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E S SE N TIA L B U SIN ES S K NO WLE D GE F O R H IGH A CH IEV ER S

Manufacturingat WarpSpeed

by Eli Schragenheim & H. William Dettmer

The Weakest Link 2

5 Steps to Focus 3

DBR for Dummies 7

Managing Systems in the Information Age 8

In This Summary

It's amazing the number of organisations who have a problem -but can't figure out what it is. The production environment iscomplex - and very few people understand cause and effect

within complex systems.

Managers know there's a problem, but they don't know what tolook for and don't know what to do with the information theyfind. They can't distinguish what's really important. They can'tseparate the effects of market change from internal system issues.They drown in information.

This leads to one of two outcomes. Either the organisation survives- just. Or it doesn't.In today's competitive environment, you can't afford to survive bychance.

You need a better way.

Manufacturing at Warp Speed is all about creating solutions foryour organisation. Using the Theory of Constraints (TOC), youwill learn the tools you need to gain control over your systems.

Whatever the problem your manufacturing operation is facing, youare looking for a solution that:

• Is simple to understand and implement,• Aligns outcomes with production plans,• Offers maximum flexibility,• Optimises the effectiveness of resources throughout the

organisation as a whole, and• Minimises wasted resources and time.

This road map to applying Constraints Theory to your organisationand your manufacturing process will show you how to achieve that.

You will come to recognise what's really important to identifyingnot just the problem - but the solution. You will recognise thebenefits that constraint management has to offer your operation.Here are step by step instructions on how to apply it to yourbusiness. And you will know what it takes to get your due-datereliability spot on, your inventory down and your production leadtime under control.

So, if you're ready to create twenty-first century solutions for yourmanufacturing operations, read on.

Optimizing Supply Chain

Financial Performance

Systems Thinking – The Basics

Before we can learn how to effectively manage systemconstraints, we need to begin with a basic understanding of theTheory of Constraints. First, let’s define the terms. Everyorganisation – whether business, social or government –functions as a system.

A system is a group of related elements which are enclosed bya boundary that separates them from the externalenvironment. The elements within a system process inputs inthe hope of creating outputs of a higher value. The elementswithin the system are interdependent, so that any action onone element affects other elements. And systems have feedbackmechanisms which provide information about how the systemis functioning.

Going With The Flow – Or Against It

A big challenge in optimising your business systems is whenthe way you manage your organisation doesn’t mesh with theway work flows into them. Work usually flows acrossfunctions as it comes in – involving sales, marketing,engineering, production and warehousing. But we manage ourorganisations by arranging them into discrete departments –which create invisible barriers to communication.

Because one person can never be in effective control of somany aspects of a large organisation, departments are managedin isolation. The result is poor communication betweendepartments, and different – uncommunicated – objectivesresulting in conflict between departments. We call this sub-optimisation – or below optimum performance.

“Optimisation is the process of orchestrating the efforts of allcomponents toward achievement of the stated aim.Optimisation is management’s job. Everybody wins withoptimisation.”

If a system was a collection of independent parts that didn’taffect each other, it would be fine to manage this way –isolated departments seeking to enrich their performance at theexpense of other parts of the system.

But organisations can only survive as a whole. Infighting,conflict and competition between departments don’t reflect thefact that all parts of the system rely on one another to performand deliver for the organisation. Just maximising theperformance of each component part won’t cut it – you needto optimise the way all the elements work together.

The Weakest Link

If you think of a system as a chain, you can see that it is onlyas strong as the weakest link. The same applies toorganisations. And it’s interesting to note that strengtheninganything but the weakest link does not affect the overallperformance of the system. Yet strengthening the weakest linkcreates an immediate increase in the strength of the wholechain. But of course – only until you reach the next weakestlink.

The 3 Constraint Management Assumptions

Assumption #1: Organisations have a goal.The goal of most commercial organisations is to make a profit.The goal has no limit – you can keep making money forever.But in order to function and follow the goal, there are certainnecessary conditions that the organisation must meet.

Assumption #2: An organisation is greater than the sum of its parts.

As you saw in The Weakest Link, independently optimisingthe departments in an organisation may not be the best way to

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Constraints – A Moving Target

Constraints never really disappear – they just migrate toanother place.

That’s the bad news. The good news is that as the constraintsare broken by improvement efforts, system performance oftenexperiences a quantum leap.

Ultimately, you may have shifted the constraint but youhaven’t eradicated it. It’s moved on – either inside the systemor in the surrounding environment. Then some other factorhas become the system constraint.

What is the CCR?

The Capacity-Constrained Resource (CCR) is the resourcewhich is slowing down the system, due to being at full capacityor overloaded. In any system one component will be the firstto become constrained under pressure. This is the CCR. TheCCR is one of the most important concepts in the Theory ofConstraints (TOC) and Drum-Buffer-Rope (DBR).

About the Authors

Eli Schragenheim is president of Elyakim Management Systems(Israel). He is an international expert of Theory of Constraints(TOC) and the author of a number of books includingManagement Dilemmas: The Theory of Constraints Approach toProblem Identification and Solutions and many articles publishedin management journals. He is a sought after speaker atinternational management conferences around the world.

William Dettmer is a Senior Partner at Goal SystemsInternational and an expert on Theory of Constraints. He haswritten several books including Goldratt’s Theory of Constraintsand Breaking the Constraints to World-Class Performance as wellas a number of articles. He has consulted with Fortune 500companies on the subject including Boeing, LucentTechnologies, Tellabs, Inc., Western Digital Corp. and NECAmerica.

increase effectiveness. The links between the departments are asimportant as their individual performance.

Assumption #3: Only a few factors constrain an organisation’s optimum performance.

Having only a few constraints enables us to control andmanage an organisation. It is impossible to manage a systemwith many independent variables, especially if it is operating ina complex environment.

Just loading up the system to the capacity of the strongestelement will only create queues in other parts of the system.It’s not possible to achieve full efficiency for every element inthe system and still operate within market parameters.

Improving or keeping your market share is a necessarycondition to achieve your goals. If you want to do that, you’dbetter not go chasing efficiencies in every department.

A lot of current management philosophies, like Six Sigma andTotal Quality Management (TQM) focus on refiningefficiencies to a high level in every area of the company. But ifyou want the organisation to be successful and effective as awhole, you have to let go of this paradigm and create a newone.

Theory of Constraints – A New Paradigm

So if you have to let go of the idea that making everydepartment ultimately efficient will generate optimumperformance, what do you do?

Before you can bring your organisation to the next level ofsuccess, you need to identify the critical success factors. Whatare the necessary conditions you need to satisfy to reach yourgoal? Once you’ve found the critical factors essential to yoursuccess, you need to follow a five-step process.

5 Steps to Focus

Step #1: Identify Identify the system’s constraints – what is limiting the system’sperformance and holding it back?

Step #2: ExploitDetermine how to get the most out of – exploit – the systemconstraint. No matter what the limitation on your system,squeeze it to get the maximum financial benefit.

Step #3: SubordinateWhen you have decided how to exploit the constraint,subordinate everything else to that. Everyone from the topdown has to put making the most of the constraint aboveeverything else. If the system constraint has been broken, itwill be visible in a quantum leap in performance and output.

Step #4: ElevateThe next step is to consider alternative ways to elevate theconstraint. This means increasing the capacity of the

constraint. For example, if the constraint is in market demand(low sales), elevation may involve an advertising campaign ornew product launch. But it’s essential to consider all theoptions for elevation before selecting the best one.

Step #5: Go Back to Step 1If all of this doesn’t break your system constraint – and even ifit does – you will need to go back to step one again, andidentify the new system constraints acting on the system. It’sessential to continually re-evaluate both the system and theconstraint management process. Once the active constraintshifts or moves on, you will need to adapt to the change – andidentify the next constraint to deal with.

Assessing System Success

With all of this in mind, the next brick in your foundation ofConstraints Theory is the ability to assess decisions. Unlessyou have reliable ways to assess your decisions and strategies,you will be become derailed from your direction and be off-course in navigating to your goal.

Evaluating Decisions – The Old-Fashioned Way

It would be very easy to evaluate your systems and decision-making if the world wasn’t constantly changing. Butunfortunately the world doesn’t stand still. The business worldis an increasingly competitive environment. The constantchanges in technology mean that the marketplace you operatein is always evolving.

Most companies evaluate decisions financially – did it add tothe bottom line? But it’s not easy to apply financial measureslike net profit and return on investment to daily operatingdecisions. It’s also hard to know how a decision made at adepartmental level affects the financial position of thecompany.

Evaluating Decisions – The TOC Way

The Theory of Constraints uses 3 different measures tobenchmark efficiencies:

Measurement #1: Throughput (T)Throughput is the rate at which your organisation generatesmore – more products, more sales, more revenues. It representsmore money coming into your system.

Throughput is the difference between total sales minusoperating expense. Throughput links local activity with thegoals of your organisation.

Measurement #2: Investment or Inventory (I)Investment or inventory is the amount your organisationspends on the products it intends to sell. This money is tied upwithin the system – including capital assets, facilities,equipment and raw materials intended to be converted intofinished products.

Measurement #3: Operating Expenses (OE)Operating expenses are usually defined as the money flowingout of your system, and includes most overheads involved in

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keeping your operation open for business. Controversially, inTOC, labour costs are segregated from OE.TOC benchmarks can be linked to traditional financialconcepts like Net Profit (NP) and Return on Investment(ROI). NP is equivalent to Throughput minus OperatingExpenses. Return on Investment is equivalent to net profitdivided by the inventory or investment required to generate it.

Make to Stock or Make to Order?

Work flows into different manufacturing systems in differentways. To some degree an organisation can control the structureof its workflow. Market forces may push your organisationtowards one delivery style or another – whether to makeproducts to stock or to make products to order.

If customers demand fast delivery – faster than the companycan make a product to order – companies may be forced tomake stock ahead of time for immediate shipping.

Constraints Theory (TOC) encourages a make-to-orderstrategy as far as possible. That’s because when you make toorder, it’s easier to subordinate everything to supportingconstraints. It allows better exploitation of internal constraints.It prevents confusion about capacity because no time orresources are wasted on products that aren’t sold. And youdramatically reduce the risk of obsolete inventory.

An alternative to making to stock – or making to forecast,where you attempt to estimate sales ahead of time – is toassemble to order. Manufacturing lead time is reduced byhaving parts of the product manufactured and to some extent,pre-assembled. This can help reduce lead time.

Drum-Buffer-Rope – ‘DBR’

Drum Buffer Rope – or DBR – is a way to schedule yourproduction to create maximum system efficiency. Using the

Theory of Constraints, DBR keeps all your resources workingtogether at optimum capacity while retaining some excesscapacity to cope with high load periods and cater for routinemaintenance, training and down time. Each resource is calibrated to operate at the pace of the CCR,to prevent system meltdown. The pace of the CCR is the‘drum’ in the Drum Buffer Rope equation. The drum is thepace set by the least capable resource’s ability to produce. Sogoing to the beat of the ‘drum’ – the beat of the CCR – iscritical for effective production and optimum utilisation ofresources.

Production is scheduled to prevent bottlenecks in the system.The most common way to achieve this is through control ofshipping times, which serve as the ‘buffer’ in the DBRequation. You must schedule around the shipping timesbecause they act as a variable time buffer which can helpcontrol the rate of production and ensure the most capableresource is fully utilised.

If your system is approaching full capacity, and more neworders will create bottlenecks or breakdowns in the system, thesales team should ease off on generating new orders until thebacklog is cleared. This co-operation between sales andproduction acts as a control mechanism which can be used toslow down demand when the system is approaching overload.

Control mechanisms like this are the ‘rope’ which maintainsthe optimum production pace for your system and ensuresresources are spent on what is nearly due for delivery.

Why DBR?

So what is DBR designed to do?



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Typical Constraints

Almost every constraint that your organisation can face willfall into one of these 7 categories:

1. The Market 2. Resources 3. Raw Materials 4. Vendors & Suppliers5. Cash Flow6. Knowledge or Competence7. Policy Constraints

Of all types of constraints, policy constraints can be thehardest to crack – and they will underpin most of the otherconstraints you identify. So to achieve success through effectiveconstraint management you need to be willing to makestructural changes in policy.

The Control Conflict

It’s a longstanding debate in management and productioncontrol – do you plan everything down to the last detail, ornot?

Those who like to plan everything like to maintain completecontrol over the production schedule – but they can’t adaptquickly enough to all the things that go wrong. On the otherhand, there are those who like to maintain flexibility in orderto adapt to the changing environment – but how can you besure a flexible schedule is getting the best out of the system?

The DBR solution to this dilemma involves a compromisebetween detailed planning and flexibility:

• Plan in detail only for those resources that have noflexibility or excess capacity, or that cannot tolerate a mistake.

• Don’t schedule any resources with excess capacity. Thoseresources should be working as fast as practical and react onlyto immediate needs.

This way the system is fully utilized, and yet flexible enoughto respond to changing situations.

• Satisfy existing demand – deliver all existing orders on time,

• Move work in process through to production,

• Reveal hidden capacity which is currently idle, and

• Generate more throughputs.

But remember, DBR won’t focus on local efficiencies. Its goalis global improvement of the system.

Putting DBR into Practice

So how do you apply DBR to your manufacturing operation?There are 3 stages to implementing DBR: Planning andPreparation, Short Term Execution and Maintenance: Stayingin Control.

DBR Stage #1: Planning and PreparationThis is a really important stage. For you to know how to getto your goal, you must know exactly where you are, otherwisewhatever effort you make will be rendered useless and youwon’t know where you went wrong! So, attack these 5planning and preparation areas well:

Planning Area 1: Get Policy in Line with Market Requirements

• Stop measuring local efficiencies. You have to get out of themindset of local efficiencies if you want to use constraintmanagement to boost performance across your organisation.

• Use small production batches to prevent resources turninginto bottlenecks – but be careful not to create a capacityconstraint.

• Give priority to work orders with the earliest due dates.Remember you are subordinating internal efficiencies tocustomer requirements. And what customer doesn’t want on-time delivery?

Planning Area 2: Open Communications between Sales and Production

While it’s not technically essentially for DBR, closecommunication between sales and production can offer thefollowing advantages:

• Production and sales can reach agreement on the best productmix.

• Sales will know the current load on production capacity –that way they won’t overload production with orders thatcan’t be fulfilled.

• When production is near full capacity sales can refine quotedlead times in line with production schedules to ensure reliabledelivery. Sales representatives can selectively inhibit the

demand for products which consume a lot of resources andcreate capacity constraints.

Planning Area 3: Identify the Capacity Constrained Resource

The Capacity Constrained Resource is the one which is fullyloaded and slowing down production in the rest of the system.If the system is fully loaded or overloaded this should be easy –it’s where backlogs and bottlenecks occur.But even if it’s not obvious, you should be able to work outwhich resource will break down first, based on currentperformance. Resources that struggle to cope with normalthroughput will be the first to break down.

Planning Area 4: Determine the Size of the BufferShipping time is commonly used as a buffer – it’s convenientand variable. The size of the shipping buffer is a key decision.

Different products may require shipping buffers of varyinglengths to accommodate production processes. Because excesscapacity will change over time, it’s necessary to keep a closeeye on shipping buffers. A good rule of thumb for a shippingbuffer is 75% of current lead time.

Planning Area 5: Define the Red-LineThe red-line is the critical point in the buffer – where you needto expedite a product to be ready for its delivery deadline. When these steps are complete, you’re ready to move into theimplementation stage: Short Term Execution.

DBR Stage #2: Short Term ExecutionWhen your organisation first implements DBR, you will have1 of 2 scenarios:

1. Capacity exceeds demand – the market is acting as aconstraint, or

2. Demand exceeds capacity – system overload is acting as aconstraint.

If you’re not already using DBR, there will be hidden capacityin your system somewhere. You can liberate that hiddencapacity by applying DBR principles. If you already knowyour organisation has hidden capacity, you will benefit all themore. So let’s get started.

Execution Area 1: Eliminate short-term Capacity Overload

If you’re already at capacity and one of your resources isexperiencing overload, you need to relieve it. If possible, allowthe overload to dissipate naturally over time, graduallyreducing the backlog. Create some breathing space. If theoverload is urgent, apply overtime or additional shifts to eventhings up. In extreme cases, sales may need to back off ondemand generation until the overload subsides by being lessproactive in drumming up orders.



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Execution Area 2: Update the Master Production Schedule (MPS)

This is a daily task – removing completed work orders, addingnew ones which have arrived. If an order in the system hasbeen cancelled, delete it from the Master Production Scheduleand reassign the raw materials.

Execution Area 3: Create a material release schedule for new entries in the MPS

Ensure there are detailed material requirements for each newwork order. Check for unassigned materials already available.Reassign them and release them for production. If your quotedlead time is the same as the shipping buffer – release thematerials immediately.

Execution Area 4: Control the production systemThen it’s just a matter of monitoring the process and staying incontrol to ensure orders are delivered on time. And how doyou do this?

Stage #3: Staying in ControlThe DBR system has control procedures which are designed towarn of 3 dangers:

1. A delivery deadline is in jeopardy,

2. When the load on the CCR undermines the stability of thewhole system, and

3. When the load on non-constrained resources begins toincrease until they too become constraints.

You can use the buffer as a control mechanism. By adjustingbuffers – whether time or inventory – you can adapt to mostvariations. But sometimes buffers alone are not enough. Youneed to identify potential buffer overruns before it’s too late. Ifyou don’t correct the problem in time, the whole system couldbecome destabilised.

In a make-to-order situation, DBR uses time buffers to protectthe production process from disruption and uncertainty.

Physical inventory can be used in the same way, protectingdelivery dates by having stock available for delivery. Excesscapacity can also act as a buffer, allowing for betterdeployment of resources even where load is high. It also makesit possible to expedite work when required.

What Do We Mean by Control?

When we say control, traditionally we mean a process ofcomparing desired results to reality and deciding whether tochange our objective or our methods of execution. But inreality, this does not lead you to focus on meaningful results. Itcan prevent you from identifying the real problems – becausereality will always differ from our plans.

For our purposes we will use a different definition. We’llconsider control as a reactive mechanism which identifiesthreatening situations and takes corrective action before thethreats are realised. We monitor the situation and any potentialthreats to the operation, to determine what will help us toidentify the threat as early as possible, and what actions we cantake to neutralise the threat.

Where Do You Draw the Line?

Red-Line control is a form of buffer management designed toidentify threats to delivery deadlines early enough to preventdue-date failure. It has 3 objectives:

1. Protect the delivery due date,2. Warn you of instability in the system, and

3. Identify the source of the problem.It works by providing a sufficient warning before the buffer isexceeded without disrupting the stability of the system. If thesystem begins to destabilise, red-line control will identify thisbecause of a higher than usual number of red-zone orders. Bylooking for the resource where most of the red orders reside,you can find the culprit – the resource that is becomingoverloaded.

To choose the right red-line time, determine how long it takesto expedite a medium sized order. If the red-line is too close tothe delivery date late deliveries will occur, even if correctiveaction is taken. In a stable system, if the red-line is too far fromthe delivery date, too many red-line warnings will occur.

If the system is becoming unstable, it will take extraordinaryefforts to prevent a red-line alert from becoming a late delivery– and there will be plenty of red-line alerts. A bigger shippingbuffer may alleviate the problem temporarily. But it’s likelyyou will need increased capacity or lowered customer demand.

When you identify an order that is in red-line time, prioritiseit. Locate it, and take specific action to ensure speedyprocessing and prevent late delivery. If orders can’t becompleted between red-line time and the shipping date, youmay have to throw manpower at the problem, in the form ofovertime or extra shifts.

The Raw Materials Red-Line

There’s another red-line to consider. That’s the time when yourun out of raw materials. The red-line for raw materials is setat an emergency level so that you can ensure that you don’trun out of raw materials before stocks can be replenished. Ifthe red-line is too close to the limit of supplies you willexperience a stock-out before you can replenish raw materials.

To establish the raw materials red-line, estimate theconsumption rate (per day or per week) and compare it to thenumber of days or weeks the fastest supplier takes to deliver areplacement order. A breach of the red-line prompts animmediate call to the fastest supplier for restocking.



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Managing Excess Capacity

It’s important to maintain some excess capacity everywhere inthe system, even at the CCR. Using DBR, you can free uphidden capacity and put it to work. But how do you managethe newly liberated capacity?

Capacity is either ‘productive’ or non-productive. Non-productive capacity is not necessarily unimportant – it may bedevoted to training, set-ups and other crucial tasks that are notnecessarily geared towards immediate production andthroughput.

But even after these activities are accounted for, there willusually be some excess capacity.

You can use this excess capacity in a number of ways. You canundertake new set-ups, produce more of your existinginventory or branch into new products. Of course, moreproduction must be co-ordinated with marketing to ensure youcan move the stock you produce.

Protective Capacity

It’s important to maintain a level of excess capacity to protectagainst internal variability, unanticipated breakdowns, absenceof key personnel, and external uncertainty caused by

fluctuating demands and inaccurate market forecasts. But it’ssurprisingly difficult to do.The problem is that traditionally management sees any excesscapacity as a waste of money. This comes from the localefficiency mentality which is common in accounting andbusiness administration.

Excess capacity is considered a waste – it is trimmed off inlayoffs or tied up in busy-work which looks productive, butisn’t. Workers make themselves look busy, worrying that ifthey are seen to have nothing to do, they will be retrenched.

Yet the reality is that without excess capacity, you end up withlonger production lead times, delivery date failures, loss ofquality and flexibility, and inadequate customer service. So how do you find a happy medium?

Throughput-Based Decision Making

The biggest challenge in managing any organisation isreconciling the conflicts between the operation as a whole, andthe local departments where the daily work takes place.

Organisations succeed as whole systems. Even if you have thebest marketing – or any other – department in the world, ifother departments aren’t up to scratch the organisation won’tsucceed.

When companies become large enough to separate theirfunctions into separate departments – and nearly all largercompanies do – it’s easy to lose sight of the big picture. In largeand complex organisations, management usually assumes thatthe sum of local efficiencies equals overall organisationalefficiency. They assume that maximising performance againsttheir chosen benchmarks in all departments will createmaximum profitability for the company. And they assume thatcutting costs across the board is always good for the bottomline.



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DBR for Dummies

DBR is a complex topic – but if you want it in a nutshell, here’sthe ultimate rundown on how to apply DBR to your operation:

• Make sure all resources have a little extra capacity to protectthem from overload,

• Create red-line warning systems to warn of impending problems,constraints or system instabilities,

• Act to prevent threatened constraints or disruptions toproduction,

• Use smaller batch sizes, plan daily and give priority to the closestdue dates,

• Reduce quoted lead time to match actual lead time, and

• Align sales and production around ensuring on-time delivery oforders.

The Fine Line Between Too Much and Not Enough

There's a fine line between too much excess capacity and notenough. Before you add or cut excess capacity, it's importantthat you ask yourself some questions about your operation'sneeds.

Remember that it's often easier to cut capacity than to add it -and that it can only be added or lost in 'chunks'. Be wary oftrimming excess capacity. This goes double when the capacity ispeople. Your remaining people will take the lesson to heart -they will learn to look busy, whether they are or not.

These tips will help:

• If you're contemplating cutting excess capacity be sure youwon't need it before you commit yourself.

• If you're thinking about adding capacity be sure you reallyneed it. Ask yourself if it will generate additional throughputthat justifies the investment. And be sure you haven'toverlooked any hidden capacity already in the system.

The fact is these assumptions are faulty. The challenge is to find out how local decisions really affectthe global financial performance of the company. What weneed is a new set of benchmarks that provide a link betweenlocal decisions and bottom line results. Managers need clearguidelines in making day-to-day decisions, whether in theirown department or across the organisation. And they need toknow their decisions will be financially sound.

Using the DBR measures of Throughput,Investment/Inventory and Operating Expenses, we can linktraditional financial concepts to daily decisions. Net Profit canbe calculated by subtracting Operating Expenses fromThroughput:

Net Profit = Throughput - Operating Expenses

Return on Investment can be calculated by dividing Inventoryby the Net Profit you just calculated:

Return on Investment = Inventory/Investment

Net Profit

This allows managers to calculate the bottom line outcomes oftheir decisions.

Managing Systems in the Information Age

The new buzzword these days is ‘enterprise’ – meaning thewhole organisation. While it’s not a new concept to those whohave been practicing systems thinking for years, managingcompletely integrated systems comes as a revolution to oldschool management thinking.

These days, more and more companies are recognising theimportance of integrating their system into a whole, instead ofmanaging it as a collection of separate divisions.In the information age, we generally assume that moreinformation is better.

We believe that if we have more information and betterinformation technology, our systems will operate moreeffectively. We tend to forget that if you put garbage in, you’ll

get garbage out, and that the most state of the art computertechnology is no match for intelligent, enlightened humanbeings.

Constraints theory and DBR help filter out a lot of irrelevantinformation and focus on what’s really important – how tokeep work flowing through the system, and profits cominginto the bank account.

You now have the tools to transform not just one department,but your entire organisation, and the ability to deal with theunexpected. So now when you succeed, it won’t just be by luck.With the really important information at your fingertips, andcontrol over your system, you’ll leave competitors in the dust.

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DBR Decision-Making Guidelines

You can use some guidelines based on DBR and Constraints

Theory that help management make decisions:

• Delivering firm orders on time generates throughput for thewhole system. Sales and production need to co-operate toensure that due dates are realistic and the system is able to copewith the demand generated by marketing.

• Producing to forecast or stock doesn’t generate guaranteedthroughput. There’s no way to accurately predict how longstock will remain on the shelves – or if it will ever by sold.Producing to stock can block throughput generation byreducing capacity to fulfil firm orders on time.

• The best use of limited capacity throughout the system is realproductive work.

Golden Rules of DBR

1. Like living things, organisations live or die as whole systems.2. Performance of complex systems is limited by a few factors atany time. These are the system constraints.3. Managing for local efficiencies will eventually compromise theperformance of the whole organisation.4. Constraints may be internal or external, physical, financial,market or policy based.5. Market demand is always a constraint. 6. No system can stay in balance forever. Disruption,uncertainty, variation and change are guaranteed, no matterwhat.7. The five focusing steps can be used to deal with current orfuture constraints.8. Throughput, Inventory/Investment and Operating Expenseallow you to link local decision making to traditional financialbenchmarks. 9. Resources that are consistently fully loaded or overloaded willultimately compromise the system. Excess capacity is not wasted.

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