101311ConstraintsEtc334

101311ConstraintsEtc334 - IE334 Sundry Topics Theory of...

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IE334 – Sundry Topics Theory of Constraints 2-12 Baldrige & ISO (Malik) 14-16 17-26 Measurement & Controls 27-28 Deming + 29-37 Sustainability (Unruh) 38-42 Management 43 1
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2 Theory of Constraints Hypothesis that every “system” if operated effectively will hit some constraint that inhibits furthering its objectives ( a ‘systems’ “Peter” principle ) “Either you manage these constraints or they will manage you” [ uses a novel ] “Throughput” – rate of cash generation Unlike TQM and process control that tend to focus on input and output ????
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3 Throughput and . . . Reducing time and cycle time to get to market No revenues until product is in market Time and speed are now critical concerns for all operations
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4 Also newer factors Customer success Customer “delight” Establishing relationships Hence need for responsiveness to new and different challenges and demands, thus Agility more on this later
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5 For ‘for-profit’ entities the goal is related to money . . . Others may say “customers”, or “jobs” In any event these are inter-related
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6 Theory of Constraints (Eliyahu Goldratt) Make more money Satisfy customers Satisfy employees Ross Fig. 13-1
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7 Making more money Should imply satisfying more customers, and at the same time the employees – both now and in the future
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8 “The Goal” Chains and links Weakest links Boy scouts with back-packs Bottlenecks Ropes ( you can’t push ropes ) Manage the constraint Benefit - raise visibility & consciousness
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9 Metrics are critical 1. Throughput (cash from sales) 2. Inventory (stuff to be sold) 3. Operating expense (conversion costs) These impact - Net profit, return on investment, cash flow
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10 Identify constraint(s) ! These are the weakest links Make the constraint as effective as poss. Align everything else to accept and work within this constraint (don’t build WIP) Make efforts to increase thru’put across constraint Go back to STEP 1 and next constraint *
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11 Logic trees Effect – Cause – Effect What to change What to change to How to cause the change Thinking like a physicist ?
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12 What to measure Use metrics to make decisions Throughput Inventory Operating expense Which impact Net profit R O I Cash flow
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13
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14 Baldrige Components 1. Leadership 2. Strategic Planning 5. Human Resource Focus 6. Process Management 7. Business Results Figure 3
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15 ISO etc.
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This note was uploaded on 10/24/2011 for the course IE 334 taught by Professor Gard during the Spring '11 term at Lehigh University .

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101311ConstraintsEtc334 - IE334 Sundry Topics Theory of...

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