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    Introduction To The Theory of Constraints (TOC) & Critical Chain Project Management (CCPM)

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    This document provides an introduction to the Theory of Constraints (TOC) and Critical Chain Project Management (CCPM). It discusses key concepts in TOC such as identifying bottlenecks, exploiting bottlenecks, and subordinating other resources to bottlenecks. The document also summarizes the five-step TOC process and highlights how CCPM uses aggressive estimates, buffers, and resource pooling to manage project uncertainty and reduce risk.

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    Introduction To The Theory of Constraints (TOC) & Critical Chain Project Management (CCPM)

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    M Maulana
    23 views16 pages
    This document provides an introduction to the Theory of Constraints (TOC) and Critical Chain Project Management (CCPM). It discusses key concepts in TOC such as identifying bottlenecks, exploiting bottlenecks, and subordinating other resources to bottlenecks. The document also summarizes the five-step TOC process and highlights how CCPM uses aggressive estimates, buffers, and resource pooling to manage project uncertainty and reduce risk.

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    TOC McNabb

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    This document provides an introduction to the Theory of Constraints (TOC) and Critical Chain Project Management (CCPM). It discusses key concepts in TOC such as identifying bottlenecks, exploiting bottlenecks, and subordinating other resources to bottlenecks. The document also summarizes the five-step TOC process and highlights how CCPM uses aggressive estimates, buffers, and resource pooling to manage project uncertainty and reduce risk.

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    23 views16 pages

    Introduction To The Theory of Constraints (TOC) & Critical Chain Project Management (CCPM)

    Uploaded by

    M Maulana
    This document provides an introduction to the Theory of Constraints (TOC) and Critical Chain Project Management (CCPM). It discusses key concepts in TOC such as identifying bottlenecks, exploiting bottlenecks, and subordinating other resources to bottlenecks. The document also summarizes the five-step TOC process and highlights how CCPM uses aggressive estimates, buffers, and resource pooling to manage project uncertainty and reduce risk.

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    of 16

    Introduction to the Theory of

    Constraints (TOC) & Critical Chain


    Project Management (CCPM)

    Major Mark McNabb


    Principles of the Theory Of Constraints (TOC)
    (aka Synchronous Manufacturing)

    The Action You’re Proposing:

    --Will It Increase “Throughput”?

    --Will It Decrease Inventory?

    --Will It Decrease Operating Expense?

    -Goldratt-

    Throughput: not moving items, but “Sales”, i.e. Finished product the customer Buys
    Business Rationale for Theory of Constraints (TOC)

    If You didn’t Sell it!


    Until You Sell what
    they worked on!

    Note: in this TOC context, “Sales” = Revenue from customers Minus Vendor Costs
    THEORY OF CONSTRAINTS (TOC) PROCESS

    1. IDENTIFY THE CONSTRAINT


    (identify capacity constraints, bottlenecks)

    2. EXPLOIT THE SYSTEM CONSTRAINT


    (utilize & protect the bottlenecks)

    3. SUBORDINATE ALL OTHER RESOURCES TO


    THE CONSTRAINT
    (utilize non-bottlenecks only to keep
    pace with bottleneck flows)

    4. ELEVATE THE SYSTEM CONSTRAINT


    (reduce load, improve capacity & reduce
    variability of existing bottlenecks)

    5. RETURN TO STEP 1
    Sources: The Goal, by Goldratt and Cox
    Critical Chain, by Goldratt
    Some Highlights of TOC From “The Goal”
    "BOTTLENECKS PACE THE PLANT"

    1. The output of upstream operations control the output


    of downstream operations.
    2. The cycle times of all work centers varies -- this
    variability spreads through all downstream operations.
    Therefore:

    The maximum deviation of a preceding operation


    will become the starting point of a subsequent operation.
    Or:
    1. Work Centers with excess capacity cannot work on
    parts they cannot get.
    2. Bottlenecks cannot work on additional parts when
    they are already at 100% capacity.
    3. Fluctuations in bottleneck outputs only make things
    worse.
    A B Output
    1 per hr 100 per hr ?
    100 per hr 1 per hr ?
    Bottlenecks can also be created by poor management policies:
    A. We need to Offshore Outsource: our labor: $15/hour, theirs: $0.5/hr
    (Really? What about the time, costs of packaging & transportation, and Time,
    Sales lost when outsourced items are Unavailable, Delayed, and/or Bad?)

    B. We are to use our “5 Ms” at near-full capacity, that’s Efficient


    (BUT how long will they run Properly at that level? Are they working the
    most important tasks? What do you do when you need More capacity?)

    C. Large Work in Process and Finished Goods inventories are Good, they
    show as Assets on the Accounting sheets
    (BUT what are they Costing you, until the finished items are actually Bought?)

    D. Large Batches are Good, if we get a few bad items we’ll recover
    (BUT what do you do while waiting for Batches? What if Most items are bad?)

    E. If each step produces an Average of 10 items/hr, so will the Plant


    (Really? What is the Spread? Don’t dependent steps usually Amplify problems?)

    F. Improve (a) step’s Efficiency, Whole Process gets better


    (Really? What if That step was Not the “weakest link” in the Process “chain”?)

    Note: Items B-F are metrics described in “The Goal” by Goldratt & Cox
    "Inventory is the Root of All Evil"
    T. Ohno (Toyota)
    E. Goldratt

    Always work on reducing inventory through:


    1) Reducing operations set-up time
    2) Reducing cycle time and its variability
    3) Reducing vendor variability in terms of
    quality, delivery times and delivery amounts
    4) Do not make unnecessary parts -- even if people
    and machines sit idle
    DRUM BUFFER ROPE

    DRUM: Paces the plant (bottlenecks)

    BUFFER: Inventory protection for bottlenecks


    to ensure no stoppages

    ROPE: Ties everything together; material releases


    and assembly schedules that reflect bottleneck
    constraints

    9470
    THEORY OF CONSTRAINTS (TOC) PROCESS
    (As Described In “The Goal” and “Critical Chain”)

    1. IDENTIFY THE CONSTRAINT

    2. EXPLOIT THE SYSTEM CONSTRAINT


    --CRITICAL CHAIN PROJECT MANAGEMENT

    3. SUBORDINATE ALL OTHER RESOURCES TO


    THE CONSTRAINT

    4. ELEVATE THE SYSTEM CONSTRAINT

    5. RETURN TO STEP 1
    Some Project Time & Resource Concerns

    • Working to multiple lists


    • Not enough resources, yet shared across all projects
    • Managers keep changing priorities, lose time taking people
    off jobs then restarting jobs later (multi-tasking)
    • Difficult getting the right people at the right time assigned
    to the right tasks

    Source: NAVSEA, Pearl Harbor Naval Shipyard & IMF


    Some Human Factors
    • People perform consistently with the way they are being
    measured--Even if the metric is not appropriate
    • Jobs usually start later rather than earlier
    -- Don’t start early, or you’ll just get to do it Over-right?

    • When work is completed early, there’s a tendency to enhance it


    —So little time is saved
    • What can go wrong will . . . (Murphy)
    ---Don’t most folk add time to schedule to account for this?
    • Often have no structured methodology to lower schedule risk for
    tasks in progress

    Source: NAVSEA, Pearl Harbor Naval Shipyard & IMF


    UNCERTAINTY UNLEASHES A CASCADE EFFECT

    Integration Dependencies • Delays: “c” is delayed if either “a”


    or “b” is late
    a
    c • Gains: Even if “a” or “b” finishes
    b early, “c” cannot be started
    Cascade Effect
    Delays multiply: every
    Resource Dependencies Within a A & D are done by the same small delay propagates,
    Project within and across projects
    A C resource
    Gains don’t add up: even
    E • Delays: If A is late, not only if many tasks finish early,
    projects still cannot finish
    B D C but also D gets delayed
    early
    • Gains: Even if A finishes
    Resource Dependencies Across Projects early, resource cannot start D
    as has to wait for B to finish
    A C
    E Project 1

    B D D & H are done by the same resource


    • Delays: If D on Project 1 is late, H on Project 2
    F H also gets delayed as resource is stuck on D
    Project 2
    J
    • Gains: Even if D finishes early, resource cannot
    G I start H as has to wait for F to finish
    Source: NAVSEA, Pearl Harbor Naval Shipyard & IMF
    CRITICAL CHAIN PROJECT MANAGEMENT
    (CCPM)

    Critical Chain - longest chain of dependent tasks


    Dependent through finish-to-start connections OR
    Resource dependency

    CCPM provides a step by step job plan of


    action, based on:
    -- Aggressive job time estimates
    -- Precedence network
    -- Resource loading and teaming
    -- Human nature
    -- Pooled safety
    -- Buffer management
    Aggressive Job Time Estimates, Pooled Safety
    and Buffer Management

    Task duration estimates and buffer placement

    5 5 6
    10 Project Buffer 13
    AFTER Feeding
    6 6 Buffer 6

    10 10 12

    BEFORE 20
    12 12
    Source: NAVSEA, Pearl Harbor Naval Shipyard & IMF
    The Theory of Constraints (TOC) Process

    IDENTIFY THE CAPACITY CONSTRAINTS


    (BOTTLENECKS) [IDENTIFY THE CONSTRAINT]
    {RETURN TO STEP 1]

    UTILIZE & PROTECT THE BOTTLENECKS


    [EXPLOIT THE CONSTRAINT]

    UTILIZE NON-BOTTLENECKS ONLY TO


    KEEP PACE WITH BOTTLENECK FLOWS
    . [SUBORDINATE ALL OTHER RESOURCES
    TO THE
    CONSTRAINT]
    IMPROVE THE CAPACITY AND REDUCE THE
    VARIABILTY OF EXISTING BOTTLENECKS
    . [ELEVATE THE CONSTRAINT]

    ALSO Remember: TOC applies to ALL Activities– Not just Mfg

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