www.tocpractice.

com

27th InternationalConferenceofthe
TOCPractitionersAlliance TOCPA
www.tocpractice.com

August1618,2016Johannesburg,SouthAfrica

Validating6SupplyChainRuleswiththe
dicegame

Philip Viljoen. RuZults. South Africa

17th 18th August, 2016

27th InternationalConferenceoftheTOCPractitionersAlliance TOCPA

www.tocpractice.com

Philip Viljoen
Philip Viljoen is a founder member of TOCPA. He
has been teaching and implementing TOC as
part of AGI, the Goldratt Group, TOCSA and
Ruzults since 1995. He is currently the MD of
RuZults and focuses on Strategy Development
and Value Chain Solutions

philip@ruzults.com
Skype: philjoen
Mobile: +27826515977

27th InternationalConferenceoftheTOCPractitionersAlliance TOCPA

www.tocpractice.com

MaximiseThroughput

MaximiseThroughput

Customers

Minimize
costs

Sales

Maximise
recoveries
ReduceCPU

Outbound
Logistics

Minimize
costs

Production

Inbound
Logistics

Procurement
Minimize
costs

Meetsales
targets

27th InternationalConferenceoftheTOCPractitionersAlliance TOCPA

www.tocpractice.com

Maximize Shareholder Value

Throughput, Investment, Operating

Expenses
IDENTIFY the systems constraint(s).

Decide how to EXPLOIT the systems

constraint(s).

SUBORDINATE everything else to the above

decisions.

ELEVATE the systems constraint(s).

If in a previous step a constraint has been broken,

identify the next constraint and repeat the
process. Warning!!!!! Do not allow INERTIA to
become a systems constraint.

1. Improving flow (or equivalently lead time) is a

primary objective of operations.
2. This primary objective should be translated
into a practical mechanism that guides the
operation when NOT to produce (prevents
overproduction).
3. Local efficiencies must be abolished.
4. A focusing process to balance flow must be
in place.

27th InternationalConferenceoftheTOCPractitionersAlliance TOCPA

www.tocpractice.com

ThroughputThinking
ShareholderValue

EBITDA

ThroughputT

ROI

System
Productivity
T/OE

InvestmentI

Operating
ExpenseOE

KPIs
Sales, Production all
departments
Reliability and Availability

27th InternationalConferenceoftheTOCPractitionersAlliance TOCPA

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Demandasthechosensystemsconstraint

Demandbottleneck
Thedemandthatwedecidetosatisfyexceptionallywell.
Itssizeisdeterminedbythecapacityofanupstream
CapacityConstrainedResource

CapacityProfile
20%Protectivecapacity{

CCR
Thesystemfeedingthedemandbottleneckisfully
subordinatedtomaximiseThroughput

27th InternationalConferenceoftheTOCPractitionersAlliance TOCPA

www.tocpractice.com

Thesolution:Supplyrules
MaketoAvailability
1.Customer demand is the
systems constraint

IDENTIFY the systems constraint(s).

Decide how to EXPLOIT the systems
constraint(s).
SUBORDINATE everything else to the
above decisions.

2. Fill every order perfectly

3. Protect the system as a

whole with sufficient protection
against supply and demand
variability
Inventory
buffer

1. Improving flow (Throughput) (or

equivalently reducing lead time) is
the primary objective of the
business.
2. This primary objective should be
translated into a practical mechanism
that guides the operation when NOT to
produce (prevents overproduction).

4. Release to production only

what has been consumed by
the customer
3. Local efficiencies must be abolished

ELEVATE the systems constraint(s).

If in a previous step a constraint has
been broken, identify the next
constraint and repeat the process.
Warning!!!!! Do not allow INERTIA to
become a systems constraint.

5. Abolish local efficiencies

4. A focusing process to balance flow
must be in place.

6. Buffer status sets priorities

for everybody in the system
and focuses improvements
27th InternationalConferenceoftheTOCPractitionersAlliance TOCPA

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The Dice Game

Customer

Supplier
A
Average production:

3,5 units/resource/day

Variability per resource:

1 to 6 units on any day - random

Variability of demand:

1 to 6 units on any day - random

One day is one roll of the die for every resource as well as the customer

What is the number of units the system will produce in 20 days?

Will the customer be happy?
8

27th InternationalConferenceoftheTOCPractitionersAlliance TOCPA

www.tocpractice.com

The Dice Game

Supplier

Customer
A

Average production:

3,5 units/resource/day

Variability per resource:

1 to 6 units on any day - random

Variability of demand:

1 to 6 units on any day - random

THEREALITY
Onaveragethesystemproduces48unitsandamaximumof60unitsin20days
Thecustomerishappyamaximumof15%ofthetime,whenwegotlucky.
Whatarethereasonsforthis?9

27th InternationalConferenceoftheTOCPractitionersAlliance TOCPA

www.tocpractice.com

Customer

Supplier
A

B
C
D
E
Remaining
Remaining
Remaining
Remaining
DAY
Throw Move Inventory Throw Move Inventory Throw Move Inventory Throw Move Inventory Throw Move OUTPUT
1
3
3
1
2
2
0
2
2
0
3
2
0
4
2
2
2
2
2
0
5
3
0
6
3
0
6
3
0
4
3
3
3
5
5
0
5
5
0
5
5
0
5
5
1
4
4
4
4
4
4
0
4
4
0
4
4
0
6
4
0
5
4
4
5
2
2
0
2
2
0
2
2
0
6
2
0
3
2
2
6
3
3
0
3
3
0
6
3
0
4
3
0
4
3
3
7
1
1
0
3
1
0
1
1
0
3
1
0
6
1
1
8
1
1
0
6
1
0
4
1
0
2
1
0
2
1
1
9
6
6
5
1
1
0
1
1
0
4
1
0
6
1
1
10
5
5
6
4
4
0
4
4
0
5
4
0
4
4
4
11
2
2
3
5
5
3
2
2
0
2
2
0
6
2
2
12
3
3
4
2
2
0
5
2
0
3
2
0
2
2
2
13
1
1
3
2
2
1
1
1
0
3
1
0
4
1
1
14
4
4
3
4
4
3
2
2
0
5
2
0
4
2
2
15
6
6
8
1
1
1
3
3
0
5
3
2
1
1
1
16
2
2
7
3
3
3
1
1
0
4
1
0
4
1
1
17
3
3
5
5
5
2
6
6
0
6
6
5
1
1
1
18
4
4
5
4
4
5
1
1
0
5
1
0
6
6
6
19
2
2
3
4
4
5
4
4
3
1
1
0
4
1
1
20
2
2
2
3
3
7
1
1
1
3
3
2
1
1
1
Totals
61
61
68
59
61
49
81
48
75
43
43
Efficiency
100%
87%
80%
59%
57%

27th InternationalConferenceoftheTOCPractitionersAlliance TOCPA

www.tocpractice.com

Accumulated variability
A

Varia

Varia

Varia

D
Varia

E
Varia

20%

20%

20%

20%

20%

0%

0%

0%

0%

0%

0 2 4 6

0 2 4 6

0 2 4 6

0 2 4 6

0 2 4 6

CumulativeVariability
120%
100%
80%
60%
40%
20%
0%
1

11

27th

InternationalConferenceoftheTOCPractitionersAlliance TOCPA

www.tocpractice.com

Run1

EFFECTOFCUMULATIVEVARIABILITYONFLOW
Supplier

DAY

Throw Move

0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Totals
Efficiency

1
5
1
5
3
2
6
2
1
5
4
5
1
2
3
5
5
6
1
3
66

1
5
1
5
3
2
6
2
1
5
4
5
1
2
3
5
5
6
1
3
66
100%

Remaining
Remaining
Remaining
Throw Move
Throw Move
Throw Move
Inventory
Inventory
Inventory
0
0
2
1
1
0
0
4
3
1
5
8
8
8
5
5
8
7
7
7
7

3
3
2
5
5
2
2
3
3
1
1
5
1
5
3
2
6
6
1
3
62

1
3
2
5
4
2
2
3
3
1
1
5
1
5
3
2
6
6
1
3
59
95%

0
0
2
0
1
3
4
5
4
2
2
0
0
0
2
0
0
1
4
3
4

1
1
6
4
2
1
1
4
5
1
6
5
1
3
5
4
5
3
2
2
62

1
1
4
4
2
1
1
4
5
1
3
5
1
3
5
2
5
3
2
2
55
89%

0
0
0
0
0
0
0
0
0
0
0
2
3
0
0
2
0
0
0
0
0

4
5
6
4
2
2
4
5
5
4
1
4
5
6
3
6
5
4
6
5
86

1
1
4
4
2
1
1
4
5
1
1
4
4
3
3
4
5
3
2
2
55
64%

Customer

Remainin
g
Throw Move OUTPUT BACKLOG
Inventory
0
0
0
0
0
0
0
0
0
4
1
0
0
2
3
3
6
9
7
6
4

3
6
4
6
2
1
3
6
1
4
2
5
2
2
3
1
2
5
3
4
65

1
1
4
4
2
1
1
4
1
4
2
4
2
2
3
1
2
5
3
4
51
78%

1
1
4
4
2
1
1
4
1
4
2
4
2
2
3
1
2
5
3
4

51

0
5
3
1
1
3
3
1
2
2
2
2
1
3
1
0
0
2
2
2
12

DEMAND

1
6
1
3
1
4
4
3
3
2
4
2
3
5
4
1
2
3
5
6
63

SYSTEM
CUSTOMER
INVENTOR
HAPPINESS
Y
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
1
0
0
0
15%

0
0
4
1
2
3
4
9
7
7
8
10
11
10
10
10
14
17
18
16
15

2.6

18

MAX

AVE

LT(DAYS)

27th InternationalConferenceoftheTOCPractitionersAlliance TOCPA

www.tocpractice.com

Decouple resources
Maximise resource efficiency

Newkpi:100%efficiencyforallresources.Maximisecostrecovery.MinimiseCPU
A

Varia
20%
0%
0 2 4 6

15

15

15

15

Enoughinventorytoinsulateeach
resource
Varia
Varia Varia
Varia
20%

20%

0%

0%
0 2 4 6

0 2 4 6

20%

20%

0%

0%
0 2 4 6

0 2 4 6

Worstcaseonaday:
Supplyis1anddemandis6=5outofaresourcesinventory=1daysprotection

Sufficientprotection?
3daysor15unitsperresource
13

27th

InternationalConferenceoftheTOCPractitionersAlliance TOCPA

www.tocpractice.com

Run2

HIGHLOCALEFFICIENCIESFORALLRESOURCES
Supplier

DAY
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Totals
Efficiency

E
Customer

CUSTOME
Remainin
Remainin
Remainin
Remainin
Thro Mov
Thro Mov
Thro Mov
Thro Mov
g
Thro Mov OUTPU
R
System
g
g
g
BACKLOG DEMAND
w
e
w
e
w
e
w
e Inventor w
e
T
HAPPINES Inventory
Inventory
Inventory
Inventory
y
S
15
15
15
15
60
1
5
5
18
2
2
13
4
4
14
5
5
19
1
1
5
6
0
64
6
1
1
13
6
6
17
2
2
11
5
5
18
6
6
4
2
0
59
6
1
1
9
5
5
20
2
2
10
3
3
15
6
6
0
6
1
54
3
5
5
12
2
2
17
5
5
13
2
2
14
3
3
2
1
0
56
1
6
6
14
4
4
16
5
5
14
4
4
17
1
1
2
3
0
61
5
4
4
17
1
1
12
5
5
14
5
5
17
5
5
0
5
1
60
3
2
2
16
3
3
9
6
6
17
3
3
17
3
3
1
2
0
59
5
2
2
17
1
1
7
3
3
19
1
1
13
5
5
2
3
0
56
3
2
2
16
3
3
8
2
2
18
3
3
13
3
3
1
4
0
55
5
1
1
14
3
3
10
1
1
18
1
1
9
5
5
1
6
0
51
5
2
2
12
4
4
10
4
4
18
4
4
8
5
5
2
3
0
48
4
1
1
10
3
3
7
6
6
23
1
1
5
4
4
2
6
0
45
5
2
2
11
1
1
7
1
1
22
2
2
2
5
5
1
6
0
42
1
6
6
13
4
4
9
2
2
20
4
4
5
1
1
3
4
0
47
1
6
6
17
2
2
8
3
3
21
2
2
6
1
1
2
3
0
52
1
2
2
18
1
1
6
3
3
18
6
6
11
1
1
4
5
0
53
5
1
1
15
4
4
9
1
1
18
1
1
7
5
5
1
4
0
49
3
4
4
14
5
5
11
3
3
16
5
5
9
3
3
2
1
0
50
2
2
2
11
5
5
12
4
4
16
4
4
11
2
2
1
1
0
50
1
1
1
8
4
4
13
3
3
16
3
3
13
1
1
0
1
1
50
56 56
63 63
65 65
64 64
66 66
66
6
72
15%
A

100%

100%

100%

100%

100%

3.3

64

MAX

AVE

19

LT(DAYS)

27th InternationalConferenceoftheTOCPractitionersAlliance TOCPA

www.tocpractice.com

Run3

SIMPLIFIEDDRUMBUFFERROPE WITHOUTBUFFERMANAGEMENT.
Supplie
r

DAY

RELEAS Remaining Thro Mov Remaining

Remaining
Mov
Throw Move
Throw
E
Inventory w
e Inventory
Inventory
e
0

Customer

REMAININ
CUSTOME
Remainin
Remainin
OUTPU
GFG
DEMAN BACKLO
R
g
ThrowMove
g
Throw Move
Buffersize
T
INVENTOR
D
G
HAPPINES
Inventory
Inventory
Y
S

30

30

28

30

27

30

27

30

25

30

20

30

17

30

18

30

23

30

23

30

10

19

30

11

17

30

12

15

30

13

10

30

14

30

15

30

16

30

17

11

30

18

11

30

19

11

30

20

13

30

65

62

64

60

77

60

48

47

68

100%

Totals
Efficiency

95%

94%

78%

98%

67

47

47

70%

2.4

30

MAX

AVE

13

LT(DAYS)

27th InternationalConferenceoftheTOCPractitionersAlliance TOCPA

www.tocpractice.com

Buffer status sets priorities for everybody in the

system and focuses improvements
1/3
TooEarly
TooMuch

OK
Noaction

1/3
Monitor
Flowand
prepare

1/3
Act
Expedite

Late
Out

BUFFER MANAGEMENT
Prioritize according to the status of the buffers.
Black highest priority, then red, yellow, green lowest
Blue no priority

Yellow status is the ideal status equilibrium but alert

Act (expedite) on red status only (do not operate in the noise)
Assess whether buffer size needs to increase or decrease
Too Often red - Increase
Too Often green - Decrease

These are the only priorities for everybody in the system

27th

16

InternationalConferenceoftheTOCPractitionersAlliance TOCPA

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Run4

SIMPLIFIEDDRUMBUFFERROPE WITHBUFFERSTATUS
Supplier

DAY

RELEASE

0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Totals

0
4
6
1
6
1
4
6
4
3
2
6
4
4
3
6
2
1
5
3
6

Efficiency

Customer

Remainin
Remainin
REMAINING
Remaining
Remaining
Remaining
OUTPU
BACKLO CUSTOMER Buffer
g
Throw Move
g
Throw Move
Throw Move
Throw Move
Throw Move
FG
DEMAND
Inventory
Inventory
Inventory
T
G
HAPPINESS
size
Inventory
Inventory
INVENTORY
0
2
5
5
5
1
0
2
4
6
5
5
7
6
4
9
5
2
6
3
3

2
3
1
6
5
5
4
2
1
3
6
2
5
5
1
6
4
1
6
6
74

2
3
1
6
5
5
4
2
1
3
6
2
5
5
1
6
4
1
6
6
74
100%

0
0
0
0
5
9
9
8
6
4
1
4
5
8
8
4
6
6
6
9
12

5
6
1
1
1
5
5
4
3
6
3
1
2
5
5
4
4
1
3
3
68

2
3
1
1
1
5
5
4
3
6
3
1
2
5
5
4
4
1
3
3
62
91%

0
1
0
0
0
0
4
3
4
6
11
10
10
8
8
8
8
8
3
4
5

1
5
5
6
1
1
6
3
1
1
4
1
4
5
5
4
4
6
2
2
67

1
4
1
1
1
1
6
3
1
1
4
1
4
5
5
4
4
6
2
2
57
85%

0
0
0
0
0
0
0
2
1
0
0
1
0
0
4
3
6
5
6
5
6

5
6
2
5
2
3
4
4
2
2
3
3
6
1
6
1
5
5
3
1
69

1
4
1
1
1
1
4
4
2
1
3
2
4
1
6
1
5
5
3
1
51
74%

0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
2
1
2
2
3
2

6
5
1
3
1
6
5
4
2
1
5
4
4
3
4
2
4
5
2
2
69

18
15
13
13
8
8
5
3
3
2
1
2
4
4
6
8
8
5
5
6
10

18
18
18
18
18
18
18
18
18
18
18
18
18
18
18
18
18
18
18
18
18

1
4
1
1
1
1
4
4
2
1
3
2
4
1
4
2
4
5
2
2
49

1
4
1
1
1
1
4
4
2
1
3
2
4
1
4
2
4
5
2
2
49

71%

2.5

18

MAX

AVE

LT(DAYS)

4
6
1
6
1
4
6
4
3
2
6
4
4
3
6
2
1
5
3
6
77

0
0
0
0
0
0
0
0
0
0
2
4
4
6
8
8
5
5
6
10
58

1
1
1
1
1
1
1
1
1
1
0
0
0
0
0
0
0
0
0
0
50%

27th InternationalConferenceoftheTOCPractitionersAlliance TOCPA

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27th InternationalConferenceoftheTOCPractitionersAlliance TOCPA