Building Lean Supply Chains with the Theory of Constraints

by Srinivasan, Mandyam

• ISBN13: 9780071771214
• ISBN10: 0071771212
• Edition: 1st
• Format: Hardcover
• Copyright: 2011-11-10
• Publisher: McGraw-Hill Education

Summary

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

Foreword	p. xv
Preface	p. xvii
Acknowledgments	p. xxi
The Sixteen Lean Supply Chain Principles	p. xxiii
The Lean Supply Chain Roadmap	p. 1
Challenges to the Lean Supply Chain	p. 3
The Internet and Commoditization	p. 4
Manufacturing Practices	p. 5
The Bullwhip Effect	p. 6
The Beer Game	p. 9
The Impact of 'Forecasting and POS Data	p. 13
The Impact of Lead Times	p. 15
Lessons from the Beer Game	p. 16
Structuring the Lean Supply Chain	p. 19
The Lean Supply Chain Roadmap	p. 21
Develop Systems Thinking Skills	p. 21
Focus on Throughput	p. 22
Design Products and Services that Deliver Customer Needs	p. 23
Develop a Competitive Operations Strategy	p. 24
Form Strategic Alliances with Supply Chain Partners	p. 24
Streamline the Value Stream	p. 25
Create Flow Along the Supply Chain	p. 25
Implementing the Lean Supply Chain Roadmap	p. 26
Conclusions	p. 27
References	p. 28
Envisioning the Lean Supply Chain: Systems Thinking	p. 31
The Traditional Approach to Managing Systems	p. 31
Local Optimization	p. 32
Using Systems Thinking to Meet the Challenge	p. 33
Applying Lean Supply Chain Principle 1	p. 34
Management Philosophies to Enhance Lean Supply Chain Performance	p. 38
The Theory of Constraints	p. 38
Theory of Constraints and Un-common Sense	p. 41
Lean	p. 42
Synergies Between TOC and Lean	p. 44
The Business Ecosystem	p. 47
Personal Computer Ecosystems	p. 51
Conclusions	p. 60
References	p. 61
Adopting a Throughput World Perspective	p. 63
TOC and the Thinking Process	p. 64
An Un-common Sense Minute	p. 65
Focusing on the Constraint	p. 66
Physical Constraints	p. 67
Market Constraints	p. 68
Policy Constraints	p. 68
Estimating Product Costs with Cost Accounting Systems	p. 69
The Standard Cost Accounting System	p. 70
CSN, Inc	p. 73
Activity-Based Costing (ABC)	p. 77
Applying ABC to CSN, Inc	p. 79
Throughput Accounting	p. 82
Throughput Accounting Measures	p. 82
Relating Throughput Accounting to Traditional Accounting	p. 83
Kings of Neon	p. 85
Relating Throughput Accounting Measures to Financial Measures	p. 87
Cost World Versus Throughput World: Everclear, Inc	p. 88
The Five-Step Focusing Process of TOC	p. 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 Decision	p. 93
Elevate the System's Constraints	p. 94
If a Constraint Was Broken in a Previous Step, Go Back to Step 1	p. 94
An Example of the Five-Step Focusing Process	p. 95
Interpreting T	p. 98
An Un-common Sense Minute	p. 99
Applying Throughput Accounting to CSN, Inc	p. 99
Conclusions	p. 101
References	p. 101
Designing Products and Processes to Fulfill Customer Needs	p. 103
The Viable Vision	p. 103
Defining the Market Segments	p. 106
Market Segmentation at Hindustan Unilever Limited	p. 108
Order Qualifiers and Order Winners	p. 110
Benchmarking Best Practices	p. 111
Managing Customer Demand Volatility	p. 114
Quick and Reliable Response	p. 115
An Un-common SenseMinute	p. 119
RiskPooling	p. 119
The RAP Principle	p. 120
Customer-Time-Based Demand Profile	p. 124
The TOC Distribution and Replenishment Solution	p. 127
The Plant Warehouse	p. 128
Setting Target Inventory Levels at the Points of Consumption	p. 129
Safety Buffers to Accommodate Variation	p. 131
Looking for Opportunities to Reduce Safety Buffers	p. 132
The Make-to-Availability Replenishment Mechanism	p. 132
Monitoring Safety Buffers Based on Buffer Penetration	p. 133
Applying the TOC Distribution Solution at thePOC	p. 134
Measures for Sustaining the Solution	p. 138
Conclusions	p. 139
References	p. 141
Building a Competitive Operations Strategy	p. 143
Gaining a Competitive Advantage	p. 144
Building a Structural Position	p. 145
Competing Through Process Execution	p. 146
Operational Effectiveness and the Productivity Frontier	p. 146
Operational Effectiveness and Competitiveness	p. 149
Operational Effectiveness: Necessary but Not Sufficient	p. 149
Building Strategic Flexibility	p. 151
A Model for Enterprise Growth	p. 153
Maintaining a Process Orientation	p. 155
Bringing New Products to Market Easter	p. 160
Coevolving Marketing and Operations Strategies	p. 165
Communicating Financial Benefits to Management	p. 168
Enabling the Operations Strategy	p. 173
Conclusions	p. 179
References	p. 180
Partnering in the Lean Supply Chain	p. 183
Partnering with Suppliers	p. 185
Arm's-Length Relationships	p. 185
Strategic Partnerships	p. 187
Vendor-Managed Inventory	p. 191
Partnering with Logistics Providers	p. 193
3PLs and 4PLs	p. 194
Postponement in Logistics	p. 196
Cross-Docking	p. 196
Supply Chain Metrics	p. 199
Creating Win-Win Partnerships: The Evaporating Cloud	p. 202
The Office Worker's Dilemma	p. 204
The Injection for the Office Worker's Dilemma: The Dabbawalas	p. 206
Takeaways from the Reo Motors Case	p. 220
Conclusions	p. 221
References	p. 222
Streamlining the Value Stream	p. 223
From Craft Production to Mass Production to Lean Production	p. 223
Henry Ford and the Origin of Mass Production	p. 224
The Toyota Production System	p. 225
The U.S. Response	p. 226
Lessons Learned	p. 227
Lean: A Growth Strategy	p. 229
Value-Stream Mapping	p. 232
The Tools and Techniques of Lean	p. 236
5-S	p. 238
Flowcharts	p. 240
Takt Time	p. 243
Average Labor Content and Minimum Operator Requirement	p. 249
Mixed-Model Scheduling and Small-Batch Production	p. 250
One-Piece Flow	p. 252
Cellular Layout	p. 254
Standard Work	p. 255
Pull Replenishment and Kanbans	p. 256
Point-of-Use Materials Storage	p. 259
Total Productive Maintenance	p. 259
Mistake-Proofing and Method Sheets	p. 260
Continuous Improvement and the Pursuit of Perfection	p. 260
Conclusions	p. 262
References	p. 263
Creating Flow Through the Supply Chain	p. 265
Creating Flow: Synergies Between TOC and Lean	p. 266
Comparing TOC and Lean Philosophies	p. 266
Exploiting the Synergy Between TOC and Lean to Create Flow	p. 268
Creating Flow: The Impact of Variability and Dependency	p. 269
The Frontier City Clinic	p. 270
The Impact of Variation on Dependent Events	p. 274
Creating Flow: The Impact of Batch Size	p. 280
Process Batch Versus Transfer Batch	p. 281
Controlling Flow Using Pull	p. 282
A Serial Production System	p. 282
Using a Push System to Address Flow	p. 285
Controlling Flow Using Kanbans	p. 286
Controlling Flow Using Con WIP	p. 288
Controlling Flow by Pulling from the Bottleneck	p. 289
The Drum-Buffer-Rope Model	p. 290
Time Buffers Versus Inventory Buffers	p. 292
Determining Buffer Size	p. 293
The Simplified Drum-Buffer-Rope Model	p. 295
Buffer Management	p. 296
The Dice Game	p. 297
Variations on the Dice Game	p. 300
Simulating the Con WIP System	p. 301
Pull Systems Are More Stable and Predictable Than Push Systems	p. 302
Comparing Pull and Push Systems for Efficiency	p. 303
Conclusions	p. 303
ConWIP Efficiency Law	p. 303
Corollary to the Con WIP Efficiency Law	p. 303
References	p. 304
Managing Projects the Theory of Constraints Way	p. 307
Characteristics of Projects	p. 308
The Impact of Variation on Project Completion Times	p. 310
Project Management with PERT/CPM	p. 311
Determining the Critical Path	p. 312
Causes of Avoidable Project Delays	p. 316
Multitasking	p. 317
Parkinson's Law	p. 318
The Student Syndrome	p. 318
Sandbagging	p. 319
Critical Chain Project Management	p. 320
Planning the CCPM Schedule in a Single-Project Environment	p. 321
Planning the CCPM Schedule in a Multiproject Environment	p. 324
Executing the CCPM Schedule Using Buffer Management	p. 324
An Un-common Sense Minute	p. 327
Sustaining the Change	p. 328
Visual Project Management	p. 329
A Firm, Aggressive Plan	p. 329
Frequent Reporting of Completed Tasks	p. 330
The Expert Resource Bench	p. 334
Implementing VPM	p. 336
Special Cases in VPM	p. 338
Conclusions	p. 342
References	p. 343
Index	p. 345
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