2016 TOCICO 2-Day Workshop Conference – Pravets, Bulgaria
Flow and Decision Making
Using
Theory of Constraints
Part 2
Kathy Austin
Focused Profit Strategies, LLC
© 2016 TOCICO. All Rights Reserved.
2
2016 TOCICO 2-Day Workshop Conference – Pravets, Bulgaria
Achieving the Goal: It’s All About Flow
Independent resources work together to achieve the
organization’s goal
GOAL
$
The faster the flow, consistent with demand, the more
successful the organization will be in achieving its Goal
However, in complex organizations it can be difficult to
effectively manage all of the interdependencies that exist
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2016 TOCICO 2-Day Workshop Conference – Pravets, Bulgaria
Sounds Simple, But…
Flow is impacted by:
1. Interdependencies
2. Constraints
3. Variability
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2016 TOCICO 2-Day Workshop Conference – Pravets, Bulgaria
Focusing Steps
of Theory of Constraints
1. Identify the system’s constraint (the weakest link)
2. Decide how to exploit the constraint (protect, get the
most from, or not waste)
3. Subordinate (synchronize) everything else to the above
decision
4. Elevate (get more of) the constraint
5. If the above steps have broken the constraint, go back
to Step 1
WARNING
Do not allow inertia to become the system’s constraint!
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2016 TOCICO 2-Day Workshop Conference – Pravets, Bulgaria
The only meaningful measure of an
organization’s performance is
how well it is achieving its Goal
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2016 TOCICO 2-Day Workshop Conference – Pravets, Bulgaria
A
B
C
GOAL
$
D
Process Waste Study
Process
Scrap Rate
A
B
C
D
8%
3%
5%
7%
Where should the system focus its limited
improvement budget?
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2016 TOCICO 2-Day Workshop Conference – Pravets, Bulgaria
Process Waste Study
Process
Scrap Rate
A
B
C
D
8%
3%
5%
7%
Pareto Analysis would direct waste reduction efforts at Process A
The constraint in this example is Resource B; it has less capacity than A,
C, or D. Load on resources for this example: A: 83%, B: 90%, C: 70%, D:
70%
The 3% scrap rate on the constraint process (B) and the impact of
the C and D operations on parts that have been processed by the
constraint are much higher priorities than A!
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2016 TOCICO 2-Day Workshop Conference – Pravets, Bulgaria
Take-Aways
• All operations have significant elements of flow that can be
managed to improve performance
• Focus must shift to the system level
• Flow is impacted by interdependencies, variability, and
constraints
• There are processes to analyze and improve any flow system
• Reducing flow time enables goal achievement
• The only way to go to the next level is to leave our silos of
excellence
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2016 TOCICO 2-Day Workshop Conference – Pravets, Bulgaria
“Every improvement is a change,
but not every change is an improvement.” - Eli
Goldratt
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2016 TOCICO 2-Day Workshop Conference – Pravets, Bulgaria
Where To Start Tomorrow?
•
•
•
•
Identify your system and its links
What is your real constraint?
What are your limiting and blocking problems?
Determine what Work-In-Process (WIP) means in your system
and where it is located
• How does WIP flow through your system?
• What system of links feeds your system?
• Whose system of links does your system feed?
©2016 TOCICO. All Rights Reserved.
2016 TOCICO 2-Day Workshop Conference – Pravets, Bulgaria
About the Presenter
Kathy Austin is a results-driven performance optimization leader with demonstrated
experience in building high performance teams and customer relations. Known for proactive
problem identification and resolution, cost control, and maximizing productivity, resulting in multimillion dollar throughput and cost improvement.
She and Gerry Kendall co-authored Advanced Multi-Project Management in 2012. In 1997, Kathy
and Ted Hutchin co-authored Why It’s Not Luck. Kathy became a Jonah in 1989 and a Jonah’s Jonah
in 1991.
Kathy is certified in all areas of the Theory of Constraints (TOC) Body of Knowledge (BOK) and has been a
member of TOC-ICO since the first meeting in Atlanta. Additionally, she has developed and taught multiple basic,
expert, and licensee courses across the entire TOC BOK. Kathy is past vice-chair of the APICS CM-SIG and coauthored/edited (with Jim Cox) the APICS TOC series. She is also an ISCEA Certified Critical Chain Project
Manager.
In the past, Kathy has held various positions with the Avraham Y. Goldratt Institute (AGI), APT Concepts,
established the Operations Continuous Improvement Department at Delta Airlines Inc., and currently serves as
Chief Strategist at Focused Profit Solutions, LLC in the Atlanta GA, USA area.
She currently serves on the TOC-ICO Board of Directors.
LinkedIn: www.linkedin.com/in/kathymaustin
Email: [email protected]
©2016 TOCICO. All Rights Reserved.