Theory of Constraints Handbook - James Cox Iii [194]
Buy-in issues won’t be discussed in this chapter.18 The two problematic areas discussed next are included due to the potential problems that might occur and not be fully understood.
Moving from MTS or MTO to MTA
The move toward MTA can be done from either MTO or MTS or a combination of the two. The move from MTS to MTA might be viewed as relatively easy because there should be stock in the system, both finished and in production, that is not already dedicated to customer orders. Most of the time the amount of available stock found in the system is larger than the target level. The problem comes when there is no stock that is not already dedicated to specific customer orders.
When the shop currently operates under strict MTO, then there is definitely no WIP or finished goods that are not already dedicated to customer orders. The practical action is that enough stock must be prepared. The preferred way to start the replenishment is with full buffers—the finished-goods stock buffer level is at the target. Only when the actual stock level allows for replenishment should the switch between MTO to MTA be performed. If that change were done too early, chaos would occur in the shop floor.
The problem is that building stock has to be done on top of continuing to supply to order according to the current rules and sales volumes. This means producing to stock (later it’d be for availability) on top of running the production order required for actual customer orders. The practical action is to use only excess capacity to build the required stocks. It would take time according to the available capacity. The best way to physically build finished-goods inventory buffer on top of the regular demand is to generate dummy MTO orders for the stock building using a large time buffer in finished goods so that it won’t turn red too soon. The chosen date would give realistic expectations for when the availability marketing offer would be ready for launch.
Software Considerations
MTA places a lot of emphasis on the proper management of the shop floor. On top of the production side, at least two additional functions must be connected and performed well—marketing and sales (mentioned here as if they are the same function) and the purchasing of raw materials.
The marketing side needs to develop the offer to the clients, including setting the right expectations, so customers know about any limits to the quantity that can be purchased at one time. Sales needs to know when to try harder and when to find ways to restrict the demand based on the planned load.
The TOC buffers in both MTO and MTA assume perfect availability of raw materials. The generic rules of maintaining stock, explained in both this chapter and the next chapter on distribution, are applicable for managing the stock buffers of the raw materials.
It is the natural role of software to connect all the pieces to show one holistic picture. However, that natural role is seldom what one really gets. Most ERP software packages do not really display one cross-functional picture. The current situation with TOC is that while the general direction of looking at the performance of the whole organization and pointing to the weak links does exist, it has not yet been converted fully into software specifications.
Another role of software is to focus the attention of the decision makers on what really matters. It is not done currently in the vast majority of the software packages.
Software has a critical role in communicating and instituting processes and terminology. This does not mean that the current ERP packages institute the right ones. TOC challenges many of them. However, the power of the software cannot be ignored. This highlights the need for TOC software to institute the right processes and to provide the relevant information to the various levels of the decision makers.
As no current ERP package is built upon the TOC principles, and given the basic difficulty of implementing/revising such software,