Building Lean Supply Chains with the Theory of Constraints

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  • Edition: 1st
  • Format: Hardcover
  • Copyright: 2011-11-10
  • Publisher: McGraw-Hill Education
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Innovative strategies for integrating Lean and the Theory of Constraints to create the smooth flow of goods and services through the supply chain Building Lean Supply Chains Using the Theory of Constraintspresents key principles for building and managing the Lean supply chain in a systematic manner. At the same time, the book offers specific steps and instructions to help you deal with the complexities of running the business from a logistics and operations perspective. This detailed resource stresses systems thinking. It uniquely integrates two management philosophies: the Theory of Constraints (TOC) and Lean thinking, illustrating how they complement and reinforce each other to create the smooth flow of goods and services through the supply chain. The book offers a number of new developments to competitors: it introduces the Lean Supply Chain roadmap and discusses some of the latest developments in TOC, in particular the Viable Vision, the Thinking Process, Critical Chain Project Management and Visual Project Management, and Strategy and Tactics trees. This strategic resource also contains a section on supply chain partnering that demonstrates how it is possible to apply simple Lean concepts to deliver a win-win-win solution for multiple supply chain partners. Building Lean Supply Chains Using the Theory of Constraints Addresses Lean thinking in conjunction with TOC, demonstrating how they can work together synergistically Introduces the Lean Supply Chain roadmap and TOC's Viable Vision, a new, cutting-edge topic for increasing revenue Offers 16 extremely practical principles for building and managing the supply chain Shows how to apply basic principles from TOC to significantly increase the profitability of an organization Offers guidance on how to apply Lean thinking in conjunction with throughput accounting (a TOC tool) to offer better value to customers at a competitive price

Table of Contents

Forewordp. xv
Prefacep. xvii
Acknowledgmentsp. xxi
The Sixteen Lean Supply Chain Principlesp. xxiii
The Lean Supply Chain Roadmapp. 1
Challenges to the Lean Supply Chainp. 3
The Internet and Commoditizationp. 4
Manufacturing Practicesp. 5
The Bullwhip Effectp. 6
The Beer Gamep. 9
The Impact of 'Forecasting and POS Datap. 13
The Impact of Lead Timesp. 15
Lessons from the Beer Gamep. 16
Structuring the Lean Supply Chainp. 19
The Lean Supply Chain Roadmapp. 21
Develop Systems Thinking Skillsp. 21
Focus on Throughputp. 22
Design Products and Services that Deliver Customer Needsp. 23
Develop a Competitive Operations Strategyp. 24
Form Strategic Alliances with Supply Chain Partnersp. 24
Streamline the Value Streamp. 25
Create Flow Along the Supply Chainp. 25
Implementing the Lean Supply Chain Roadmapp. 26
Conclusionsp. 27
Referencesp. 28
Envisioning the Lean Supply Chain: Systems Thinkingp. 31
The Traditional Approach to Managing Systemsp. 31
Local Optimizationp. 32
Using Systems Thinking to Meet the Challengep. 33
Applying Lean Supply Chain Principle 1p. 34
Management Philosophies to Enhance Lean Supply Chain Performancep. 38
The Theory of Constraintsp. 38
Theory of Constraints and Un-common Sensep. 41
Leanp. 42
Synergies Between TOC and Leanp. 44
The Business Ecosystemp. 47
Personal Computer Ecosystemsp. 51
Conclusionsp. 60
Referencesp. 61
Adopting a Throughput World Perspectivep. 63
TOC and the Thinking Processp. 64
An Un-common Sense Minutep. 65
Focusing on the Constraintp. 66
Physical Constraintsp. 67
Market Constraintsp. 68
Policy Constraintsp. 68
Estimating Product Costs with Cost Accounting Systemsp. 69
The Standard Cost Accounting Systemp. 70
CSN, Incp. 73
Activity-Based Costing (ABC)p. 77
Applying ABC to CSN, Incp. 79
Throughput Accountingp. 82
Throughput Accounting Measuresp. 82
Relating Throughput Accounting to Traditional Accountingp. 83
Kings of Neonp. 85
Relating Throughput Accounting Measures to Financial Measuresp. 87
Cost World Versus Throughput World: Everclear, Incp. 88
The Five-Step Focusing Process of TOCp. 92
Identify the System's Constraint(s)p. 92
Decide How to Exploit the System's Constraint(s)p. 92
Subordinate Everything Else to that Decisionp. 93
Elevate the System's Constraintsp. 94
If a Constraint Was Broken in a Previous Step, Go Back to Step 1p. 94
An Example of the Five-Step Focusing Processp. 95
Interpreting Tp. 98
An Un-common Sense Minutep. 99
Applying Throughput Accounting to CSN, Incp. 99
Conclusionsp. 101
Referencesp. 101
Designing Products and Processes to Fulfill Customer Needsp. 103
The Viable Visionp. 103
Defining the Market Segmentsp. 106
Market Segmentation at Hindustan Unilever Limitedp. 108
Order Qualifiers and Order Winnersp. 110
Benchmarking Best Practicesp. 111
Managing Customer Demand Volatilityp. 114
Quick and Reliable Responsep. 115
An Un-common SenseMinutep. 119
RiskPoolingp. 119
The RAP Principlep. 120
Customer-Time-Based Demand Profilep. 124
The TOC Distribution and Replenishment Solutionp. 127
The Plant Warehousep. 128
Setting Target Inventory Levels at the Points of Consumptionp. 129
Safety Buffers to Accommodate Variationp. 131
Looking for Opportunities to Reduce Safety Buffersp. 132
The Make-to-Availability Replenishment Mechanismp. 132
Monitoring Safety Buffers Based on Buffer Penetrationp. 133
Applying the TOC Distribution Solution at thePOCp. 134
Measures for Sustaining the Solutionp. 138
Conclusionsp. 139
Referencesp. 141
Building a Competitive Operations Strategyp. 143
Gaining a Competitive Advantagep. 144
Building a Structural Positionp. 145
Competing Through Process Executionp. 146
Operational Effectiveness and the Productivity Frontierp. 146
Operational Effectiveness and Competitivenessp. 149
Operational Effectiveness: Necessary but Not Sufficientp. 149
Building Strategic Flexibilityp. 151
A Model for Enterprise Growthp. 153
Maintaining a Process Orientationp. 155
Bringing New Products to Market Easterp. 160
Coevolving Marketing and Operations Strategiesp. 165
Communicating Financial Benefits to Managementp. 168
Enabling the Operations Strategyp. 173
Conclusionsp. 179
Referencesp. 180
Partnering in the Lean Supply Chainp. 183
Partnering with Suppliersp. 185
Arm's-Length Relationshipsp. 185
Strategic Partnershipsp. 187
Vendor-Managed Inventoryp. 191
Partnering with Logistics Providersp. 193
3PLs and 4PLsp. 194
Postponement in Logisticsp. 196
Cross-Dockingp. 196
Supply Chain Metricsp. 199
Creating Win-Win Partnerships: The Evaporating Cloudp. 202
The Office Worker's Dilemmap. 204
The Injection for the Office Worker's Dilemma: The Dabbawalasp. 206
Takeaways from the Reo Motors Casep. 220
Conclusionsp. 221
Referencesp. 222
Streamlining the Value Streamp. 223
From Craft Production to Mass Production to Lean Productionp. 223
Henry Ford and the Origin of Mass Productionp. 224
The Toyota Production Systemp. 225
The U.S. Responsep. 226
Lessons Learnedp. 227
Lean: A Growth Strategyp. 229
Value-Stream Mappingp. 232
The Tools and Techniques of Leanp. 236
5-Sp. 238
Flowchartsp. 240
Takt Timep. 243
Average Labor Content and Minimum Operator Requirementp. 249
Mixed-Model Scheduling and Small-Batch Productionp. 250
One-Piece Flowp. 252
Cellular Layoutp. 254
Standard Workp. 255
Pull Replenishment and Kanbansp. 256
Point-of-Use Materials Storagep. 259
Total Productive Maintenancep. 259
Mistake-Proofing and Method Sheetsp. 260
Continuous Improvement and the Pursuit of Perfectionp. 260
Conclusionsp. 262
Referencesp. 263
Creating Flow Through the Supply Chainp. 265
Creating Flow: Synergies Between TOC and Leanp. 266
Comparing TOC and Lean Philosophiesp. 266
Exploiting the Synergy Between TOC and Lean to Create Flowp. 268
Creating Flow: The Impact of Variability and Dependencyp. 269
The Frontier City Clinicp. 270
The Impact of Variation on Dependent Eventsp. 274
Creating Flow: The Impact of Batch Sizep. 280
Process Batch Versus Transfer Batchp. 281
Controlling Flow Using Pullp. 282
A Serial Production Systemp. 282
Using a Push System to Address Flowp. 285
Controlling Flow Using Kanbansp. 286
Controlling Flow Using Con WIPp. 288
Controlling Flow by Pulling from the Bottleneckp. 289
The Drum-Buffer-Rope Modelp. 290
Time Buffers Versus Inventory Buffersp. 292
Determining Buffer Sizep. 293
The Simplified Drum-Buffer-Rope Modelp. 295
Buffer Managementp. 296
The Dice Gamep. 297
Variations on the Dice Gamep. 300
Simulating the Con WIP Systemp. 301
Pull Systems Are More Stable and Predictable Than Push Systemsp. 302
Comparing Pull and Push Systems for Efficiencyp. 303
Conclusionsp. 303
ConWIP Efficiency Lawp. 303
Corollary to the Con WIP Efficiency Lawp. 303
Referencesp. 304
Managing Projects the Theory of Constraints Wayp. 307
Characteristics of Projectsp. 308
The Impact of Variation on Project Completion Timesp. 310
Project Management with PERT/CPMp. 311
Determining the Critical Pathp. 312
Causes of Avoidable Project Delaysp. 316
Multitaskingp. 317
Parkinson's Lawp. 318
The Student Syndromep. 318
Sandbaggingp. 319
Critical Chain Project Managementp. 320
Planning the CCPM Schedule in a Single-Project Environmentp. 321
Planning the CCPM Schedule in a Multiproject Environmentp. 324
Executing the CCPM Schedule Using Buffer Managementp. 324
An Un-common Sense Minutep. 327
Sustaining the Changep. 328
Visual Project Managementp. 329
A Firm, Aggressive Planp. 329
Frequent Reporting of Completed Tasksp. 330
The Expert Resource Benchp. 334
Implementing VPMp. 336
Special Cases in VPMp. 338
Conclusionsp. 342
Referencesp. 343
Indexp. 345
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