Monday, 6 April 2015

On Clear days you can see Corporate HQ - 10

Why the 5 Focusing Steps are so Important

Most middle and senior managers do not understand or simply are not interested in how their business system works. They are content to focus on their local department and optimise that – rather than understanding the business as a whole to cause it to maximise results. Even top management (CEOs) often do not understand their business. They condone and even encourage their management teams to optimise their local departments – production, marketing sales, finance etc. Wherever local optimisation is the rule the business concerned will always harm the bottom line significantly. Local optimisation is a massive mistake!

The 5 Focusing Steps are guidelines that, properly used, will cause a management team to always reflect on their (local) decisions. Doe the action or decision taken locally help or damage the business as a whole? As we will see the 5 Focusing Steps are a guide, but they do not replace a deep understanding of the business system.

What follows is my third example of the impact of the exploit and subordinate steps on the bottom line. In this example I have chosen a situation in which there is a constraint only during a part of the year - that could be overcome through inventory management. Just a small policy change would be worth a huge amount.

BTW. If you have any similar examples please share them with me. I will publish them (if there are not too many!) Send your stories to CSSTW@Bluewin.ch - I will credit you with the story.

3rd Example of the 5 Focusing Steps in Action

Year-end Low Inventory Targets

Such targets are policies instituted to demonstrate a well-managed business with low inventories to Wall Street and investment analysts. Factory and business managers are given no choice but to meet these year-end targets no matter the problems it gave the business.
One business always met its targets with the full knowledge that as soon a January starts they would not be able to fulfil market demand. Because they could not deliver everything early in the year they were later forced to lower prices in order to win back the lost business. Year-end inventory targets were extremely damaging to their bottom line. A 1% price reduction cuts a 10% margin by 10% to 9%. Can you imagine that 1% is enough price incentive to win back customers?
0T2 5 Steps
Another business, also with a stringent year-end inventory target, sold synthetic yarns to a special industry that created fabrics for the consumer market. The nature of this business was such that during the first quarter of every 2 years out of 3, demand would exceed supply by a considerable amount. Since year-end inventory targets were holy, factory management did not dare to produce for the first quarter. Instead the produced enough for the first quarter but sold the extra amount (above inventory targets) to dealers at very low prices – at least this way their customers would be satisfied – they get the quantities they need from their factory  and not from competitors. 
Calculate for yourself what the cost would be to hold the extra inventory for on average 5 months 2 years out of 3 and say 8 months in years without peak demand. The cost of holding the extra materials is minimal compared to the extra income (Throughput). The extra income is sales less materials cost.
Factory management was most irritated by this because the dealers owned Aston Martins and Ferraris while they (factory management) could only afford Fords!
Clearly, when you read these 2 examples the conclusion has to be that the policy concerned is not a good one. Low inventories are certainly a good idea, but only once you can continue to meet demand despite low stock levels. Corporate management is the problem. What they want is fine, but it should not be requested equally from all factories. A further problem is it is very difficult to get sufficient time with top managers (either because these are too busy or middle managers fear for their careers) to show that the local optimisation of inventory leads (in such cases) to bottom line damage. Such situations often live on for many years damaging the company year after year.

IMG 0574

Sunday, 5 April 2015

On Clear Days you can see Corporate HQ - 9

Why the 5 Focusing Steps are so Important

Most middle and senior managers do not understand or simply are not interested in how their business system works. They are content to focus on their local department and optimise that – rather than understanding the business as a whole to cause it to maximise results. Even top management (CEOs) often do not understand their business. They condone and even encourage their management teams to optimise their local departments – production, marketing sales, finance etc. Wherever local optimisation is the rule the business concerned will always harm the bottom line significantly. Local optimisation is a massive mistake!

The 5 Focusing Steps are guidelines that, properly used, will cause a management team to always reflect on their (local) decisions. Doe the action or decision taken locally help or damage the business as a whole? As we will see the 5 Focusing Steps are a guide, but they do not replace a deep understanding of the business system.

What follows is my second example of the impact of the exploit and subordinate steps on the bottom line. In this example I have chosen another situation in which a there is apparently a clear physical constraint in the factory concerned. However through just a few simple changes to the way the factory works in relation to the constraints (policy changes) they also were able to move from an overloaded situation to being able to meet all demand with the expected lead time.


BTW. If you have any similar examples please share them with me. I will publish them (if there are not too many!

2nd Example of the 5 Focusing Steps in Action

Exploiting the constraint in a coatings (for automotive) factory

Before I arrived at the factory I knew that factory management was lobbying for more vessels to hold paint. They claimed their constraint was the number of storage vessels; they had already submitted a project to install 2 additional vessels.

0T1 5 Steps

This time I ran a simple simulation to show the impact of properly exploiting the constraint. Participants were supervisors from the factory and plant management. The simulation went well, the people got the idea and began discussing the constraint. I did not believe the constraint was the vessels since I also knew that quality control had limited capacity due to illness and an accident that reduced capacity by a large amount. Because evaluating colour takes several years to learn adding people to quality control was not going to work.

I led the team to the idea that quality control is the constraint of the system. Initially they were doubtful but when they began to think about the quality control job and the amount of time actually spent evaluating colours it became clear that quality control, even with 2 of their 4 people out of action, had enough capacity to do the job of colour quality control correctly. The decision made was that the colour experts would do only colour evaluations. To collect samples they would no longer walk back and forth between the lab and the factory; they would no longer add the corrections to the mix vessels and they would not wait until mixing was complete. Other employees were found to make the corrections (weighing pigments and adding these to the mixing vessels), people were found to collect samples and the quality control experts found ways to reduce the number of corrections needed. All these actions were "subordinate to the constraint” actions – subordinate to decision that the two colour experts in QA would focus only on colour evaluations.

Once all the actions the team decided were implemented the factory enjoyed a 40% increase in capacity – and no longer needed to buy any added vessels.

IMG 0420

On Clear Days you can see Corporate HQ - 8

Why the 5 Focusing Steps are so Important

Most middle and senior managers do not understand or simply are not interested in how their business system works. They are content to focus on their local department and optimise that – rather than understanding the business as a whole to cause it to maximise results. Even top management (CEOs) often do not understand their business. They condone and even encourage their management teams to optimise their local departments – production, marketing sales, finance etc. Wherever local optimisation is the rule the business concerned will always harm the bottom line significantly. Local optimisation is a massive mistake!

The 5 Focusing Steps are guidelines that, properly used, will cause a management team to always reflect on their (local) decisions. Doe the action or decision taken locally help or damage the business as a whole? As we will see the 5 Focusing Steps are a guide, but they do not replace a deep understanding of the business system.

What follows is a first example of the impact of the exploit and subordinate steps on the bottom line. In this the first example I have chosen a situation in which a there is a clear physical constraint in the factory concerned. However through just a few simple changes to the way the factory works in relation to the constraints (policy changes) they were able to move from an overloaded situation to being able to meet all demand with the expected lead time.

Examples of the 5 Focusing Steps in Action

Exploiting the constraint in automotive component production

The factory produces a major component for both cars and trucks. Production involves a series of steps followed by an automated assembly and lastly some manual final assembly. The company invited me to a meeting with the plant manager to discuss how TOC (and the 5 Steps) could solve his problem of insufficient capacity.

The plant manager's problem was demand far exceeded the factories capability to supply (by about 25%). Instead of a discussion with the him, he confronted me with 16 sceptical engineers who had been working on the problem already for a very long time.

0T0 5 Steps

I explained the 5 steps and their importance. This led to a discussion about the location of their constraint. With 16 engineers in the room consensus was difficult. After a while it became clear that they believed either a metal turning step or the final manual assembly step were the possible constraints. I explained that it is unusual to find the constraint at the end of a production line simply because month end pressures to meet sales targets ensure plenty of capacity there. They finally agreed that the best candidate was the turning machine in a line (they had 10 lines).

From there it was easy. I asked them how many hours per day the constraint machines would be producing. They claimed constantly except for set-ups. I asked to see these machines. We went to 5 lines and found that in 3 of them (60%) the turning machine was idle. They were idle for set-ups (but no set up person was present) and one was idle for a break. Clearly they were losing capacity at the constraint and therefore for the factory.

Back in the conference room the engineers came up with many ideas to make sure the constraint never stops (apart from actual work doing set-ups). They also came up with ways to accelerate set-ups significantly. Most of the changes could be made immediately (some did require the OK from their union). The result was they easily discovered the 25% of capacity needed to meet demand!

To exploit the constraint they had to find ways to shorten set-ups; they had to find ways to cover for breaks, meals and shift changes and they eventually found ways to move material between production lines since the constraint was not equally loaded across all 10 lines.

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Friday, 3 April 2015

On Clear Days you can see Corporate HQ - 7


Why the 5 Focusing Steps are so Important

Most middle and senior managers do not understand or simply are not interested in how their business system works. They are content to focus on their local department and optimise that – rather than understanding the business as a whole to cause it to maximise results. Even top management (CEOs) often do not understand their business. They condone and even encourage their management teams to optimise their local departments – production, marketing sales, finance etc. Wherever local optimisation is the rule the business concerned will always harm the bottom line significantly. Local optimisation is a massive mistake!

The 5 Focusing Steps are guidelines that, properly used, will cause a management team to always reflect on their (local) decisions. Doe the action or decision taken locally help or damage the business as a whole? As we will see the 5 Focusing Steps are a guide, but they do not replace a deep understanding of the business system.

What follows is a discussion of the impact of the exploit and subordinate steps on the bottom line. If an organisation follows the 5 steps correctly they can easily find 20 - 40% greater Throughput. The impact of the exploit decision and subordination is shown using several cases (materials cost at 35%, 50% and 65% of sales and 10, 20 and 30% positive impact on sales.

Why are the 5 Steps so Important for a Business

The decision to exploit and subordinate to the constraint

Consider a business with an internal constraint. The constraint limits how much can be produced and sold. This business now applies the 5 focusing steps. As a result, without adding any fixed costs, the business finds it can sell 10, 20 and 30% more (gains that can often be easily achieved). The tables below show the impact in 3 different situations – one with 35% material cost; one with 50% material costs and one with 65%. In all 3 cases the businesses earn 5% on sales (profit is 5% of sales).
1010 35




With low materials cost (35%) the leverage is huge. 
1010 50




Despite less leverage with higher materials costs the impact is still impressive.
1010 65




With very high materials (totally variable costs) the leverage declines further but a good impact remains.
From the 3 tables it is clear that following the 5 Steps can have a very significant positive impact on the bottom line. Someone wishing to use the 5 Steps faces the problem that current experience tells managers that such impact is just not possible. They cannot believe that such huge jumps in profitability are possible after their many years of improvement initiatives. The claim insults their capability and their view of themselves as successful managers. The examples below, taken from real life situations, will hopefully demonstrate the possibilities and the pitfalls of not following the 5 steps. (Nevertheless there will always be resistance; much of which in the form of ‘we are different’.)

Elevating or expanding the constraint

After following the 5 Steps in a disciplined way the organisation will know exactly where to expand. The expansion will immediately lead to more sales and Throughput. If in the above first example I have 3 resources machines in my constraint area then a new resource can potentially add 25% to sales and Throughput for a small amount of added costs. It is of course essential to know the cost of such an expansion since you may have to expand the near constraints too or the sales organisation may be unable to increase sales.
The decision how to exploit the constraint and proper subordination has the biggest impact on the bottom line. It’s free! Following the 5 steps correctly and continually is the most rewarding action an organisation can take. It focuses scarce improvement resources at the point of greatest rewards – great for the company and very motivating for the improvement team.
IMG 0578

On Clear days you can see Corporate HQ - 6

Why the 5 Focusing Steps are so Important

Most middle and senior managers do not understand or simply are not interested in how their business system works. They are content to focus on their local department and optimise that – rather than understanding the business as a whole to cause it to maximise results. Even top management (CEOs) often do not understand their business. They condone and even encourage their management teams to optimise their local departments – production, marketing sales, finance etc. Wherever local optimisation is the rule the business concerned will always harm the bottom line significantly. Local optimisation is a massive mistake!
The 5 Focusing Steps are guidelines that, properly used, will cause a management team to always reflect on their (local) decisions. Doe the action or decision taken locally help or damage the business as a whole? As we will see the 5 Focusing Steps are a guide, but they do not replace a deep understanding of the business system.
What follows is a description of the 5 focusing steps, how to apply them, why each step is important and a series of examples of common practice that violate the 5-Steps. This sixth post is a short discussion of the fifth (the step with an important warning that is often not heeded) of the 5 steps. This last step is actually simple the first step in the next cycle of improvement.

The 5 Focusing Steps

Step 5: If the constraint has been broken (has moved) go back to step 1. WARNING: Do not let you inertia become the systems constraint!

Clearly the 5 steps are a never-ending improvement cycle since there is no way to ever eliminate constraints. At best they will move to a new location.
The warning is extremely important! We humans develop a new paradigm very quickly as our business simulations show. We can explain the 5 steps in depth and emphasize the 5th step, run the simulation with manager participants and within 30 minutes they will forget the 5th step's warning. While this step makes eminent sense to them it seems managers cannot follow it correctly – it takes time practice and probably at least 2 people that constantly remind each other – of not just of step 5 but all of them.
Sometimes a business will tell me their constraint wanders (or dances) throughout the factory or business. This is simply a phenomenon of too big batches. The operation swallows too much at a time so that the constraint seems to move through the factory. To see the effect in animal life watch an Anaconda snake swallow a pig. The pig is swallowed whole and travels slowly through the snakes digestive system. The huge batch makes the snake lethargic and largely inactive … similar to a constipated factory. 
Factories with wandering constraints have too much WIP and very likely no constraint at all once they choke the release or freeze half their projects (see Production the TOC Way or Critical Chain - both by Eli Goldratt)
IMG 0570

On Clear days you can see Corporate HQ - 5

Why the 5 Focusing Steps are so Important

Most middle and senior managers do not understand or simply are not interested in how their business system works. They are content to focus on their local department and optimise that – rather than understanding the business as a whole to cause it to maximise results. Even top management (CEOs) often do not understand their business. They condone and even encourage their management teams to optimise their local departments – production, marketing sales, finance etc. Wherever local optimisation is the rule the business concerned will always harm the bottom line significantly. Local optimisation is a massive mistake!

The 5 Focusing Steps are guidelines that, properly used, will cause a management team to always reflect on their (local) decisions. Doe the action or decision taken locally help or damage the business as a whole? As we will see the 5 Focusing Steps are a guide, but they do not replace a deep understanding of the business system.

What follows is a description of the 5 focusing steps, how to apply them, why each step is important and a series of examples of common practice that violate the 5-Steps. This fifth post is a short discussion of the fourth (probably the step that is taken much too soon much too often) of the 5 steps.

The 5 Focusing Steps

Step 4: Elevate (Expand) the Constraint

Many times an organisation will expand resources of a perceived constraint, without deciding how to exploit the constraint or how to cause the rest of the organisation to subordinate to the decision. This is almost always a mistake. It is a mistake because a good decision how to exploit together with proper subordination yields so much capability (capacity) that the expansion is often shown to have been unnecessary. The first 3 focusing steps minimise investment and by delaying it to the proper time when investment is truly necessary.

Also many times the first 3 steps alone will cause the constraint to move (see step 5). A too early expansion of something would therefore be a waste of money. While the 5 steps are not a Lean process they do prevent financial waste whenever they are properly applied.

So, if the constraint has been properly and fully exploited and subordinated to; and it is still the constraint, then it is time to expand it … but only after full exploitation! Usually this will cause the constraint to move to a new place (unless strategically, the company decides to expand in such a way as to maintain the location of the constraint).

Elevate or expansion does not only mean investment in added resources. It means any expenditures made to increase capacity such as overtime, hiring temporary staff, outsourcing and anything else you may think of.

IMG 0380

On Clear days you can see Corporate HQ - 4

Why the 5 Focusing Steps are so Important

Most middle and senior managers do not understand or simply are not interested in how their business system works. They are content to focus on their local department and optimise that – rather than understanding the business as a whole to cause it to maximise results. Even top management (CEOs) often do not understand their business. They condone and even encourage their management teams to optimise their local departments – production, marketing sales, finance etc. Wherever local optimisation is the rule the business concerned will always harm the bottom line significantly. Local optimisation is a massive mistake!

The 5 Focusing Steps are guidelines that properly used will cause a management team to always reflect on their (local) decisions. Is the action or decision taken locally help or damage the business as a whole? As we will see the 5 Focusing Steps are a guide, but they do not replace a deep understanding of the business system.

What follows is a description of the 5 focusing steps, how to apply them, why each step is important and a series of examples of common practice that violate the 5-Steps. This fourth post is a short discussion of the third (probably the most difficult to implement) of the 5 steps.

The 5 Focusing Steps

Step 3; Subordinate Everything Else to the Decision how to Exploit

This is the difficult step. Imagine that sales are asked to sell lower margin products (in preference to higher margin ones). The fact is that our lower margin products consume our constraint (equipment) resource more effectively; that we get many more low margin products per unit of time from our constraint is a good reason to favour these. Sales, if they are measured by price or margins may well resist such subordination.
Similarly production generally loves big batches or efficiency at every resource. At first glance the right way to go, but big batches extend lead-times of those products waiting their turn. Long lead times (due to big batches, compromise quality - quality control sees problems much later. This quality issue tends to cost in other ways too - materials cost increases and capacity is reduced. The focus on efficiency everywhere wastes scarce improvement resources that should focus efforts on the limiting factor – our constraint.
These examples show how difficult it is to get the correct behaviour. Departments and their managers are measured and rewarded by the results of just their department and not by the effect these managers have on the business as a whole. True, some corporations have a bonus system that rewards middle managers by the overall results. This is a first step, but an ineffective one.
Bosses are used to measuring their employees by the results they achieve locally mainly because they do not have the tools to measure impacts their people have on the business as a whole.
Every business has a lot of work to do to give their managers and employees the information necessary to properly subordinate to the constraint. The data is there in ERP systems; it just needs to be transformed into information!
Part of my garden!
Jardin Burkhard

Sunday, 29 March 2015

On Clear days you can see Corporate HQ - 3

Why the 5 Focusing Steps are so Important


Most middle and senior managers do not understand or simply are not interested in how their business system works. They are content to focus on their local department and optimise that – rather than understanding the business as a whole to cause it to maximise results. Even top management (CEOs) often do not understand their business. They condone and even encourage their management teams to optimise their local departments – production, marketing sales, finance etc. Wherever local optimisation is the rule the business concerned will always harm the bottom line significantly. Local optimisation is a massive mistake!

The 5 Focusing Steps are guidelines that properly used will cause a management team to always reflect on their (local) decisions. Is the action or decision taken locally help or damage the business as a whole? As we will see the 5 Focusing Steps are a guide, but they do not replace a deep understanding of the business system.

What follows is a description of the 5 focusing steps, how to apply them, why each step is important and a series of examples of common practice that violate the 5-Steps. This third post is a short discussion of the second of the 5 steps.

The 5 Focusing Steps

Step 2: Decide how to exploit the constraint.

This is easy to say, but it is not so easy to do. How should I use my constraint to maximise profits (assuming maximum profit is the business goal)? Which of my products have the highest margins? Which of my products consume constraint capacity most effectively? What are the implications of my decisions in the market? What are the implications for the future? Clearly this is not an easy decision for any to make. It is in fact the responsibility of top management to decide!
If management does not take the decision or does not take it correctly the business will suffer. The bottom line will reflect this suffering. Unfortunately business results will not point to the culprit for less than optimal (even poor) results. The culprit is almost always the way we manage our system, our constraint, or could it be anything else? If it is something else let me know at rgb@vistem.eu!
The constraint might be our market. The market may not be buying enough of our products to fill our factories resulting in a less than satisfactory bottom line. Our decision may then be to cause our markets to buy more and more from us (and this must not be done with lower prices since our competitors can easily copy these). Some sort of powerful competitive advantage is essential.
It is important to remember that a policy ‘constraint’ should simply be changed. Deciding how to exploit an inappropriate policy does not make any sense. An inappropriate policy was originally put in place for a good reason. That is why it should be changed but not necessarily be eliminated. Chang such policies, KPIs or just the way work gets done.
IMG 0395

Saturday, 28 March 2015

On Clear days you can see Corporate HQ - 2

Why the 5 Focusing Steps are so Important

Most middle and senior managers do not understand or simply are not interested in how their business system works. They are content to focus on their local department and optimise that – rather than understanding the business as a whole to cause it to maximise results. Even top management (CEOs) often do not understand their business. They condone and even encourage their management teams to optimise their local departments – production, marketing sales, finance etc. Wherever local optimisation is the rule the business concerned will always harm the bottom line significantly. Local optimisation is a massive mistake!

The 5 Focusing Steps are guidelines that properly used will cause a management team to always reflect on their (local) decisions. Is the action or decision taken locally help or damage the business as a whole? As we will see the 5 Focusing Steps are a guide, but they do not replace a deep understanding of the business system.

What follows is a description of the 5 focusing steps, how to apply them, why each step is important and a series of examples of common practice that violate the 5-Steps. The second step is a discussion of the first of the 5 steps.

The 5 Focusing Steps

Step 1: Identify the Constraint

“We are continually working on eliminating constraints”, is a common claim when we ask for that thing that blocks a businesses performance. The statementalone indicates common practice. Every entity or department focuses on what they call constraints. These constraints originate from the behaviours of other departments around that focus on their own constraints. It is an uncoordinated mess. Everyone is trying his or her best. It is the system that forces every manager to optimise his or her local department.
0101
There can be only 1 (or very few) physical constraint(s) in any system of entities; like a chain can have only one weakest link. Since this is true a business system will have only 1 constraint located in just one of the entities. That is what we must find.
There is something else that people call a constraint. These are the rules by which their business is run. These may be formal policies, guidelines, key performance measures or simply ‘the way we run the business around here’. These have been called policy constraints. The 5 steps are not valid for these ‘policy constraints’ they (the inappropriate parts of policies) must be changed to remove or change the damaging part.
The simplest way to understand how to find a constraint is to look at a production environment with many machines more or less in a sequence between raw materials and finished product. One of these machines has, on average, the smallest capacity. Work in process (WIP) tends to pile up in front of this machine. (Many times materials are released as soon as possible so that huge amounts of (WIP) are present throughout the factory masking the true constraint.) So, the most loaded resource is the constraint of the system as a whole. The constraint does not need to be a bottleneck! The constraint can be the market or sales that are not delivering a sufficient number of orders to keep the factory busy.
The next steps are the guidelines how to manage the business constraint. They are guidelines! They are not a management cookbook! Top and middle management need to develop the thinking and tools to be able to apply the 5 steps correctly.
IMG 0381

On Clear days you can see Corporate HQ - 1

Why the 5 Focusing Steps are so Important

Most middle and senior managers do not understand or simply are not interested in how their business system works. They are content to focus on their local department and optimise that – rather than understanding the business as a whole to cause it to maximise results. Even top management (CEOs) often do not understand their business. They condone and even encourage their management teams to optimise their local departments – production, marketing sales, finance etc. Wherever local optimisation is the rule the business concerned will always harm the bottom line significantly. Local optimisation is a massive mistake!
The 5 Focusing Steps are guidelines that properly used will cause a management team to always reflect on their (local) decisions. Is the action or decision taken locally help or damage the business as a whole? As we will see the 5 Focusing Steps are a guide, but they do not replace a deep understanding of the business system.
What follows is a description of the 5 focusing steps, how to apply them, why each step is important and a series of examples of common practice that violate the 5-Steps. The first step is a discussion on the prerequisites to apply the 5 steps correctly.

The 5 Focusing Steps - The Pre-Requisites

Prerequisites to the application of the 5-Steps

  1. Definition of the System: The system to be optimised could be our production (because we know that production is holding back our ability to succeed. It could be the business as a whole including our markets. Care should be taken that the system selection will not lead to local optimisation.
  2. Definition of the Goal of the system. If we do not know the goal of our business we will not know how to optimise it – there will be many things that can be improved so that our business will have no focus.
  3. We need to know how our business can tell it is approaching the goal. Top management may be able to look at the bottom line, but middle management is operating locally. They need a way to know that their decisions and actions are causing the business as a whole to approach the goal more and more.
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Friday, 27 March 2015

Economic Order Quantity (EOQ)

EOQ is a Cost World metric. The purpose of the method is to find the minimum cost of buying and holding inventory. It does not take into consideration the impact inventory has on Throughput (and sales). Too low (and the wrong) inventory will almost certainly cause a company to lose sales, Throughput and profit.

The reason to minimise inventory should not be to minimise these to costs. It should be to minimise lead-times (for low inventories in a supply chain, lead-times must be low). The shorter lead-times are the smaller the bullwhip effect and the smoother demand will be on production. The smoother demand on production is, the more effective production will be in on time delivery, ensuring product availability, production capability (capacity to produce) and production cost per unit.

In the TOC World we focus on maximising Throughput which, done correctly, leads to the lowest overall cost. We focus on placing inventory in the right place in order to ensure due date and availability near 100%. We focus on minimal lead-times to minimise the bullwhip effect and thus also inventory. Because of this focus it can easily happen that TOC Throughput tactics take an organisation away from the EOQ minimum – often towards the left with more frequent re-ordering.

So, is EOQ a valuable concept? Or, is it dangerous?

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Wednesday, 3 September 2014

Critical Chain in Japan

Disasters - Rapid Response, Rapid Repair

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If you would like to read the rest of my article please send an email to JapanCC@vistem.eu and request a copy.

Alternatively you can also go to the September edition of ProjektMagazin http://bit.ly/Wa4QwR the German magazine for project management. (My article is in English!) 

IMG 0275The Simplon Pass between Switzerland and Italy