FOR THOSE OF US WHO NEED BRUSHING UP ON OUR LANGUAGE

P R E S E N T E D B Y B O N N I E A U M A N N, A L G O R I T H M I C S

AT A G I L E P H I L LY

Primer on the Theory of Constraints

To Do List

The Production Dice Game

To Do List

The Production Dice Game Dependency Statistical Variation

To Do List

The Production Dice Game Dependency Statistical Variation

Speechifying

To Do List

The Production Dice Game Dependency Statistical Variation

Speechifying Theory in a Nutshell

To Do List

The Production Dice Game Dependency Statistical Variation

Speechifying Theory in a Nutshell

The Flow Game

To Do List

The Production Dice Game Dependency Statistical Variation

Speechifying Theory in a Nutshell

The Flow Game Phases, Iterations, and Flow

A VISCERAL EXPERIENCEOF

READING THE GOAL

The Production Dice Game

Ship 14 Knives in 4 Days

The Game Each round represents a day’s work Roll the dice to see what you produced Each operation is dependent on the upstream

operation for input Play for 4 days

Why 14? The average roll of a dice is 3.5 * 4 = 14

THE LIMITS OF MY LANGUAGE ARE THE LIMITS OF MY MIND.

Speechifying

The Goal

Make money now and in the future

The Goal

Make money now and in the future

Sales* NOT Production

*Sales minus all money not generated by the co. (materials, commissions, etc.)

What prevents us from achieving The Goal?

Constraints

What is a Constraint?

Anything that limits the system’s performance

Internal External

Bottlenecks Policies

Market DemandRaw Materials

Constraint is Anything that Limits the System

Bottleneck

A Special Kind of Constraint

Demandon an operation or resource

Capacityof the resource≥

Capacity Constraint Resource

A Special Kind of Bottleneck

Limits the entire system’s throughput.

Balance is Doom

Balanced Operations

Dependency & Statistical variation

Floating Bottlenecks

Floating Bottlenecks

Floating Bottlenecks are…

Unpredictable

Floating Bottlenecks

Floating Bottlenecks are…

Unpredictableaka

Unmanageable

Floating Bottlenecks

Floating Bottlenecks are…

Unpredictableaka

Unmanageableaka

Doom

The 3 Global Measures

Throughput - Money flowing In Rate at which a system generates money through sales

(not through production).

The 3 Global Measures

Throughput - Money flowing In Rate at which a system generates money through sales

(not through production).

Inventory - Money inside company Product inventories are liabilities, not assets. Liability:

Something that frustrates achievement of the goal.

The 3 Global Measures

Throughput - Money flowing In Rate at which a system generates money through sales

(not through production).

Inventory - Money inside company Product inventories are liabilities, not assets. Liability:

Something that frustrates achievement of the goal.

Operating Cost - Money flowing Out All the money a system spends in turning inventory into

throughput (e.g. Managers)

Profit?

ThroughputOperating Costs

Net Profit

Increasing Profit

1. Increase Throughput

Increasing Profit

1. Increase Throughput

2. Decrease Assets (including inventory) Avoid Throughput and Operating expense

Increasing Profit

1. Increase Throughput

2. Decrease Assets (including inventory) Avoid Throughput and Operating expense

3. Decrease Operating Expense Avoid Throughput and Assets

Increasing Profit

TOC’s order of importance1. Increase Throughput

2. Decrease Assets (including inventory) Avoid Throughput and Operating expense

3. Decrease Operating Expense Avoid Throughput and AssetsTraditional Model

puts this in #1 slot

“Cost Center Disease”

Exploiting Constraints

Examples throughput Reduce set-up time Relieve workers so there is no idle time at the CCR Sub-contract or outsource bottleneck resource Add capacity to the constraint

Exploiting Constraints

Examples throughput Reduce set-up time Relieve workers so there is no idle time at the CCR Sub-contract or outsource bottleneck resource Add capacity to the constraint

Exploiting Constraints

Examples throughput Reduce set-up time Relieve workers so there is no idle time at the CCR Sub-contract or outsource bottleneck resource Add capacity to the constraint

Exploiting Constraints

Examples throughput Reduce set-up time Relieve workers so there is no idle time at the CCR Sub-contract or outsource bottleneck resource Add capacity to the constraint

TELL ME HOW YOU WILL MEASURE ME AND

I WILL TELL YOU HOW I WILL BEHAVE.

Why?

Traditional Theory of Constraints

Inventory = Profit Overproduction Busy = Efficient

Operational Costs #1 Sub-system

optimization Cost Center Disease

Inventory = Profit Sell inventory Extra work

discouraged

Throughput #1 Systemic optimization

Continuous Improvement

Implications

VIA KARL J SCOTLAND

HTTP: / /AVAILAGILITY.CO.UK/2010 /07 /16 /THE-FLOW-EXPERIMENT/

The Flow Game

Drum – Buffer – Rope

Drum The CCR (Capacity Constrained Resource).

Purpose: Its production rate sets the production rate for the entire plant, downstream & upstream.

Buffer Placed in front of the drum (upstream) to keep it busy for a specified

time. Purpose: No throughput disruption.

Rope  Actions taken to tie the rate at which material is released into the

plant (at the first operation) to the production rate of the drum (CCR). Purpose: Ensure WIP inventory doesn’t exceed the level needed for the

buffer.

TOC JIT

Job shop3 Global

Measurements

Kanban authorizations

Flow basedLocal, non-financial

measurements e.g. cycle time

Drum-Buffer-Rope

TOC vs. JIT

Most Comprehensive Reference Ever

Questions to lead your discovery http://maaw.info/TOCquestions.htm

Chapter by Chapter summary of The Goal http://maaw.info/ArticleSummaries/ArtSumTheGoal.ht

m

KanBanDev Yahoo Group