Synchronous Management Principle 13: Managing Process Batch to Maximize Flow | Operational Excellence Quick Hits

Speaker 1: (00:07)
In today’s session, we’re going to continue on the concept of synchronous management. Today’s session is on principle number 13. Principle number 13 talks about process batch, and it may be varied both along its route and over time. So let’s talk about this subject a little bit deeper and understand batching and the effect on the organization and how the batching could change over time or even within a certain period based on the current situation.

Speaker 1: (00:42)
Again, I want to talk about batch definitions so we understand batch definitions. So the process batch, that’s the amount of work that’s processed at a resource before that resource changes to another product. And then also our transfer batch. That’s the amount of work that is transferred from one operation to the next within the same run or within that same process that was defined in the process batch above.

Speaker 1: (01:06)
So taking those into consideration, let’s look at designing flow. So here’s a basic value stream map. This is not uncommon from what I see in companies. And we want to understand the different points in the flow because our batching decision can affect the different value streams based on the current design. So in this case, we want to understand, we always have a release point. So the release point is the point that raw materials are released into the system.

Speaker 1: (01:36)
And then we can also have a divergent point in the flow. So in this case, where we have one operation that’s feeding multiple value streams. So in this case, we have the restrike operation here that’s feeding four different value streams. So those are divergent points. So the restrike is a divergent point where I can have multiple customers downstream.

Speaker 1: (02:00)
We can also have convergent points where multiple value streams come together. So like this assembly process, I need components from both of these value streams in order to assemble the product. So that’s a convergent point. And then I also might have batch processes like this heat treat operation, where it’s got to go into an oven in a batch process. So I have a supermarket here before it, where I can accumulate product and then run it as a batch. So these are all considerations when we’re looking at managing the flow. So one thing we want to understand is when managing the flow, we want to really look at the current situation and make decisions based on maximizing the flow. So it’s not about minimizing cost, it’s not about keeping everybody busy, it’s about maximizing the flow. So, of course, these points in the flow are important, but also the inventory profile.

Speaker 1: (02:56)
We want to understand what is situational decision-making. So situational decision-making is about making effective and pragmatic decisions or choices and considering the specific situation or context, thereby avoiding a “one-size-fits-all” approach. So that’s a problem I see in organization, it’s like, oh, this is the decision we always make. No, you can’t make that decision. We’re trying to maximize flow. You want to look at the current situation and pragmatic means we’re making decisions based on facts and data. And we’re going to look at that situation and make the best decision. So it’s like you see in sports. So if you’ve watched the sporting event and you hear the commentator say, oh, based on the current situation, you’re going to make a decision based on that current situation, and the next time that situation comes up, it might be a different decision because the events have changed from the previous one.

Speaker 1: (03:50)
And a friend of mine always used to say it’s like a baseball game. So depending on the inning that you’re in and depending on the score and depending on where the runners are, you’re going to make a decision based on that and it might be a different decision that you’re making in the second inning based on the situation and a different decision based in the ninth inning, depending on what’s happening. So that’s situational decision-making.

Speaker 1: (04:14)
So it’s very important that we make the right decisions based on the current situation. When we’re looking at organizations, of course, our decision is always to maximize capacity constraint, overall effectiveness. So if anything, we want to keep the capacity constraint and then those value streams, you might have multiple capacity constraints, or before a divergent point, you might have one capacity constraint. Our goal is to try to maximize the overall effectiveness without causing starvation.

Speaker 1: (04:42)
Second, we want to maximize the flow within the value stream. So what does that mean? We need to understand the current inventory profile. So in this case, we want to have visual management in place so we can see the flow. If we can’t see the flow, then it’s impossible to make a situational decision based on the inventory profile because we don’t know how much inventory’s stacked up in front of different operations. Then we want to make batching decisions based on downstream conditions. So what’s the condition downstream from the resource and we’ll make the decisions based on that. So we never want to look upstream. Unfortunately, a lot of companies are looking upstream, so, oh, we’ve got to run overtime because this work centers get completely backed up and we’re behind so we need to run overtime. No, we need to look downstream and see what the effect that resource has on the downstream operations.

Speaker 1: (05:34)
So we got plenty of inventory downstream, don’t waste the cost of running overtime because you’re just going to pile up more work in front of the downstream operations. So we want to always look downstream. Next is to move resources based on the current flow disruptions. So if we have flow disruptions, we can move resources from one area to another to try to unblock those flow disruptions. Next is use underutilized resources to offload works. So if we have equipment or resources that are less effective, even if they’re slower, we’re going to improve the flow by using those underutilized resources to offload work. Next is consider the effective divergent point, convergent, and batch process. So when we’re making these decisions, what’s the effect on those different points in the flow? Those are important points to understand in the flow. And lastly, don’t manage to minimize cost. I can’t stress this enough where our goal isn’t to minimize cost, the goal is to maximize flow.

Speaker 1: (06:34)
And again, you’ve heard me say multiple times when you focus on maximizing flow, we always get cost reductions as a side benefit. When we focus on minimizing cost, it almost always kills flow. So we want to focus on flow first and don’t try to manage to minimize cost. That’s our session for today. So in next week’s session, we’re going to talk about the last element of synchronous management and that’s operational measures principles. So the operational measurements’ principle is throughput should be going up, inventory should be going down and operating expense should be going down ideally all at the same time. However, it’s possible and may even be desirable to have one of the measures go in the wrong direction in order to improve into other ones. We’ll talk about that in more detail in next week’s session.