Archive for July, 2012

(excerpted from The Pipeline)

Which brings the discussion to something called the Theory of Constraints”, said the intrepid, results-based consultant, adding to a previous list.


Despite their differences — which I don’t want to diminish — all improvement approaches and methodologies do overlap each other, from the standpoint of the elements they share, the elements they have in common”, she said.  “And — educated bunch that you have become — you say, well, duh, the physics that govern production are immutable, and the various improvement approaches and methods should have more in common than they have in conflict. 

Reducing an improvement approach or methodology to its salient features is an over-simplification.  Nevertheless, essence can be useful.  Every approach or methodology has its salient feature, which — conveniently enough — tends to identify it. 

So — we say that TQM is about quality;  we say that reengineering is about radical redesign;  we say that Six Sigma is focused on reducing variation;  we say that Lean is about reducing waste. 

The salient feature of the Theory of Constraints — what we call TOC — is identifying, exploiting, and elevating the system’s constraint to higher throughput.  We have already discussed constraints.  Recall the earlier discussion of chains;  the weakest link in the chain invariably limits the strength of a chain — limits its ability to accomplish its purpose;  that’s the constraint. 

No matter what else you improve about the chain — no matter which other link you strengthen — you will not improve the overall strength of the chain, unless you strengthen its weakest link.  It is the constraint that determines the throughput of the entire system. 

Think about the implication of that last statement”, said the intrepid, results-based consultant. 

What the Theory of Constraints gives you is focus.  Not a focus on something you don’t like and believe is inherently wrong — or inherently evil, as former GE Chairman and CEO Jack Welch would say about variation — and about the methods for how to reduce or eliminate it wherever it exists.  


TOC gives you a focus on what you have to improve in order to make more money.   

In terms of production scheduling, Lean and TOC actually have a lot in common, and they both have a lot to offer.  Most of their supposed conflicts are overstated, particularly within the narrow confines of our little world of homebuilding.  The areas of actual conflict between Lean and TOC are few.  In terms of scheduling, the biggest difference between TOC and Lean is that TOC purposely unbalances the capacity of the resources of its process, while Lean purposely levels the capacity of the resources of its process.  

Let me show you what I mean.”


TOC builds production scheduling around the availability of the system’s most constrained resource, because it is this constraint that determines the throughput/output of the entire production system”, she explained.  “TOC is all about finite capacity, and synchronizing the entire production system around whatever makes the capacity finite, what it calls the constraint.  Lean likes continuous flow;  TOC likes what it calls synchronous flow.   

Lean acknowledges the presence of constraints (or bottlenecks), but doesn’t require its pacemaker to be the constrained resource — unless, it’s a build-to-order process.  When it comes to how they manage their build-to-order processes, the Theory of Constraints and Lean Production are in essential agreement.  

And — homebuilding production is what type of process?”

It’s a build-to-order process”, said the CEO. 


(excerpted from The Pipeline)

“As you just noted, the pace of production is what gives the production system its rhythm”, said the intrepid, results-based consultant.  “At least, pace should give production its rhythm;  we have seen the consequences of RB Builders’ failure to achieve even-flow production.  What did you call it, a tsunami? 

“Speaking of which, a term related to “pace” is what we call “flow”.”  

On the board, she wrote:


“In the Lean World, there are different types of flow.  The production mantra in Lean says, “flow where you can, pull where you must”.  It is very much a continuous, or single-piece, flow proposition, with a recognition that continuous flow is not always possible.  Lean Production will support either flow or build-to-order processes, but it encourages continuous, single-piece flow as its picture of perfection, and has tended, in the past, to look at production management in a factory or manufacturing environment. 

“Homebuilding is essentially a build-to-order proposition”, she said.  “Build-to-order lies somewhere in the middle of the flow continuum, nothing resembling old-fashioned, batch-and-queue, mass production, but also not the continuous, single-piece flow that Lean Production would prefer.  But, since Lean will accommodate build-to-order processes, it should be able to work in a homebuilding environment.

“For a build-to-order process, Lean recommends maintaining a FIFO, or First-In, First-Out, sequence, regulating the amount of inventory or work-in-process, and making the bottleneck resource function as the pacemaker.  Since continuous flow and build-to-order processes are both pull-type production systems, the distinction lies in where you put the pacemaker in the process.  

“In continuous, single-piece flow, Lean puts the pacemaker as close to the end of the process, as close to the customer, as it possibly can”, she said.  “Everything upstream from the pacemaker can be pulled — replenished – from small amounts of inventory, at the demand of each downstream activity, and then everything downstream from the pacemaker is continuous flow.  

“In build-to-order processes, Lean puts the pacemaker earlier — upstream – in the process, at the point from which FIFO sequencing begins”, she continued.  “That applies directly to homebuilding, because — in addition to being a build-to-order process — homebuilding should use FIFO sequencing.  Lean also recommends making the most constrained resource the pacemaker in a build-to-order process, all of which makes it possible to consider pacemaker placement based on parameters and requirements other than customer demand and continuous flow.” 


Part I: "What sets the pace of production?"

Posted July 9, 2012 By Fletcher Groves

(excerpted from The Pipeline)

“Every method of production planning and management involves the scheduling of a sequence of tasks performed by resources”, continued the intrepid, results-based consultant, making another list on the board.


“Central to that understanding are three issues, framed by these questions: What sets the pace of production? How do we protect the process from variation and uncertainty? How do we manage a process as a system (not a collection of independent activities)?

“Let’s consider the first process scheduling issue. What should we be using to set the pace of a production process?”

“Doesn’t the job schedule set the production pace?”, asked a superintendent.

“Not really”, argued a different superintendent. “The job schedule sets the sequence and expected durations of activities for each house There’s sequence and duration, but no rhythm. That’s what pace is – the rhythm of the production system. Pace applies to the entire system, not each individual job. If we don’t see it as a production system, we just have a collection of separate, disconnected job schedules.

“I would think pace has to do with a resource.”

“Okay”, said the intrepid results-based consultant. “Presume the pace of production should be set by some type resource. What kind of resource? What kind of attributes would you look for in a resource tasked with setting the production pace of the entire system?”

The ideas came in rapid fashion.

“The most important resource?”
“The most expensive?”
“The most reliable?”
“The busiest?”

“Lean Production calls its pacesetting resource a “pacemaker””, she said. “Lean Production tries to schedule a single point (the pacemaker), which, in turn, sets the pace for the entire system, process, or value stream. It sets that pace to match the rate of “customer demand”, or what Lean calls “takt”. The purpose of “takt time” is to precisely match production with customer demand.

“It is the heartbeat of a Lean Production system.”