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Origins
Developed by Eliyahu M. Goldratt A management philosophy developed in the 1980s Boosts process performance by studying each element of the process Identifies and focuses on reducing bottlenecks Often applied in conjunction with Kaizen, TQM, JIT / Lean principles
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The concept
Line managers have always analyzed individual components of a process Maximizing components may not improve the process Goldratt views the entire process and looks for the weakest link
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Goldratts 5 steps
Identify the systems constraints Decide how to exploit the constraints Subordinate everything else to the exploitation of constraints Elevate the systems constraint If any constraints have been violated, repeat the process
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Definitions
Constraint: Anything that limits or hampers a systems performance relative to its goal Inventory: All the money used to purchase things the system intends to sell Operating expense: The money a system spends to turn inventory into throughput Throughput accounting: An accounting system used to measure TOC operations
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Drum-Buffer-Rope
Logistical tool that balances flow of a system Drum: A schedule for capacity of the constraint Buffer: Built in lead time for parts to reach the constraint early (in process inventory) Rope: A schedule, or information connection, for releasing raw materials
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Identify Capacity Constrained Resource (CCR) -Paretos Rule may help Schedule CCRs to capacity (drum) Protect from statistical fluctuations with time buffers (buffer) Monitor CCRs to ensure the timely release of materials upstream (rope) Monitor the Buffer
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An Illustration
10 units / hr Process 1 12 units / hr Process 2 7 units / hr Process 3
Process 5
Process 4
10 units / hr
11 units / hr
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PROCESS
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Stakeholders have the best knowledge about process They have the best ideas for process improvement They are aware of unintended consequences Stakeholders consent is necessary for implementation
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Process Managers & operators Process customers, internal & external Suppliers internal & external Process design personnel Maintenance personnel
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Why does project management produce sub-optimal results? What are countermeasures?
All members of a project team should have the enterprise wide viewpoint Project teams should have members representing the stakeholders Project teams should seek consultation from other parts of the enterprise as they form action proposals
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Project Measures
Need meaningful performance measures Example: Productivity / throughput Focus on incremental improvements All sub-activities need to be geared towards the larger objectives Example of kaizen events
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Project Documentation
Goals & objectives
Project budget
Roles, responsibilities for team members List of Key Result Areas (Deliverables) 3/11/13
Needs focus on the metrics E.g. for a plan or schedule :Gantt Chart Cost considerations are critical Documentation at every stage
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Internal & external Age groups (esp. for consumer goods) Geographical location Industry types A retail or individual customer A firm (supplier company, customer company)
Types
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Written surveys (or) online surveys [survey monkey, googlegroups] Focus Groups Interviews
Face-to-face By phone
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Business Results
A process produces 40,000 pencils. 3 types of defects can occur. The number of occurrences are
Blurred printing: 36 Wrong dimensions: 118 Rolled ends: 11 Total number of defects: 165
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Business Results
Defects per unit (DPU) = # defects / # units = 165 / 40000 = 0.004125 Blurred printing: 40,000 Dimensions: 3 places where it is checked, hence, number of opportunities = 3 x 40000 = 120,000 Rolled ends: 2 ends per pencil, hence total number of opportunities = 40,000 x 2 = 80,000
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Business Results
Throughput yield = e-0.004125 = 0.996 Assume a process that goes through stage A, B & C with individual yields of 0.9, 0.8 & 0.9 respectively. Then RTY = 0.9 x 0.8 x 0.9 = 0.648
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Business Results
PPM = DPU x 1,000,000 PPM is often used to denote impurity. Suppose 0.35 grams of sand is found in 25 kilograms of rice, then
An Example
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THANK YOU
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