Articles, Papers and more - Reference Resources

Golden Nugget #1 Managing production priorities in an Make to Availability environment is simple when using the Theory of Constraints buffer management solution. Yet, for specific environments, some considerations have to be taken into account as described and explained in the TOC Golden Nugget #1. ... Click here to read Goldratt's Golden Nugget #1.
Golden Nugget #2 Stray elephant: (MTA; Production) When initially determining the proper buffer target, we need to determine the maximum consumption within replenishment time. That is done by looking back at the consumption during past time-intervals (intervals that are equal in length to replenishment time) and choosing amongst them the max value – or actually, the reasonable max. What does a “reasonable max” means? Well, statistically, the consumption behaves, roughly, as a normal (Gaussian) distribution. ... Click here to continue reading
Golden Nugget #3 Immunizing against competitors’ price reduction: (Inventory turns offer; Sales) One of the reservations initially raised by our clients’ sales people, regarding the inventory turns offer, is that even though they (at last) see the benefits of that offer to their prospects (distributors and/or retailers – resellers), a competitor can still easily win by simply reducing prices. Not only that there is a decisive answer for such a reservation, but its explanation deepens the sales force understanding of their clients. ... Click here to continue reading.
Golden Nugget #4 Inventory target, Asymmetric time constants When experiencing a decline or increase of consumption for an SKU, the inventory target should be changed accordingly. But many times a change in consumption is merely a statistical fluctuation and not a trend, and therefore should not trigger an inventory target change. Trouble is, when experiencing a lower or higher consumption, we cannot foretell if it signifies a long term change that requires action (changing inventory target), or whether it is just a fluctuation. . ... Click here to continue reading.
Golden Nugget #5 Assessing super rapid time at an early stage To fully enroll the Rapid Response (RR) offer, without taking a risk of deteriorating Reliability, it is required to shrink the production buffer to less than one quarter of the industry lead time. Reaching that stage takes substantial time. Much before that stage – when load control is implemented – the lead time is shorter than half the industry lead time. ... Click here to continue reading.
Golden Nugget #6 Fine tune of the priority system – an exception The effectiveness of the priority system stems from the fact that it is robust yet simple; only three priority colors, with a strict instruction not to try being super- accurate and pin point which among the same-colored orders should be processed first. That being said, there is one exception – a unique case where refinement of the priority system is very much needed. ... Click here to continue reading.

The Power of Cause and Effect
What does 2009 hold for an electronic sub‐systems manufacturer?
Last week, we spent time with a group of top managers of a Japanese company, a large electronic sub‐ systems manufacturer. It quickly became apparent to them that they have to answer the biggest business question they ever faced. Can it be that almost everyone is grossly misreading the current situation; the newspapers, the investors, and even the most practical and experienced people – the top managers of the large companies?...
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Standing on the shoulders of Giants
Production concepts versus production applications
The Hitachi Tool Engineering Example
It is easy to trace the popularity of Lean production to Toyota's success. Toyota's success is undeniable. Toyota now manufactures as many cars as the traditional leader – GM – and does it while making profits. Over the last five years, Toyota's average net profit over sales was 70% higher than the industry average, while GM is losing money.1 The success of Toyota is fully attributed to the Toyota Production System (TPS).2 At least this is the conviction of Toyota's management – the stated number one challenge of Toyota is to pass TPS on as the company's DNA to the next generation.
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Big Brand Retail Story
A few weeks ago I spent a morning with a group of middle level managers from a major brand name in apparel, we will call them BigBrand. It is a long time since I had the pleasure to talk with middle level managers trying to inspire them to realize that their area of influence spreads much beyond their restricted area of responsibility.
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How are prices determined?
My second visit was to a company that produces 60% of its region’s consumption of plastic sheets that look like glass. I must have been in an extremely adventurous mood to accept this Company into the Viable Vision program because even that concise description sets two alarms bells ringing at full volume. One alarm bell should ring because of the large market share the Company already has. Even if the Company succeeds in building a decisive competitive edge, there is simply not enough easily accessible market to capitalize on the competitive edge.
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Comfort Zones
Did you ever classify people as open-minded people and conservative people? What about action-oriented people and procrastinators? After thirty years of trying to induce organizations to change, such classifications are so deeply ingrained in my thinking that they have major ramifications on my actions. I tend to decide early on whether or not I would like to work with a company based on the classification box I have slotted the top management into. This audit visit forced me to realize that the classification is likely to lead to grave mistakes. Let me describe what brought me to such a radical conclusion.
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Never say I know!
If there is a rule I try to drill into everyone it is this: check and cross-check the key data on which our suggested solution is based. Last month I had to face a case where it was apparent that I had deviated from that rule. Of course the consequences were embarrassing, but that is not the reason I’m now forcing myself to sit down and write this document (I’m not a masochist). The main reason is that the renewed analysis showed me (again) the extent to which there is no end to deeper understanding; we have embarked on a journey that does not have an end, just exciting and rewarding stepping stones.
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Short-Shelf-Life Products
When an industry is already operating in line with a TOC solution, do we still have anything of significance to offer? Last week I made an audit visit to a relatively large company that manufactures flour and maize. This Company sells these ingredients in bulk to other manufacturers, in packages of half-a-kilo to 2.5 kilos to retailers, and its highest margin product is bread, which is produced in 8 large bakeries and represents about 30% of the total sales. Increasing sales of a significant, high-margin product has much more of an impact than increasing sales of a low-margin product. No wonder that when I first met them 2 years ago my inclination was to focus on the bread.
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Removing Barriers to Make the Sale
(Or... another example of “cost accounting” deficiencies)
One of our Viable Vision clients has been suffering for quite some time from significant sales reduction due to the downturn in foreign markets. The company is a contract manufacturer of branded consumer goods and is using a combination of MTA and MTO to form its competitive edge – enabling much higher inventory turns for the brands it serves.
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