Theory of Constraints Handbook - James Cox Iii [272]
FIGURE 14-7a Stock buffer zones.
FIGURE 14-7b Number of “stockouts” and “stockouts with demand” occurrences for parts over the past 180-day period.
FIGURE 14-7c Number of “parts over green limit” occurrences for parts over the past 180-day period.
Metric 2: Stability
The objective of this metric is to measure the amount of variation that is passed along through the system. A key factor in overall system performance is the amount of variability and volatility that the system experiences and how well that system absorbs or deflects it away from critical areas. In particular, these critical areas are the drums in TOC systems. Encouraging stability at drums is a must. Drums are the anchor point of an overall scheduling system, meaning that all other schedules are planned from the drum schedules. If this is the case, then obviously disrupting the drum schedule creates the effect that all other schedules are out of synchronization with what is deemed to be critical. Disruptions to the drum schedules can also erode their capacity. Drum utilization is defined as a measure (expressed as a percentage) of how intensively the constraint resource is being used to produce Throughput. Utilization compares actual time used to produce Throughput (setup and run time) to available time of the constraint (clock time). Utilization is 100 percent minus the percent of time lost due to the constraint starvation, blockage, and breakdowns. It is critical to measure to know what the overall potential of the system is (see the “Profit Maximization in TOC” section of this chapter) and what a company is leaving on the table every measurement period. This is a dramatically different focus than traditional accounting, which has no mechanism to measure lost opportunity. In reality, there are only a few reasons that cause us to lose potential at drums:
1. Starvation. Starvation occurs when the drum runs out of material on which to work.
2. Unnecessary or over-production. This is a waste of drum capacity on things that, quite simply, are not yet required.
3. Downtime. This is downtime of the drum due to unplanned (Murphy) or planned events.
4. Blockages. Blockages occur when the drum is prevented from running because an operation that it feeds is down. This usually occurs when there is not enough space to queue material between the resources or the resource is actually physically connected to the drum.
5. Poor Throughput rate product mixes. As explained earlier, a key to profit maximization is to make and sell products that produce the most Throughput per time unit on the drum. By making products with a lower Throughput rate, we squander the ability to generate additional cash. There are obvious caveats here as the market may require a company to make a full line of products (each with potentially different rates of Throughput) in order to win any business. (See Chapter 13.)
Other critical factors that affect stability and thus should be measured are the amount of non-constraint overloading and the number of late releases. While TOC expects occasional overloads at non-constraints from time to time, it is important to be able to measure the amount of overload that has and is occurring. If it rises above a threshold (specific to the environment) in the aggregate and at the individual resource area, then the system’s stability (and ultimately reliability) will be jeopardized as conflicting priorities and expedites rise. A late release is work that is released to the production floor after the scheduled released time based on the rope length tied to a drum or shipping schedule. Late releases exacerbate the non-constraint overloads to which we previously referred.
These measures are necessary to encourage localities to use good buffer management and roadrunner techniques (effective subordination) in order to ensure that work is available to the drum at the scheduled time and that drum utilization is protected. Additionally, it encourages problem solving and improvement initiatives in order to protect and bolster uptime on