Theory of Constraints Handbook - James Cox Iii [158]
2. From the minimum planning perspective, the critical question is whether the detailed schedule of the capacity constraint is truly necessary? What would be the damage if the sequence of the constraint would not be followed as is? Do we always lose capacity in such a case?
3. From the flow perspective, the challenge is the emphasis on the CCR buffer because from the overall flow it looks like a disruption to the flow. The trigger to the flow is certainly a customer order. Do we need to create an artificial time delay at the CCR? Is it something that improves the flow or is it a blockage of the flow?
What Should the Strategic Constraint Be?
A worthy capacity constraint for being the strategic constraint is a resource whose capacity is very difficult to elevate. The difficulty might be that it is very expensive, but it could also be that enlarging the capacity is a large project because the ramifications are very substantial for all the functions within the company. Think about a basic steel company where a huge furnace is the most obvious capacity constraint. To build another furnace is a multimillion investment and it takes several years. Then, as building another furnace adds much more than a mere 2 to 3 percent to capacity (in many cases it doubles the capacity), many additional workers are required, not just for the furnace, but also because the new furnace induces elevating most of the other equipment as well.
This is probably an extreme case where the difficulty in elevation is very clear. Even in such a case, a clever CEO might find alternatives to bypass the limitation of the existing furnace by buying basic steel from other manufacturers who do not have a good market for the capacity they have. However, even in the case where the market potential is far larger than the limited capacity of the furnace, the market demand could still be an active constraint because gaining more market demand would improve the performance of the company by allowing producing and selling more of the highly profitable products instead of the less lucrative ones.
Two characteristics of the market demand make it the major practical constraint in the vast majority of cases:
1. Clients do not like to be subordinated to an internal constraint of a supplier of products or services. In most cases, the clients have an alternative supplier, and if that one offers better service, then the clients might choose to move to that supplier. Once this is done, then the company no longer has a capacity constraint.
2. When the potential is far larger than the internal capacity, then the organization can find ways to increase its throughput even without elevating the internal constraint. One obvious way is by increasing the price. Another is to concentrate on the more profitable niches of the market demand.
However, if the market demand is the system constraint, how can an internal resource be a capacity constraint?
The claim is that it is perfectly possible to have both the market demand and the limited capacity of a specific resource as interactive constraints.
Having both the market and one CCR is quite a good match. The necessary assumption is that proper exploitation of both constraints could leave just enough protective capacity on the CCR to ensure that whatever commitment is given to the market will be met. In this manner, the market constraint is given the higher consideration without neglecting the capacity limitation of the CCR.
This is actually the way to handle any situation of interactive constraints: Decide which one is the major or primary one and ensure that the other or secondary constraint would be somewhat less loaded (take less commitments on that one).
Note that a constraint can be defined as anything that cannot subordinate to another constraint and thus cannot be ignored. This definition fits the reality of most CCRs.