Theory of Constraints Handbook - James Cox Iii [187]
Nevertheless, such a limit on the commitment is not capable of addressing a 20 percent rise in the total demand for all the products at the same time. After all, it is not the responsibility of any single customer to look at the total demand of all customers.
When we dealt with MTO, we established a way to deal with too much demand by being able to quote longer lead times than the standard lead time. This method of quotation smoothes the load and allows good utilization of the CCR.
In MTA, we do not have a way to restrain the demand according to capacity. Does it mean we should have to maintain enough capacity at all times? Well, it is certainly possible to sustain a peak of load for a limited time because having enough inventory on hand smoothes the impact of a temporary lack of capacity. The effectiveness of BM priorities dedicates the limited capacity to those products that need it most. However, such a peak period cannot continue for too long without affecting availability. Thus, the biggest risk to the good performance of the TOC MTA methodology is growing market demand, which requires more capacity than the CCR is capable of handling.
The planned load is a worthy tool to judge the required capacity based on the demand at hand. However, in order to judge the capacity at hand we must include in the planned load all replenishment orders. As you may recall, the regular definition of planned load for MTA takes into account only the replenishment orders that are released into the floor. Ideally, all the replenishment requests have been released to the floor, but when capacity is temporarily limited, some replenishment orders are delayed because they have lower priority and the CCR would be busy anyway processing orders that are more pressing.
Therefore, in order to monitor the overall capacity status one must run a somewhat different planned load; let’s call it the full planned load that includes all production orders and also replenishment orders that are not released yet.
What we get then is the time it takes for a new production order, just released, until it is processed by the CCR. Ideally, we need it to be not more than 80 percent of the formal replenishment time. The other 20 percent represents the time required after the CCR to complete the order. When the planned load is longer than 80 percent of the replenishment time, it means the actual replenishment time is longer and thus there might be a threat on the availability if that situation continues. Therefore, if this is just a peak for a short period of time, then the system has a good chance to stay stable. However, if the market demand continues to grow, then the threat would become a reality.
If there is a reasonable assessment that the demand is truly going up, then the conclusion should be to increase the capacity as soon as possible.12 Of course, we mean to increase the capacity on the CCR, but any elevation of the CCR should initiate an analysis of whether another resource would become a true CCR, so we might consider increasing the capacity of that resource as well.
Increasing capacity is an investment, so we had better be confident that the sales are truly growing. In addition, we need to know which resources should be elevated. We know the CCR requires more capacity, but many times we have less good information on the other resources. As we’ll see later, certain feedback from the floor might help us to pinpoint the resources that will need extra capacity once the demand goes up. However, additional study of other resources that might require more capacity may be needed.
There might be another way. Suppose there is a certain amount of capacity that can be purchased quickly at will; for instance, calling for overtime or even adding an extra shift. There are cases where the shop floor already works 24 hours a day, 7 days a week.