Theory of Constraints Handbook - James Cox Iii [133]
The second factor that makes it impossible to have the ideal perfectly balanced plant is the combined effect of dependency and fluctuation. As discussed in the previous section, resources downstream will feel the impact of disruptions in upstream processes in a very biased fashion—they feel the impact of negative variations, but not those of the positive variations (see Srikanth and Umble, 1997, Vol. 1, Chapter 4). As a result, resources downstream will fall further and further behind, unless they have available capacity to catch up. If the plant were perfectly balanced, there would be no catch up capacity available and the plant would fall further and further behind. Without an appropriate amount of reserve capacity, the plant will be unable to operate effectively. As the plant falls behind schedule, managers will be forced to increase capacity (through overtime, hiring additional labor, etc.) at the resources that have the most delays. Thus, in the end, managers are forced to run unbalanced plants.
The total available capacity of a resource can be broken down, based on the previous discussion, into three categories: productive capacity, protective capacity, and excess capacity.
Productive capacity is defined as resource capacity that is required to produce a quantity of product sufficient to satisfy the agreed upon output of the system (Sullivan et al., 2007)4. Protective capacity is the resource capacity needed to protect the Throughput of the system by ensuring that some capacity (above the capacity required to support system Throughput) “is available to catch up when disruptions inevitably occur. Non-constraint resources need protective capacity to rebuild the bank in front of the constraint or capacity constrained resource (CCR) and / or on the shipping dock before Throughput is lost” (40). Excess capacity (22) is defined as resource capacity that is in excess of what is required to protect Throughput of the system. Protective and excess are also called idle as most of the time they are not used; protective engages when Murphy strikes to rebuild buffers.
It is a far better strategy to acknowledge that perfectly balanced plants are not attainable and are not even desirable. This means that most real life production operations are unbalanced and many resources will have idle (composed of protective and excess) capacity available. The availability of this idle capacity allows us to design a system under which the operation as a whole will perform at a higher level of reliability (less fluctuation) than individual operations.
Applying the Five Focusing Steps to Production Operations
We are now in a position to design a system that can operate at a very high degree of reliability while producing the highest levels of output possible. Since we do not have a balanced plant, it is clear that at least some resources will have more capacity than needed to meet market demand. In fact, in any dependent chain of resources there will be one resource that has the least capacity relative to demand. If the capacity of this resource is the same or less than the capacity required to meet market demand, then the resource is referred to as a bottleneck. The weakest bottleneck is the constraint of the system.
The rules one must use to get optimal performance from any system are derived under TOC through the application of the 5FS. The resulting approach is referred to as the DBR method of managing production operations. The application of the 5FS would proceed thusly.
Step 1: Identify the System Constraint
In this case, we are dealing with a situation in