon-handandpipelineisheldfix•  Unlikethecommonapproachthatlookforfixingthetargetinventory

–  Whenstockgoesoutofthebuffer,eitherforsaleorbeingscrapped,thenareplenishmentorderhastobereleasedintothepipeline

–  ThereplenishmentorderdoesNOThaveanydue-date!

•  Thesizingofthestockbuffersdependson“reliablereplenishmenttime”–  Whichputsaspecialfocusonreducingthereplenishmenttime

•  Theideaofnotincreasingthebufferjustbecauseitispossiblestillholdsforstockbuffersaswell


2018 TOCICO Webinar

The true breakthrough: Buffer Management

•  ItisdifficulttounderstandbufferswithoutbuffermanagementOnceabufferisaformalandvisiblepartoftheplanningthen

theactualstateofthebufferguidesustodeducethetruepriorities;whilethebehaviorofthestateofthebufferreveals

whetherthebufferisaboutrightornot•  Theideaisthatduringtheexecutionthepenetrationsintothe

bufferwouldberecordedandmonitored•  Whenmostofthebufferhasbeenalreadyconsumedthen

thereisarealthreattotheprotectedarea–  Insuchacaseweliketobenotifiedinordertodecidewhatcanbedone

topreventthepossibledamagetotheprotectedarea(commitment)–  Whentoomanybuffersget“red”status,oraverycriticalpenetrationis

notquicklyfixed–thensomethingiswronginthebufferingsystem


2018 TOCICO Webinar

The buffer status

•  Welookforasimple,yetveryeffective,waytorepresentthecurrentstateofthebuffer–  Weneedsimplicitytomakethemessageclearandeasytofollow

•  Theideaforthemajorityofthebuffers:Dividethebufferintothreeequalparts:green,yellowandred

–  Foratypicaltimebuffer:thefirstthirdofthetimetheorder/missionisingreen,thenitturnsyellow,after2/3ofthetimeitbecomesred

•  Oncetheorder/missionisfinished–themonitoringstops,butstatisticscouldbegatheredforhowmuchofthebufferwasconsumedattheend

–  Penetrationintothelastthirdofthebuffer,notedbytheRedcolor,signalsaneedtoexpeditetheorder/mission

•  Assumingthereisjustenoughofthebuffertomeetthecommitment,ifsuchspecialattentionistaken


2018 TOCICO Webinar

The buffer status for stock buffers

•  Thebufferisstockthatisspreadalongthepipelineandon-hand

•  ThebufferstatuslooksonlyontheON-HANDstock–andmeasurehowmuchismissinguptothetoplevel–  When0-33%ofthebufferismissingfromtheon-handthestatusis

Green–  Between33-67%missing–thestatusisYellow–  Morethan2/3ofthebuffermissing:itisRed–  Shortage–meansBlack

•  Thestatusofanorderinthepipelineis:Lookingdownstreamhowmuchstockexists–andhowmuch

ismissingtothetopofthebuffer


2018 TOCICO Webinar

The priority system and the underlining assumptions

•  Partofthepowerofbuffermanagementistoestablish

Oneclearprioritysystemforthewholeflow–  IftherearemorethanONEsetofprioritiesthentheactualresultis

notbeingabletofollowanypriority

•  Thesimplepriorityschemeis:

Red>>Yellow>>Green>>Nopriority

•  WhataboutBlack?–  Meaningordersthatarealreadylate,ortheon-handstockisempty

–  Whenwehaveblackorderstheirprioritieshavetobere-evaluated!

•  Becauseacertaindamagealreadyoccurred,somaybethecurrentredsareevenmoreimportanttokeeptheircommitment,ordeliveringtheblackfastisstillthetoppriority


2018 TOCICO Webinar

Identifying what blocks the flow

•  Buffermanagementcanbeusedtoidentifyblockagesintheflow–  Whatwecalla“blockage”issomethingthatcausesanordertobecome

Red•  Fortime-buffersitmeansfluctuationsthatcausesignificantdelaysthatcould

easilypushanorderintotheRed

•  Itcouldbecausedbyexcessivesetupsorprocessingtimes,butalsoqualityproblemsthatrequirere-work

•  Unavailabilityofmaterials,ortemporarybigloadonaresource

•  Stockbuffersareimpactedbytwodifferentdisturbances:

–  Fluctuationsthatcausetoolongdelays–thesameasfortime-buffers

–  Suddenbigsale–wayabovetheaverage,orhavingtoscrapend-products

•  TheideaistogenerateParetoListofwhatactuallycausedorderstogointotheRed,orstayintheRedfortoolong–  Andthendothecause-and-effectanalysistofindtherootcauseandfixit


2018 TOCICO Webinar

Buffer management for projects and long missions

•  Therearecaseswherethesimple1/3divisionisnotenough1.  Whenthetimebufferprotectsverylonglead-time

–  Theconcernisthatthestartingtaskswouldconsumealotofthebuffer–ontheexpenseofallsubsequenttasks•  BecausewhenthebufferstatusisstillintheGreenitseemsnoonecares

–  Thus,wehavetousethepaceofbufferconsumption,relativetothecompletedpart,todecidewhetherthesituationisaboutrightornot

2.  Whenthestockbufferisfedbylonglead-time,andverylittlepossibilitytoexpedite–  Thisisatoughsituationformaintainingstock.Increasingthebufferis

notgoodenough.Expensiveexpeditingismuchpreferable

3.  Whenthereplenishmenttimeisprettyconstant–  Thenthe1/3red-zonemightbetoolarge


2018 TOCICO Webinar

Expediting as a formal managerial move

•  Agenericmeanstodealwithuncertaintyistoprovideflexibilitytoreactfasttoanydisruption

•  Thestatusofthebufferisusedtoidentifythesituationwherethatflexibilityistrulyrequired–  Thus,thereisaneedtopreparethemeansforurgentreaction

•  Sometimesjustgivingtherightprioritiesisenough

•  Inothercasesmeanslikeovertime,outsourcingorjustcallingthebestexpertsforassistancehavetobeaspartoftheoperationalsystem

Whenthereisnopracticalwaytoprovideexpeditingthenthebuffershavetolarger

Andthenthevalueofbuffermanagementismainlytoprovidefeedbackontheeffectivenessofthebuffers


2018 TOCICO Webinar

Too much green – a warning signal

•  Wesomehowexpectthatmostorders/missionswithatime-bufferwouldfinishinYellow–  TherecouldbeexceptionswheremanyfinishinRed,butthenthey

finishinonedayorso

–  WhenordersfinishinGreenitmightpointthatthebufferistoolong

•  Similarexpectationsexistforstockbuffers–  BeinginYellowisanaturalgoodsignal

–  ToolonginGreenisanindicatorthatthebufferistoolarge

•  ToomuchGreenrequiresspecialcare–  Becausenoonelikestobeexposedtomuchbiggerdamagewhenthe

bufferistoosmall


2018 TOCICO Webinar

Too much Red

•  Thereismoresensitivitytoidentifywhenthecurrentbufferisnotenoughthantobeconvincedthebufferistoolarge–  Whilethismightcause,onaverage,tousesomewhatlargerbuffersthan

required,thisisusuallythesmallerpricetopayforthebenefitofachievingstableandreliabledeliveryperformance

•  Toomuchredisanindicatorbasedontoofrequentdeeppenetrationsintothered–  Warning:

Notalwaystheresponseto“toomuchred”shouldtoincreasethebuffer!

Because,whenthereasonistheemergenceofacapacityconstraintthentheresponsehastobeincreasingcapacityorreducingthefirm

demand!


2018 TOCICO Webinar

Between time/stock and capacity

•  Thekeyvaluebuffersistobereliablein~95%ofthecases•  But,whentheloadononeresourcecomestoocloseto100%

thentime/stockbuffersonlydelaytheproblem•  Itiscriticaltounderstandthetwonecessaryconditionsfor

goodexploitationandsubordinationtothemarketconstraint–  Havingenoughprotectivecapacitytosupporttheexploitationscheme

•  Bothtothemarketandtothecapacityconstraint,wheneveractive

–  Subordinationhastoprotectthemarketandtheinternalconstraintfromfluctuationsintherestofthesystem

•  Bothtimeandstockbuffersarekeytoolsforsubordinationtocoverfortheexistinguncertainty

•  Buffermanagementisthemajortooltokeepthesubordinationeffectivebysettingtherightpriorities


2018 TOCICO Webinar

Strategy angle of handling uncertainty

•  Reliabledelivery,meetingallcommitmentstothemarketisaworthystrategicobjective

•  Thebiggestthreattomeetingcommitmentsisfromcommonandexpecteduncertainty–  Ontheotherhand,gainingthereputationofbeingveryreliableisa

bigbusinessopportunity•  Handlinguncertaintyrequiresmorethanbuffers

–  Maintainingflexibilityandprotectivecapacity–  Findingwaystoreducetheamountofuncertainty–  Buffersareacriticalelementforprotectingwhatistrulyvaluable–  Buffermanagementallowstogainfromuncertainty

•  Reducingthebuffersandkeepingtherightprioritiesleadtosuperiorreliabilityrelativetoallcompetitors

•  Alsoprovidingwaystoidentifywhatblockstheflowmorethanothers


2018 TOCICO Webinar

Widening the scope for buffers and buffer management

•  Budgetplanning–  Budgetssufferfromthesameproblemsasprojects:

•  Therearetoomanyover-budgetsandalmostneverunconsumedbudget–  Budgetsneedtobebuffered

•  Theusualreserveclauseisridiculous–uncertaintyissomuchmore•  Needtohavebuffermanagementthatisstrongerinthebeginningandmorepermissivetowardstheend

•  Understandingcashbuffers–  Creditlines,andothermeanstodrawcashwhentrulyneededare

buffersthatshouldbeformallyandvisibledefinesandmanaged•  Capacitybuffer

–  Quickmeanstoincreasecapacity,evenwhenitisrelativelyexpensive,whentrulyneeded

•  Maintainingthesebuffersaddsoperatingexpenses,andthustheyhavetoclearlydefinedandbeingproperlymanaged


2018 TOCICO Webinar

Summary of the key points

•  Formalandvisiblebuffershavetobeembeddedinanyplanning•  Timebuffersprotecttimecommitmentsorintermediate

objectivesthatarecriticalforthetimecommitment•  Stockbuffersprotectimmediatedemand•  Timeandstockbuffersneedalsotheflexibilityofprotective

capacity•  Buffermanagementisatoolfortheexecutionphasetoreach

theplanningobjectives•  Buffermanagementmonitorsthecurrentstateofthebuffers

andgeneratewarningwhenspecialactionsarerequired–  Alsogeneratefeedbackforbetterfutureplanning


2018 TOCICO Webinar

Ask me questions: it cannot be that obvious!

•  EliSchragenheimstrivesto:SupportTOCImplementations

Everywhere!FeelfreetocontactEliregardingquestions,reservationsandcollaborationsinTOCinitiatives

•  EliSchragenheimcontactdetails:[email protected]:elischragenheimMobile:+972522446423

Blog:www.elischragenheim.com

2018 tocico webinar basic toc time buffers, stock buffers ...€¦ · 2018 tocico webinar...

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