image - Eliyahu Goldratt (Author), Ryo Sambongi (Translator)Goldratt

  • Amazon

  • 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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