A business that has the potential to grow rapidly could have an external or internal limitation. Too many orders or not enough orders. A delivery capability that runs like clock work is essential in both these cases, to ensure reliability or availability, leading to more volume and better prices.
The characteristics of a good clock are:
- It works by itself
- It always works
- It is not fast or slow – it is on-time.
The reality of delivery in organizations is much more complex than a clock. The cause of complexity is the existence of variability. Nothing happens exactly as predicted. This is the major challenge of working like a clock. Can we build a delivery system that runs like clock work while the mechanism does not perform as predicted?
The key is to protect against what we do not know in order to know what we can deliver.
In his article “Standing on the Shoulder of Giants” dr. Eli Goldratt synthesized 4 fundamental rules for every delivery system based on the most successful delivery systems in history, Henry Ford’s assembly line and Taichi Ohno’s Toyota Production system. He verbalized these rules as:
- Improving flow (or equivalently lead time) is a primary objective of operations.
- This primary objective should be translated into a practical mechanism that guides the operation when NOT to produce (prevents overproduction).
- Local efficiencies must be abolished.
- A focusing process to balance flow must be in place.
Every delivery system that runs like clock work complies with these rules.
Operationalising these rules can be simplified when done in terms of a framework of Planning, Execution and Feedback.
Planning is necessary because time is required to get ready for execution. We are ready when the protection required to deal with the variability during execution is in place. Without complete readiness the clock cannot work. Planning includes a design phase in which we define the flow and decide which buffers are required where as well as sizing the buffers. The first step of building the clock is to put this new mechanism in place.
Execution is activating flow on-time as required by the buffers. Not faster or slower, knowing that flow will be faster or (mostly) slower after activation. A priority system based on the status of the buffers is now necessary as the mechanism to provide constant feedback whether flow managers need to take expediting actions and whether they need to change the size of the buffers.
These mechanisms enable a system most of the time to work by itself to predictably deliver on-time. Management intervention is still required but only to drive focused interventions to balance flow more and more leading to reduced protection, more reliability or availability that can be leveraged for rapid growth.