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other units so it is up to the unit to make sure projects get done quickly. In this case, the project can easily take six months or longer to complete and may take 15 hours of engineer time if the engineer does not aggressively pursue it. During the additional five months, 25 airplanes have been completed without the improvement, costing the company $25,000 more than they might have. Assume the present value of the cost savings over the remaining life of the 747 program is $250,000 if the project is completed in one month. As previously, assume that half the Throughput value ($125,000) is assigned as the inventory value from the inception of the project and that the project is started on the 26th of the month and completed on the 20th of the following month. For the first month, IDD of $625,000 would be recorded (5 days × $125,000) and for the second month $2,500,000 would be recorded (20 days × $125,000) related to the project. Tracking IDD will motivate the engineer to stay on top of this project and push it through the system to minimize IDD in the future.

The actual results for Boeing’s implementation of T/D and IDD for the 747 and 777 PCIPs are impressive. The engineers associated with the PCIPs for each aircraft began focusing on the measures and asking the right questions. Analysis of the impact of implementing these measures from June 2001 to February 2002 and from October 2002 to March 2003 showed Throughput (net cost savings) for completed PCIP projects exceeding $62 million, a 500 percent increase over similar periods before T/D and IDD were implemented. In addition, flow time decreased by 50 percent, costs were reduced 40 percent, and the quality of the product increased. After the new measures were implemented, the group manager stated that all of the group’s prior measures could be eliminated because T/D and IDD were all they really needed to know to manage their process (Mortenson 2002; Chambers 2003).

Summary of Measures

Table 33-4 summarizes the previous discussion of the use of TDD, T/D, and IDD for different types of units in a complex organization.

TABLE 33-4 Summary of Measures

Focusing for Balance (and Changing the Culture of the Company)

With TDD, the fourth Supply Chain Flow Concept is also in place for the parts of the organization that most directly affect Throughput. TDD provides the focusing process to balance flow (Goldratt, 2009). While Ford used direct observation and Ohno used the gradual reduction in the number of containers and then gradual reduction of parts per container, TDD can be used to focus on balancing flow based on time.

When using TDD on the critical process flow, it is easy to see where the system is unbalanced.11 Senior management can use TDD because it has a consistent meaning across units, that is, that an organizational unit has been late on a commitment to deliver to either another unit or a customer. The magnitude of TDD is easy to interpret.

In addition, since everyone is measured in the same way, this means the top levels of the company want exactly the same thing as the bottom levels of the organization: fast, reliable flow. With this in mind, the top priority of the top of the organization is to ensure that the lowest levels of the organization are fast and reliable. These measures link local actions to global results. Those at the bottom of the organization also want senior management to succeed at being fast and reliable because that means the bottom of the organization will be achieving its goals as well.

In contrast to TDD, T/D and IDD are more valuable to unit managers than senior management for two reasons:

1. Both T/D and IDD are unit-specific—they depend on the unit’s goal and the specific types of intra-unit projects and tasks that are required to accomplish the unit’s goal. Therefore, T/D and IDD generally are not comparable across units the way TDD is.

2. T/D and IDD are relative rather than absolute measures. TDD for a period is meaningful by itself, whereas T/D and IDD for a period can only be evaluated in relation to prior periods.