One Building Block of a Stable and Capable Delivery System | Operational Excellence Quick Hits

Speaker 1: (00:05)
In the last session, we talked about what is a stable and capable delivery system? In our house of operational excellence, the first pillar is to create that stable and capable delivery system. There’s three elements that make up that first pillar. First one is synchronous flow. The second one is employee involvement and teamwork. The third one was capable processes. This session, we’re going to talk about what is synchronous flow? Synchronous flow. When we look at any system, we can measure the system’s effectiveness and what’s the difference between effectiveness and efficiency? Our goal is to flow work to customer demand. If we use our rowing team example, we have this top team that everyone’s working together and rowing together. They’re effective because they’re getting to the finish line first. The second crew, we have one rower that’s super efficient. He’s rowing three times faster than the rest of the crew, so in this case, this boat is not in sync. Having one person more efficient doesn’t help improve the system efficiency. It actually hurts the system efficiency.

Speaker 1: (01:21)
When we look at any system, there’s two types of capacity, the first type is what we call productive capacity. This is the capacity that’s required to produce what is sold. In any value stream, there’s always one resource that determines the capacity of that value stream. That resource, we can name it the capacity constraint resource, or CCR, the Takt setter, the flow dictator, the pacemaker. I don’t care what you name it. It’s the resource that dictates the flow of the whole value stream.

Speaker 1: (02:00)
In addition to productive capacity, we have protective capacity. Protective capacity is the capacity above the resource with the least amount of capacity in the value stream. In this case, if I have seven operations, operation four determines the pace of the flow. All other resources have more capacity than that resource. That additional capacity above what the capacity constraint resource has is protective capacity. We need protective capacity in any system because we know that there’s going to be problems. We know there’s going to be issues. We know there’s going to be delays, and so we need that extra capacity to overcome those delays and sprint to catch up to the pace at which we need to produce the customer demand.

Speaker 1: (02:56)
The synchronous flow approach, how can we control inventory and remain productive? There’s a multi-step process we go through. The first step is to choke the release of material to be in line with the customer demand. Only release work into the system or reliable lead time before the order is due. Second step is to then identify the CCR. The reason that is the second step is because we don’t know where the capacity constraint resource is by using data. That data is not accurate, and it’s not going to give us a true picture, and we can’t measure the variation in the process in all processes. By choking the release and releasing material a certain time before the order’s due, within a few lead time cycles, the capacity constraint resource will identify itself. If it’s not apparent where the CCR is, then we use shipping as the order, or the customer orders as the pacesetter.

Speaker 1: (03:58)
Third step is to establish the inventory profile to protect the system. If we want any inventory in the system, we want it first near shipping to protect the customer, and then second place is that our capacity constraint resource to protect that resource from starvation. Then step four is make sure that the capacity constraint resource is working to customer demand. In previous sessions, we talked about that management window. We want to reduce that management window so that we know every day, the capacity constraint resource is meeting our customer demand rate.

Speaker 1: (04:37)
Then the last step is determine the rules of when to take action. If the CCR is more than one day behind, we need to take action to catch them up. That could be done through over time, but before we spend any extra money, we want to say, is there other resources that can come and help and assist the capacity constraint resource to get back on schedule? That’s really important when we talked about our employee skills matrix to understand where we can pull resources to help improve flow through the capacity constraint resource.

Speaker 1: (05:17)
The second requirement for when we need to take action as if inventory profile gets out of whack and it’ll cause starvation of the capacity constraint resourc. Then we need to take action to get the inventory profile corrected. This is the first box in the pillar of creating a stable and capable delivery system, creating synchronous flow within the organization.