1© 2004 TOCICO. All rights reserved.
TOCICO 2004 Conference
TOCICO CONFERENCE 2004
Using the 5 Focusing Stepsto Define Local Measurements
Presented By:Presented By: Sanjeev GuptaSanjeev GuptaRealization TechnologiesRealization Technologies
Date:Date: 2626thth October 2004October 2004
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The measurements problemThe measurements problem
• Managers need local measurements− Evaluate local contribution to system performance− Provide alerts for proactive course corrections− Pinpoint improvement needs and focus improvement efforts
• Local measurements can be counterproductive− The moment we introduce local measurements, we risk local
optimization at the expense of global goals
• Examples of bad local optimization− Projects: hidden safeties− Supply Chain: excess inventory− Sales: inflated forecasts, heavy discounts
REMINDERT, I and OEare not local
measurements
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Nothing new to reportNothing new to report
• All the necessary concepts have been defined
• Further development will happen when the solutions is implemented in more companies
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Consideration: variability and uncertaintiesConsideration: variability and uncertainties
• If we had a perfect, non-variable world ...− Customer demand was known years
in advance− Manufacturing technology did not
change− Machines did not break down− Work-processes had zero variability− New technologies could be
developed without trial and error
• … the measurements problem could be solved by optimization software.
1. Create optimized plans with detailed instructions
2. Communicate instructions
3. Ensure that instructions are followed
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1. Identify the constraint
2. Exploit the constraint
3. Subordinate everything to Step 2
4. Elevate the constraint
5. Go back to Step 1 if the constraint has changed
Key to local measurementsKey to local measurements
Subordination LogicConvert exploitation decisions into instructions for front-line managers.
Buffer ManagementMake instructions reflect the effects of uncertainties and insubordination.
Buffer DiagnosticsRecord obstacles to subordination and prioritize based on buffer impact.
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Measuring subordination: productionMeasuring subordination: production
• DBR is assumed for Master Scheduling and Material Release
• Buffer Consumption measures subordination in aggregate− What percent of orders are in the red
zone? Is that number growing?
• Track work-in-process (WIP) inventory for local contribution− WIP can be quantified as Throughput $’s
or Number of Work Orders/ Parts− Can have an advanced metric (WIP x
days of buffer consumed), or simply classify as RED/ YELLOW/ GREEN
− If you use T$’s and days of buffer consumed, it is the same as T$-Days
• Measurement: prevent WIP from accumulating (maintain flow)− As long as materials are released per
DBR, flow is aligned with T & I goals− There might be conflicts between flow
and OE. Use T and OE calculations to resolve such conflicts
Flow GraphFlow Graph
D1D1 D2D2 D3D3 D4D4 D5D5 Time
WIP LegendColor based on buffer consumption
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Identifying/ prioritizing improvement needsIdentifying/ prioritizing improvement needs
• Reason Code is captured when work is put on hold, e.g.:− 01, Quality Problems− 02, Drawings Not Available− 03, Problems with Set-up− …
• Pareto analysis is based on buffer impact/ frequency, e.g.:− Yes, we have problems with set up. But
was that one of the top three causes of buffer consumption?
• Use standard Reason Codes− Makes analysis easy− List of standard Reason Codes should
be continually updated as old systemic problems are fixed and new ones arise
DiagnosticsDiagnostics
R1R1 R2R2 R3R3 R4R4 R5R5 Reason
LegendImpact
Frequency
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Same general solution works in projectsSame general solution works in projects
% BUFFER
% CC
% BUFFER
BUFFER REPORTINGIN PRODUCTION
BUFFER REPORTINGIN PROJECTS
1. BUFFER CALCULATIONS ARE DIFFERENT
2. MEASURING WIP IS TRICKY – Throughput $’s are difficult to quantify– Effort (hours of work) can be gamed most easily– “Number of Tasks” might be the most practical
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Information Technology can help Information Technology can help ……
Subordination Instructions
Buffer Diagnostics
Buffer Management
Data Collection,Data Collection,Processing andProcessing and
DistributionDistribution
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…… but you cannot rely on numbers alonebut you cannot rely on numbers alone
• We have to distinguish non-performance from effects of uncertainties and variability.
• Not all human intuition and judgment can be converted into bits and bytes.
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Key points about local measurementsKey points about local measurements
1. Subordination + BM, not optimization.
2. Flow, not efficiency.3. Computer-aided,
not computerized.
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Overall management process and measurements Overall management process and measurements (for production and projects)(for production and projects)
PLANNINGExploitation decisionsTranslate into instructions for first-line supervisors
IMPROVEMENTPrioritize and
pursue improvementopportunities
EXECUTIONEnforce instructionsKeep instructions current
•• T, I, OET, I, OE•• Safety NetSafety Net
•• Buffer StatusBuffer Status•• FlowFlow
•• ∆∆BufferBuffer•• ∆∆T, T, ∆∆I, I, ∆∆OE?OE?
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About Sanjeev GuptaAbout Sanjeev Gupta
• CEO of Realization Technologies, the leading provider of TOC Multi Project Management solutions.
• Prior to Realization, CEO of Thru-Put Technologies, a TOC Production Management solutions provider.
• Founded Thru-Put after working at Xerox for 5 years in various management roles, the last of which resulted in dramatic improvements in one of their plants using DBR.
• Education− M.S. in Public Management & Policy from Carnegie Mellon.
− M.S. in Mech. Engineering from Virginia Tech.
− B.S. in Mech. Engineering from Indian Institute of Technology, Delhi.
• Married, with two children.
e-mail: [email protected]
