Inventories and Work In Progress (WIP) can be helpful clues to visually identify the bottleneck or constraint in a process, but they can also be insufficient or even misleading as I explained in part 2 of this series. It is often also necessary to study material and parts routes to really understand where they get … Continue reading How to identify the constraint of a system? Part 3
When trying to find the system’s constraint, why not simply asking the middle management? At least when Theory of Constraint was young, our world spinning slower and processes simpler, the foremen usually had a common sense understanding of their bottleneck. They knew what machine to look after, and what part of their process to give more … Continue reading How to identify the constraint of a system? Part 2
When implementing some solutions, like in continuous improvement, project managers better take care about the frustrations related to the S curve. The “S curve” is the shape of the performance curve over time. It describes a latency (t1) before the performance p1 takes off after the improvements have been implemented, then a more or less … Continue reading Continuous Improvement: Prevent frustrations related to the S curve
Throughput Accounting (TA) can be understood as a simplified accounting system based on Theory of Constraints (ToC) principles. TA makes growth-driven management and decision making simpler and understandable even for people not familiar with traditional accounting. Beyond simplifying, TA has a different approach compared to traditional accounting. The latter will focus on cost control (cost … Continue reading What is Throughput Accounting?
Little's law is a simple equation explaining how Waiting Time, Throughput and Inventory are related. Wait Time = Inventory (or WIP) / Throughput Here is a video about Little's law: Fine, what is Little's law good for? Well, if a process lead time is too long, chances are that work-in-progress (WIP) is too high. For … Continue reading What is Little’s law? What is it good for?
Throughput accounting comes early for all studying Theory of Constraints. The simplest is about the 3 KPIs: Throughput (T), Operating Expenses (OE) and Inventory (I) - later changed to Investment - and their relationship for higher profits. Later, Throughput accounting is used to make sound decisions to maximize profit despite limited means, favoring the products with highest "octane", which is the … Continue reading Introduction to Throughput Accounting
When it comes to machine layout, workplace setup or storage space, a prior ABC analysis of the frequency of events or value, volume, weight, etc. is a good start for making it efficient. Reminder The ABC analysis is based on the principle of Pareto law, sometimes called 20/80 (20% of causes accumulate 80% of effects) … Continue reading ABC analysis for efficient picking
In this video, a brief explanation about FIFO (First In Firt Out) and LIFO (Last In First Out) FIFO is prefered to LIFO when the order is important, especially regarding risk of obsolescence or decay of goods stored. Sometimes, even FIFO is prefered, the physical constraints cannot avoid LIFO.