Mabin and Balderstone in their meta-analysis of seventy-eight published case studies on CCPM, found that implementing CCPM resulted in:
a. Mean reduction in lead-times by 69%
b. Mean reduction in cycle-times by 66%
c. Mean reduction in inventory levels by 50%
d. Improved due date performance by 60%
e. Increased revenue by 68%
Inhibitors to Flow
So what are the inhibitors to the flow of products and/or services organizations experience? Many professionals claim most organizations throughout the world waste between 25% and 50% of their capacity! Why? What are the reasons? Below are just some reasons causing organizations to lose some of their capacity:
1. Not knowing the location of the system constraint. The system constraint is the factor that keeps an organization from achieving more of the system goal. An organization will improve simply by eliminating system constraints when possible, and then managing them. Some will simply ignore the system constraint because they do not understand it is the control mechanism for throughput. Others may misidentify the constraint. Many process improvement experts recommend using Work-In-Process (WIP) as a tool to locate the system constraint. This may be true most of the time, but it certainly is not true all of the time. The WIP levels in a process will change frequently especially in a balanced line. Just because the highest WIP level changes from one station to another does not mean the system constraint has changed. Identifying the system constraint is the first step in improving flow. If the constraint is misidentified, then our process improvement events being used to increase flow will be useless because improvements will be accomplished on non-bottlenecks rather than the system constraint. The result is no return-on-investment while making the situation worse in some cases. How many Lean events to improve “process flow” have been accomplished on non-bottlenecks in your organization?
2. The system constraint is idle. Every minute the system constraint is sitting idle is equivalent to a minute of lost productivity for the entire system. If you do not know where your system constraints are, then these constraints have a high probability of sitting idle when there are opportunities for them to be productive. A well thought out schedule minimizes down-time at system constraints which translates into much more productivity for the organization.
Lean and Six Sigma are very powerful and necessary process improvement tools to increase flow. But are they sufficient by themselves? Do they identify system constraint(s)? Do they encourage decision makers to focus on and leverage the constraint each day? Do they encourage buffers to help mitigate variation like TOC and CCPM? TOC and CCPM certainly added more value for the Navy’s air depots that have great Lean and Six Sigma programs. CCPM is a powerful tool to help improve project flow and improve readiness.
3. Too much WIP. One of the keys to successful project management is having the appropriate amount of WIP. This is where Little’s Law can help you understand your process. The formula for Little’s Law is: WIP = Throughput x Cycle Time. Stated another way, WIP = Exit Rate x Flow Days. Basically it tells us the higher the level of WIP there is in a process, then the longer the cycle time or flow days will be for projects going through a stable system. Simply reducing WIP to the correct level will translate into shorter project cycle times. Historically, our intuition for dealing with project schedule slips is to induct another project into the system on the scheduled induction day without considering the consequences the system faces without the capacity for extra workload. If the system does not have capacity for this new project, then project cycle times will become longer and longer as we exponentially increase work to an overloaded system. This approach puts stress on the entire system. Some of our maintenance technicians have coined a new term, “Visual Progress.” This occurs when an aircraft (a project) is scheduled to move from one cell to another cell on a specific date. On this date the aircraft is moved to the next cell, even when it is not ready to move because not all of the required work will have been accomplished. This action of moving the aircraft to the next cell compounds the schedule problem by adding more stress to the system (much more activity) without improving the schedule. In reality, this approach actually makes the problem worse; a late project will now be even later. This approach is repeated over and over again throughout the year simply because “Visual Progress” looks good on a chart presented during production meetings. This is a clever way to temporarily hide a problem when we should be looking for ways to overcome lost schedule time. Hiding a project schedule problem does not help reduce the late scheduling.. Too much WIP is not limited to aircraft. For example, when the Air Force depot component scheduling system, EXPRESS, is forced to induct too much WIP, then Little’s Law is applicable here too. Too much WIP in a commodities shop will result in late deliveries back to the aircraft and will thus increase risk of longer aircraft repair cycle times.
4. Schedule Conflicts. Projects frequently experience at least two types of conflicts embedded within a schedule: resource conflicts and sequence conflicts. We should never schedule “known” conflicts! When this happens, at some point the constraint will become overloaded with work. When the overloaded worker asks which project or task is the number one priority, many times he or she is told, “They are all priority!” There is an old saying that seems to be true, “if everything is a priority, then nothing is a priority.” When a system has reached maximum capacity and is further forced to accept more work, system deadlines will continue to shift back. There is a strong correlation between too much work being placed on a process and the amount of stress the workers, supervisors, customers, suppliers etc., experience. With increased stress levels, mistakes usually follow, which will make a late project even later. This is the situation we find ourselves in far too often.
5. Metrics. Metrics drive behavior and must be used to align the goal of an organization with the activities of the organization. It is extremely helpful if a metric is a leading indicator and also drives the correct behavior. A very successful leading indicator used by TOC and CCPM is Buffer Status. As the buffer enters the red, yellow or green zone, it will signal the action required by the system. First and second line supervisors need to monitor progress daily at the tactical level and take the necessary actions while in the yellow and green zones every day to keep the project on schedule. Management gets involved when the red zone is breeched. The Fever Chart’s buffer status will help answer the question, “How do you know if you had a good day?” Buffer management will help you put the right workers on the right jobs.
Bad metrics drive bad behavior! An example would be the “efficiency” metric where a resource that is not the system constraint is expected to produce the maximum amount of work possible. Doing so creates too much WIP and as mentioned earlier, results in longer repair cycle times. This is not what the system needs. The “efficiency” metric has been used in all DoD depots. High efficiency rates on the system constraint are good, but not on non-bottlenecks. While “efficiencies” are important, they should not be used to degrade our system “effectiveness.”
6. Deadline management. This is when project managers simply focus on the project’s due date when they should focus on the project’s status. In other words, they focus on the aircraft with the next due date while ignoring other projects that are slipping and are in trouble now. This type of project manager would put extra resources on the “wrong” project! Thus the aircraft that is in trouble due to a schedule slip will be ignored during a critical period and the outcome will be a late delivery. When significant recovery actions are finally taken, they are usually taken too late to make a significant improvement in the schedule.
A very similar approach was being used by a highly respected, proud and successful maintenance manager. He stated he was not going to use CCPM because he had a better approach. He considered aircraft in the depot as “chickens in a pot.” He was going to put the majority of his workforce on the aircraft that had been in the depot process the longest duration. Once this aircraft left the depot, focus would be shifted to the next one in line.. While this approach seemed to work for him in the short term, several months later, all aircraft under his control were being delivered late. His depot repair cycle time, the metric of greatest concern to his customer, was moving in the wrong direction…a metric he was not even monitoring.
Buffer management would have been a much better approach for him; it has a very successful track record when the CCPM methodology is followed correctly.
7. Parkinson’s Law. This law contends that work time expands and consumes extra time given for task completion. It is rare for completed tasks to be turned in early when extra time is still available for task completion. Adding more and more time for task completion does not result in shorter or more predictable schedules. Amazingly, new employees are informally taught to “bank” work. This simply means, “Do not turn completed work in early.” This type of action slows down progress and makes us less competitive!
8. Cheerleader approach. Some project managers do not provide the needed leadership, structure or environment to be successful. They simply make their way around the different work centers encouraging everybody to work hard and meet the target for the year. These organizations usually end up with too much WIP and missed deliveries. WIP must be maintained at the correct level when possible.
The problems mentioned will actually induce more and more variation into the process which will create more and more confusion. The more variation there is in a process, the less output (aka throughput) that process will deliver. This is even more pronounced when variation occurs at the system constraint. One must understand variation and how to mitigate and/or manage it, especially variation at the system constraint.
"Variation is the enemy. It’s the enemy to quality. It’s the enemy to improvement. It’s the enemy to management. There is perhaps no more misunderstood concept in business today than the concept of variation. This misunderstanding is the root cause of knee-jerk reactions, over control, micromanagement, and tampering with results."
Harry Rever Director of Lean Six Sigma International Institute for Learning Dallas/Fort Worth Area
Frequently TOC applications like CCPM are ignored simply because decision makers think Lean and Six Sigma are sufficient by themselves. This is a huge mistake because there is a synergistic effect when all three work together. Without all three, the gains are marginalized. The American Production and Inventory Control Society May 2006 magazine reported a case study accomplished over a period of 2.5 years, where a corporation had twenty-one plants using Lean or Six Sigma or a combination of TOC, Lean and Six Sigma (TLS). The four Lean plants had a 4% cost reduction in 2.5 years. The eleven Six Sigma plants had a 7% cost reduction in 2.5 years. The six TLS plants had an 89% cost reduction in 2.5 years. If the complete financial picture was looked at (increased profits and reduced costs), the TLS approach would be even better. Gaining more productivity on the system constraint(s) significantly increases system productivity by improving flow. This allows the process to achieve more of the system goal! The best results occur when TOC, Lean and Six Sigma (TLS) are all working together to improve flow.