Theory of Constraints Handbook - James Cox Iii [75]
Having put the Three Rules of Execution Management into practice, the holy grail of projects—how to prioritize improvement efforts—can now be pursued. Since almost every process in projects can be improved, it is essential to pinpoint and focus on those improvements that will have the biggest impact on global performance.
As is known, the most harm to lead times and Throughput is done by practices and resources that have the most impact on project buffers. Therefore, the logical way to prioritize improvement efforts is:
Record reasons for delay in task completions.
During buffer consumption calculations, identify the tasks that are affecting project buffers the most, and classify the corresponding reasons for delays.
Do a Pareto analysis of the reasons for delays across all projects and address the top reasons.
Organizations that have focused and prioritized their improvement efforts in this manner have achieved even shorter cycle times and much higher Throughput than they achieved during the initial implementation.
Step 7: (When Applicable) Use Superior Delivery as a Competitive Advantage to Win More Business
When most competitors don’t deliver their projects on time, and late delivery has a big effect on their clients, reliable due-date performance can give companies a competitive edge. Some companies in engineer-to-order manufacturing, after stabilizing Execution, have been able to win more clients by coupling their offers with large penalties for delays.
While completing projects early is not always relevant for the client, in some cases it is critical. For example, the U.S. Air Force captive MRO facilities improved their service and value by offering faster turnaround on aircraft that were in high demand.
Similarly, a supplier of equipment for power plants was on the critical path of projects to set up those plants. This supplier was able to increase its win rates without offering price concessions by promising and delivering shorter lead times.
Lessons Learned
Following are some of the key lessons18 drawn and shared by hundreds of managers who have implemented Critical Chain.
Performance Gains Come from Managing Differently, Not Better Planning and Visibility
While good plans are essential and the rate of buffer consumption status is an effective way to monitor projects, increasing the rate of execution requires changing the way execution is managed.
Projects can be planned better even without Critical Chain, and the rate of buffer consumption provides similar information about project status as a comparison of actual time-lines against the baseline. If only better planning and visibility are what is required, they can very well be achieved with traditional methods.
However, unless WIP is reduced, task-level measurements are abandoned, projects are planned with shorter cycle times, and buffer-based priorities are followed, execution priorities will not be synchronized and projects will not be done faster. Nor will Throughput be increased.
Implement All of the Three Rules
Experience over the years has shown that the Three Rules of Critical Chain must all go together (see Fig. 4-2). Not implementing any one of them only shows up as lack of results or resistance to change. For example, organizations doing multiple projects with shared resources might be tempted to implement Critical Chain one project at a time. They ignore the pipelining rule. In a shared resource environment when WIP is not lowered, conflicts for resources continue. Priorities cannot be followed, buffers are consumed, and commitments are missed. Very quickly, faith in Critical Chain is lost.
Many times organizations aim just to gain control without increasing speed and Throughput. They compromise the buffering rule (for example, cycle times are not cut, but buffers are added). When cycle times are not cut, pipelining is compromised because long cycle times mean high WIP. When WIP is not lowered, Buffer Management cannot be done. The entire system falls apart.