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had some trouble. They were one day late on the Sales task (at the top), one day late on the Ideas task (near the middle), and one day late on the Delivery task (the bottom). In total, over that period, there was a $20 Sales task delayed for one day, a $5 Delivery task delayed one day, and a one-day delay for the $10 Ideas task; their TDD for the period was 35 TDD. During the second period, the Distribution department improved their primary performance measure. They had no late deliveries for zero TDD. We note that they were able to start some of this work early (they shifted the schedule) to take advantage of time when they were not so overloaded.

Units to Which TDD Applies: Degree of Impact on Throughput

TDD is clearly applicable to some units of complex organizations, such as production, sales, distribution, and engineering. These units have clear commitments to either outside customers or to other organizational units that directly contribute to Throughput. In addition, there is another category of units that can delay Throughput even though they do not make commitments to customers themselves. For example, the Human Resources department can affect Throughput if necessary employees are not hired and trained when needed. Purchasing can delay Throughput by contracting with unreliable or poor quality suppliers. IT can delay Throughput if it fails to deliver a critical application to Production on time. TDD should be recorded for these units as well.

FIGURE 33-15 Distribution’s total workload.

There is a third category for units or departments that have a much less direct effect on Throughput. For example, Accounting is responsible for generating monthly, quarterly, and annual financial statements. This is a critical function, so a project buffer would be maintained but the impact of this function has only a very indirect impact on Throughput. It is difficult to see how TDD would be measured for this function of the Accounting department.

These three categories of units might be classified with respect to their impact on Throughput as primary (Production, Sales, Distribution, Engineering, and similar units), secondary (Human Resources, Purchasing, IT, and similar units), and tertiary (the financial reporting function of the Accounting department). For units with primary and secondary impact on Throughput, TDD makes sense. For units or departments in the third category, it is difficult to see how TDD might be measured. However, it is well established that measures motivate performance and we would like to be able to measure units whose work falls in this third category for that reason alone. If we can develop a measure that allows senior management to monitor the performance of such units in a way that allows comparison across different units, it would be helpful.

Alternatives for When TDD Does Not Seem to Fit

Some organizational units (particularly support groups) have little control over when work is assigned and some have undetermined delivery dates. Others control their own demand and do not have delivery commitments to either external customers or other organizational units. An example of the latter is a process improvement or cost reduction group. TDD cannot be measured because there are no delivery commitments to other organizational units or customers. For such groups, the focus can be on doing good things—generating Throughput in terms of completing whatever support tasks the unit is responsible for in a timely manner. Two examples might be helpful here. The first is the Product Cost Improvement Program (PCIP) at Boeing. The PCIP is a group of engineers who evaluate and implement cost reduction suggestions from various parts of the company. The group evaluates cost-saving proposals and decides which to implement. Without real delivery commitments, it is easy for the group to release many projects into the system and, due to multitasking, take a long time to complete projects. When projects are completed, however, there is a definite cost saving realized by the company. By measuring the amount