Theory of Constraints Handbook - James Cox Iii [277]
2. Replenishment/Actively Synchronized Replenishment (ASR) buffer reporting that analyzes frequency of zone penetration and records stockouts, stockouts with demand, expedites, and the resulting impact on the shop floor.
3. Pricing indifference modeling (the comparative rate that different products generate cash over the constraint) based on Throughput constraint rates.
4. Strategic market analysis that focuses on both tactical short-term market exploitation (utilizing “free product” capacity) and the mid- and long-range strategic market offers.
5. Throughput Accounting (TA) financial statements.11
In today’s globally competitive environment, new decision-making tools are required to monitor, measure, and improve the business. A TOC information system is designed to plan, execute, and focus/prioritize improvement. Buffers provide the cushion at strategic points in the production system and BM provides real-time exception reporting on the status of the system. These buffers are visible across the organization and tie local actions to satisfying market demand.
How is the status of the buffers used to ensure sustained improvement? Five questions (5 Q’s)12 must be asked concerning all buffers (time,13 stock, and capacity) in the system:
1. What is the condition of the orders? Are they on time or late? Are the Replenishment/ASR buffers healthy?
2. If they are late, is the trend getting worse or better?
3. If it’s getting worse, what is the recovery plan?
4. Is the recovery plan effective?
5. What preventive measures are in place to keep the root issue from recurring?
Employing an effective feedback and accountability system requires answering these questions daily, weekly, monthly, and quarterly at different levels of the organization. In TOC, the point is to get an operational system in place quickly that can deal with variation, and a feedback system that can begin the process of execution, feedback, and ongoing improvement.
Generally, there are some key points of measurement and feedback that are important to maintain a real-time feedback system. In constraints management there will be relatively few control points—constraints and buffers—across an entire supply chain that can provide all of the information you need to judge the health of the entire chain and direct attention to places of need and opportunities for improvement.
Remember, all improvements are a change, but not all changes are improvements. If removing variation, waste, setups, etc., does not affect the rate at which Throughput can be generated or speed to market, do not be fooled that the company has made an improvement.
A Problem Is Identified, Now What?
Traditionally, problems are defined as those things in our organization that are not up to par from the fixed target perspective (i.e., “our on-time delivery is too low,” “too much expediting,” etc.). In TOC, these types of issues are referred to as symptoms or undesirable effects (UDEs) given that there is something more fundamental, the core problem, causing these symptoms.
The real problem is something that blocks the symptoms from being permanently addressed—the conflict. If it were as simple as taking an action to combat the symptom, management likely would have long ago resolved the issue. The fact that a symptom still plagues the organization is evidence that there is an equally important pressure—likely another system target or measure being jeopardized—that prevents a sufficient and longstanding solution to prevail. As stated earlier, a good measurement should drive the quest for increased ROI. Given that the tactical objectives for increasing ROI create conflict, resolving conflict must be at the heart of the improvement discussion.
Any time individuals in the organization are not synchronized around the right action to take, then by definition, they are wasting the capacity of their resources. Conflict over direction and the right action inhibit exploitation of and subordination to