The Goal
The Goal = corporate goal = to make money.
There are too many different indicators, especially in the management of a factory.
- As a result, we make the mistake of focusing on something that is not a measure of the achievement of this "making money"
- Especially bad for "occupancy rates".
- [Example of Incorrect KPI setting
Financial Indicators - net income : Amount of money made - ROI: Amount of profit made in relation to the amount invested - Cash Flow: Money flows in and out.
Values commonly used in factories, such as the number of units produced per hour, are not directly related to this financial indicator.
Goldratt's proposed indicators - throughput : Percentage of money generated through sales - inventory : All money invested to purchase what you intend to sell. - operational expense : money spent to convert inventory to throughput
Reducing production capacity by 100% to match market demand reduces throughput and increases inventories - Occurs when there is a dependent event that undergoes [statistical variation
- You can slow down to suit the situation, but you can't go faster.
- As a result, statistical variation is not averaged and lags accumulate
Throughput is defined by [bottleneck
- The bottleneck is "constraints".
- Improve efficiency of bottlenecks
- Devise a break time so that the machine does not stop.
- Don't create something you won't need right away.
- Do quality inspections before bottlenecks.
- Reduce bottleneck load
- If we can work on it in other ways, we'll channel it there.
- Increasing non-bottleneck utilization creates inventory at the expense of operations.
- Non-bottlenecks can afford to make more than the bottleneck can handle
- Throughput does not increase because it is determined by bottlenecks
- As a result, work-in-process inventory builds up.
- Drum Buffer Rope
- Pace of bottlenecks determines overall material input timing (drums)
- Materials needed in the process after the bottleneck should reach the bottleneck by the time the materials pass through the bottleneck to get there
- Reduce work-in-process inventory before bottlenecks by not feeding front-end processes at a rate faster than the bottleneck can handle (rope)
- Accidents and other unforeseen statistical fluctuations are not a problem because there is power outside the bottleneck, but they are a problem when the bottleneck is affected, and there is a buffer to prevent the bottleneck from stopping.
- The weakest ring determines the strength of the entire chain.
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