Fran gets promoted to Division Manager.
He now tries to convince Lou (Account Manager) to join him at the division level.
Lou meanwhile has found something interesting. He says that profits in the last few months were way above 20%.
However, the numbers did not reflect the success. This was because Inventory was listed under Assets when they should actually be listed under liability.
Lou is more than happy about prospects of joining the senior management team at the division level and bringing some changes so that numbers ---
1) Reflected whether the plant was doing well.
2) Measurements should induce parts to do what’s good for the organization.
Bob (Production Manager) however refuses the offer.
He believes that he could standardize operations further at the plant. He wants to integrate production with sales. He wants to ensure that sales fits client needs as well as plant abilities.
Stacey (Inventory Manager) refuses the offer too.
Stacey identifies what she calls 'Capacity Constraint resources'. Her team examines daily queues in front of resources. She wants to make sure that there are buffers for every resource to process. She finds out that some of the resources actually have 'holes'.
These resources were not BN`s per se, but the sequence in which they processed was important. She wants to focus all her efforts on improving the efficiency of CCRs.
Ralph wants to provide information to Stacey and Lou, instead of throwing heaps of data at them.
Fran wants to bring his team together to help him chart a path to manage the division as a whole. Everyone has suggestions on what to do (meet the resources, visit plants, meet clients) but they are cluttered and lack a coherent bond that helps them reach a goal. This is when Ralph talks about the Periodic table and how Mandaleev came up with it. Fran agrees that there was a need to develop an intrinsic order in order to maintain perspective and march towards a common goal.
So what’s the GOAL for the division? - To have a process for Ongoing Improvement.
The focus for Fran had shifted from reducing Operational Costs to increasing throughput, which was great.
The process towards achieving the goal was ongoing.
The team comes up with a 5 Step Process --
Step1:
Identify bottlenecks (Identifying NCX 10 and the furnace)
Step2:
Decide how to exploit bottlenecks (No Lunch breaks?)
Step3:
Subordinate everything to the Bottleneck (Red and Green tags?)
Step4:
Elevate bottlenecks (Getting a new machine?)
Step5:
If BN has been broken, go back to Step1.
But do not allow INERTIA to cause a constraint.
Whenever a constraint is broken, it creates a condition where it becomes very dangerous to extrapolate from the past.
This means that every time the team elevates a bottleneck, they should ensure that they dont keep the same scenario in mind when evaluating the next constraint.
EX: The team initially put red and green tags so that non BN parts caught up with BN parts at the assembly. However, there was no reason for the same process to continue, after the BN and non BN resources caught up.
This in effect had caused the CCRs. The CCRs had holes instead of buffers, because the red tags continued to get more importance.
Now that the BN scenario has been evaded, it was safer to remove the tags and process parts on a FIFO basis.
Fran takes a huge new Order from France for a lower price than what is offered within the States. However, the Order is having troubles shipping out.
Problem: The New Order is Huge. BN`s are everywhere.
The team does not realize that they needed to have more resources or buffers ahead of the BN resources to compensate for the New Order.
Suppose there were three non BN`s and one BN resource is a queue. If Murphy hit the second non BN resource, flow of parts to the BN would stop. So the BN would start eating into its current reserves. Since the size of the order is huge it wont be long before the BN actually goes idle due to lack of reserves. So, in order to compensate for the huge new order, the BN resources reserves should be appropriately stacked.
Solution: The team decides to keep its promise with the French Customer by working on extra important orders first.
In the last Chapter, Fran starts thinking about his new job and perhaps his first constraint. He believes that its important to not keep accumulating data, but to look at a specific constraint and begin by asking - IF...THEN...?
The important tasks of a manager are "What to change", "How to change" and "What to change to". Every time a change was made, it was important to not create new negative ripples.
Thursday, June 28, 2007
Wednesday, June 27, 2007
'The Goal' - Part 3 Summary!
Fran encounters a few trivial problems as he tries to implement the changes --
1) The union initially disagrees with Frans new lunch break rule. Fran now decides to meet the plant employees in groups, to make them understand the complicated situation the plant was in!
2) As Fran takes a stroll down the plant, he notices that one of the bottle necks is actually sitting idle. Reason - Fran had asked the bottleneck managers to prioritize shipments starting from the most delayed shipment.
Following the order, the machine was waiting on the parts for the current shipment. This was a critical issue and Fran decides to mark parts based on priority. A Red part indicated high priority and a green part indicated lower priority. If all the parts near a bottleneck were red, the parts with the lowest number got the highest preference.
3) The parts going into the bottlenecks and coming out of the bottlenecks appear the same. So Fran suggests that the parts coming out of the bottleneck machines be marked yellow.
4) Ralph and Ted have a minor tiff. Ralph wants to get a detailed log of specific timings when parts enter and come out of the furnace. Ralph tries to make projections on the number of shipments that could potentially go out in a given time frame. He also wants to keep accurate data in his DB about how much time the heat furnace (BN) takes to treat parts. He realizes that some of the plant employees procrastinate even when it comes to handing the bottlenecks. He brings it to Frans attention, who promises him all his assistance so Ralph can get all the relevant data to keep data accurate.
5) Fran also realizes that the bottlenecks sit idle at certain times of the day. So he moves a couple of employees to take care of the BN at all times.
A few other developments also help Fran
1) Bob also gets back another old machine to assist one of the bottlenecks.
2) One of the foremen efficiently processes parts faster than everyone else. He tries to run a full load every time he runs the BN. If two kinds of parts required the same temperature to process, he would load the high priority parts first and fill the remaining area with non BN parts. Fran wants the same process to be followed everywhere.
3) As suggested by Jonah, Bob works with the engineering department to find out that some parts don’t need to go through one of the BN machines.
Everything goes well and the plant improves profits by a solid 12%.
However, Stacey has some bad news eventually. She believes that the bottlenecks have spread. She informs Fran that shipments were not able to go out because some non BN parts were not available.
Throughput has increased leading to the more shipments being sent out. The workload on the BN`s have been increased.
However, should the non BN resources also increase efficiency to meet with the rise in throughput???
Fran decides to call for Jonah again.
Jonahs findings
1) There are huge stacks in front of some machines, some with red tags and some with green. The red stacks are heading towards a bottleneck. The green tag stacks however were not getting any attention. This resulted in some of the non BN machines acting like BN`s.
2) Jonah explains the relationship between BN`s (X) and non BN`s (Y).
Case 1 (Y -> X)
Y is a non BN. Y working 450 hrs, lets assume is equal to X working 600 hrs. If Y completes working for 450 hrs and if Y is given more work for the next 150 hrs, it results in more inventories for X to process, which it cannot handle in the given 600 hrs. Result = Excess Inventory.
Case 2 (X -> Y)
X will end up processing lesser number of parts in 600 hrs. Y will be done processing all parts from X in 450 hours, thereby sitting idle for 150 hrs. According to Jonah this was slightly more acceptable.
Case 3 (Y -> A)
X -> S
S
E
M
B
L
Y
Y processes more parts in the same time, while X doesn’t come too close. So inventory from Y sits until the remaining X parts arrive. Result = Excess Inventory.
Case 4 (Y -> Product A)
X -> Product B
By definition Y has excess capacity, more than what the market demands. So, this is not an ideal scenario as well, even though X and Y are disconnected. Inventory from Y sits in the warehouse.
Bottom line: Making a non BN resource work more than what a BN resource can handle will lead to excess inventories in front of the BN machine. It is OK to keep workers idle and not working 100% of the time.
Mistake Committed: Making a non BN process more parts than what a BN could handle. Thereby, the same non BN resource could not process parts for another non BN, leading to parts not being available from non BN parts.
Fix: Make the non BN resource process parts at the same speed as the BN resource. Ralph comes up with a good suggestion. He says that the DB team can calculate the average time taken by a BN resource to process parts. Based on this average time, parts can be processed by a non BN in order to feed the BN. At all other times the non BN resources can work on parts with the green tag.
Also, based on the BN speed, the time taken for parts to reach the final destination can be predicted. From this information, one can reverse engineer and release parts for the non BN resources. This will inevitably reduce inventory and increase throughput.
Peach is impressed with the plants turnover but at the same time, he wants to see a 15% increase in profits to continue operating the plant.
How?
Reduce Inventory by half.
Advantages: Inventory Reduces. Only half the investment needed. Cash flow eases.
There are four different time-fields associated with processing a specific part.
Setup – A Part waits for a resource, while resource gets ready to work on the part.
Process – Time a part takes to process
Queue – A part waits in Queue for a resource, while resource is processing another part.
Wait – A part waits for another part in the assembly line, in order to be processed.
Queue Time and Wait Time are the highest. Reducing Inventory reduces these two times by half.
Speed of flow of parts increases (Lead time decreases). Customers get their orders faster.
All Fran needed to do was to ask Marketing to market the new turnover rate.
Fran now ends up getting an order for 1000 parts from a client. However he needs to have the parts in by 2 weeks.
So Fran decides to cut down inventory to half one more time. This would not affect his current contracts with other clients.
He manages to ship out 250 parts every week and completes the order in 4 weeks.
One Negative side effect – Costs per part go up.
If 100 parts needed to be processed, then cost per part would be calculated based on direct labor + setup time + burden.
If set up time was initially 2 hrs then the set up time per order would be 120/100 = 1.2
However reducing inventory to half would increase set up time (120/50 = 2.4) increasing
the cost per part.
1) The union initially disagrees with Frans new lunch break rule. Fran now decides to meet the plant employees in groups, to make them understand the complicated situation the plant was in!
2) As Fran takes a stroll down the plant, he notices that one of the bottle necks is actually sitting idle. Reason - Fran had asked the bottleneck managers to prioritize shipments starting from the most delayed shipment.
Following the order, the machine was waiting on the parts for the current shipment. This was a critical issue and Fran decides to mark parts based on priority. A Red part indicated high priority and a green part indicated lower priority. If all the parts near a bottleneck were red, the parts with the lowest number got the highest preference.
3) The parts going into the bottlenecks and coming out of the bottlenecks appear the same. So Fran suggests that the parts coming out of the bottleneck machines be marked yellow.
4) Ralph and Ted have a minor tiff. Ralph wants to get a detailed log of specific timings when parts enter and come out of the furnace. Ralph tries to make projections on the number of shipments that could potentially go out in a given time frame. He also wants to keep accurate data in his DB about how much time the heat furnace (BN) takes to treat parts. He realizes that some of the plant employees procrastinate even when it comes to handing the bottlenecks. He brings it to Frans attention, who promises him all his assistance so Ralph can get all the relevant data to keep data accurate.
5) Fran also realizes that the bottlenecks sit idle at certain times of the day. So he moves a couple of employees to take care of the BN at all times.
A few other developments also help Fran
1) Bob also gets back another old machine to assist one of the bottlenecks.
2) One of the foremen efficiently processes parts faster than everyone else. He tries to run a full load every time he runs the BN. If two kinds of parts required the same temperature to process, he would load the high priority parts first and fill the remaining area with non BN parts. Fran wants the same process to be followed everywhere.
3) As suggested by Jonah, Bob works with the engineering department to find out that some parts don’t need to go through one of the BN machines.
Everything goes well and the plant improves profits by a solid 12%.
However, Stacey has some bad news eventually. She believes that the bottlenecks have spread. She informs Fran that shipments were not able to go out because some non BN parts were not available.
Throughput has increased leading to the more shipments being sent out. The workload on the BN`s have been increased.
However, should the non BN resources also increase efficiency to meet with the rise in throughput???
Fran decides to call for Jonah again.
Jonahs findings
1) There are huge stacks in front of some machines, some with red tags and some with green. The red stacks are heading towards a bottleneck. The green tag stacks however were not getting any attention. This resulted in some of the non BN machines acting like BN`s.
2) Jonah explains the relationship between BN`s (X) and non BN`s (Y).
Case 1 (Y -> X)
Y is a non BN. Y working 450 hrs, lets assume is equal to X working 600 hrs. If Y completes working for 450 hrs and if Y is given more work for the next 150 hrs, it results in more inventories for X to process, which it cannot handle in the given 600 hrs. Result = Excess Inventory.
Case 2 (X -> Y)
X will end up processing lesser number of parts in 600 hrs. Y will be done processing all parts from X in 450 hours, thereby sitting idle for 150 hrs. According to Jonah this was slightly more acceptable.
Case 3 (Y -> A)
X -> S
S
E
M
B
L
Y
Y processes more parts in the same time, while X doesn’t come too close. So inventory from Y sits until the remaining X parts arrive. Result = Excess Inventory.
Case 4 (Y -> Product A)
X -> Product B
By definition Y has excess capacity, more than what the market demands. So, this is not an ideal scenario as well, even though X and Y are disconnected. Inventory from Y sits in the warehouse.
Bottom line: Making a non BN resource work more than what a BN resource can handle will lead to excess inventories in front of the BN machine. It is OK to keep workers idle and not working 100% of the time.
Mistake Committed: Making a non BN process more parts than what a BN could handle. Thereby, the same non BN resource could not process parts for another non BN, leading to parts not being available from non BN parts.
Fix: Make the non BN resource process parts at the same speed as the BN resource. Ralph comes up with a good suggestion. He says that the DB team can calculate the average time taken by a BN resource to process parts. Based on this average time, parts can be processed by a non BN in order to feed the BN. At all other times the non BN resources can work on parts with the green tag.
Also, based on the BN speed, the time taken for parts to reach the final destination can be predicted. From this information, one can reverse engineer and release parts for the non BN resources. This will inevitably reduce inventory and increase throughput.
Peach is impressed with the plants turnover but at the same time, he wants to see a 15% increase in profits to continue operating the plant.
How?
Reduce Inventory by half.
Advantages: Inventory Reduces. Only half the investment needed. Cash flow eases.
There are four different time-fields associated with processing a specific part.
Setup – A Part waits for a resource, while resource gets ready to work on the part.
Process – Time a part takes to process
Queue – A part waits in Queue for a resource, while resource is processing another part.
Wait – A part waits for another part in the assembly line, in order to be processed.
Queue Time and Wait Time are the highest. Reducing Inventory reduces these two times by half.
Speed of flow of parts increases (Lead time decreases). Customers get their orders faster.
All Fran needed to do was to ask Marketing to market the new turnover rate.
Fran now ends up getting an order for 1000 parts from a client. However he needs to have the parts in by 2 weeks.
So Fran decides to cut down inventory to half one more time. This would not affect his current contracts with other clients.
He manages to ship out 250 parts every week and completes the order in 4 weeks.
One Negative side effect – Costs per part go up.
If 100 parts needed to be processed, then cost per part would be calculated based on direct labor + setup time + burden.
If set up time was initially 2 hrs then the set up time per order would be 120/100 = 1.2
However reducing inventory to half would increase set up time (120/50 = 2.4) increasing
the cost per part.
Sunday, June 24, 2007
ARR`s Magic In Atlanta!
Music expresses that which cannot be put into words and cannot remain silent - That’s what a soul stirring "Pray for Me Brother" does!
Last night, I hung out at the Philips arena for a glimpse of A R Rehman - The God of M U S I C!
I cannot speak anymore and it appears like the veins on my left hand have come apart. I clapped and awed and cheered like I have never done before, and so did the 5000 odd folks packed inside the arena!
ARR picked some of his classics like Humma Humma, Vande Mataram, Roja Jaaneman, Chanda Re and they were all renditioned in perfect rhythm. Sivaji Songs literally made the crowd go berserk!
ARR played to the crowds - I would have loved to hear his more melodious compositions. I mean a 'Vellai Pookal' or 'Dekho Chodke' or ‘Hum hain Is pal’ could have made the night even prettier!
I also staged a fight to meet with ARR. I reached downtown Atlanta as early as 5 for a show that was going to start at 9. I even got through a few doors with some nicely made up statements, but I was stopped when I was just a few meters away from meeting my HERO….! With a binocular, a huge camera and an ever bigger back-pack, did they think, I was some suicide bomber? Heck!!!
Anyway, I had a blast last night, though I would have loved if ARR had given us more of his true self – the 'melody', the 'silence', the music that is capable of washing off the dust from the soul!
Well, Real musicians and real fans stay together for a long, long time.
I for one, am a real fan and will continue to be! Amen!
Last night, I hung out at the Philips arena for a glimpse of A R Rehman - The God of M U S I C!
I cannot speak anymore and it appears like the veins on my left hand have come apart. I clapped and awed and cheered like I have never done before, and so did the 5000 odd folks packed inside the arena!
ARR picked some of his classics like Humma Humma, Vande Mataram, Roja Jaaneman, Chanda Re and they were all renditioned in perfect rhythm. Sivaji Songs literally made the crowd go berserk!
ARR played to the crowds - I would have loved to hear his more melodious compositions. I mean a 'Vellai Pookal' or 'Dekho Chodke' or ‘Hum hain Is pal’ could have made the night even prettier!
I also staged a fight to meet with ARR. I reached downtown Atlanta as early as 5 for a show that was going to start at 9. I even got through a few doors with some nicely made up statements, but I was stopped when I was just a few meters away from meeting my HERO….! With a binocular, a huge camera and an ever bigger back-pack, did they think, I was some suicide bomber? Heck!!!
Anyway, I had a blast last night, though I would have loved if ARR had given us more of his true self – the 'melody', the 'silence', the music that is capable of washing off the dust from the soul!
Well, Real musicians and real fans stay together for a long, long time.
I for one, am a real fan and will continue to be! Amen!
Tuesday, June 19, 2007
'The Goal' - Part 2 Summary!
Jonah and Fran meet up at New York. Fran explains his situation to Jonah, desperately seeking help to save his plant and his job.
Jonah appears pleased with the analysis that has gone into understanding productivity on the basis of his variables.
He kicks off the conversation by asking if Fran’s plant has employees who have a lot of idle time. He also asks if the inventory stacks are hitting the roof. Contrary to what may be expected, he believes that a plant where all employees are 100% engaged, was not doing well. He further expands on the statement saying that inventories can hit the roof only if the employee capacity is much more than what is required. Fran retorts that he has a skeleton work force and there was no way he could trim it further. Jonah says that he was only questioning Fran’s ability to efficiently use his work force.
To make it a little easier for Fran to comprehend, he expands on a few other terms. A balanced plant is one where the capacity of every employee is balanced with the market demand. If capacity is lower than what is required, then the firm is depriving itself of throughput. If capacity is higher than what is required, then operational expenses are higher than optimal.
The closer the plant is towards achieving a balanced status, the faster it is heading towards bankruptcy. It is nearly impossible to maintain a balanced plant.
And here comes the twist – decreasing the operational expense and maintaining the same throughput/ inventory was not going to help either. This was because of the presence of two other variables.
Dependent Events - One event determines the outcome of the other.
Statistical Fluctuations - You cannot accurately predict about an outcome unless all other variables are fixed.
The impact of these two variables would not increase profits if lowering operational expenses was the sole driver. Jonah talks about a mathematical proof that shows that when capacity is trimmed to market demands, throughput goes down and inventory hits the roof. And because the inventory costs go up, it is nearly impossible to bring down the operational expenses either.
OK, I was almost thinking that this is heading towards another History lesson where the only end result was ‘Yawn’.
But here’s what makes it amazingly clear.
Fran, compelled by his son decides to accompany his son to a trail camp. Here he takes up the leader’s role. He has to lead the group of 10 boys to their destination.
Here are some interesting episodes to help us understand some concepts better.
1) Initially Fran decides to lead the trail. All the boys follow. But he realizes, after a few minutes that he cannot see the last guy in the line. So he decides to join the end of the line to get a better hold of the situation.
2) The slowest guy in the trail (Herbie) is obviously last in the line. As time progresses, the gap widens between the boys in the trail. Even though the first guy in the line steadily maintains an average speed of 2 miles/hr, the pace of the entire chain is way lower because of slower folks like Herbie in the middle.
3) If Herbie was the 5th guy in the line and he was the slowest, the gap between him and the 4th guy would widen. This also means that all guys behind Herbie have to be slower than him in order to maintain the chain.
4) So Herbie decides to let the others go ahead of him so that he and Fran can complete the trail. However, this doesn’t help either. The pace of the individual doesn’t matter as the trail is successful only if all the members of the scout hit the destination.
5) The energy that the boys need to walk the trail is operational expense. For people like Herbie (poor fat guy!), the operational expense increases as he takes more time and needs more energy to catch up. Throughput is of course the pace that the boys maintain. Inventory increases as the distance between the boys increase (This is an amazing analogy!!).
6) The goal is to reach the destination in time. This can be done if the distances between the boys reduced; the boys pumped their threshold energy in walking and they walked at a steady pace of more than 2 miles/ hour.
7) Solution – Eureka - Make Herbie walk first! Make the other guys follow. OK, so operational expenses reduce (Other guys pump in lesser energy!), inventory decreases (distance obviously reduces!). In order to increase throughput, the boys share the big physical load behind Herbie`s back (cartloads of food here!).
8) Mission Accomplished – The Goal is Reached
And this analogy helps understand dependent events. Now, the entire trail was dependent on the last person in the trail. The throughput directly corresponds to the last person in the trail. And it makes sense if the boy following Herbie decides to stop for a while before walking again (Yep, it is not imperative for all the workers to be working all the time). And if everyone except Herbie was doing well, inventories would indeed hit the roof. And making just one boy(robots!) effective in the trail, is not going to result in success! Makes sense? Hell, Yes!
Fran comes back from the camp with his son to realize that his wife has left him. Some drama follows, though I am pretty sure that everything is going to end well. The book has a cinematic touch, somehow!
Fran comes back to his plant pumped up deciding to apply the same analogy to the plant. Initially his crew doesn’t understand whatever Fran has to offer. But luckily, there is a real world scenario in the plant that Fran utilizes to make his team understand.
A Shipment needs to go out. There are two divisions it has to pass. Step A is manual and Step B is robotic. The crew in Div A can process parts averaging at 25 pieces/ hr. The robots in Division 2 can process parts precisely – 25 parts/ hr. For B to occur, A has to finish. The shipment is headed out from Division B.
Step B is dependent on Step A. Step A has some statistical fluctuations.
Catch – There are only 5 hours to do the job.
So, what happens?
The workers in Division A can process only 19 parts in the first hour. This means that the robots get only 19 parts in the second hour.
The workers in Division A process 21 parts in the second hour. This means that the robots get only 21 parts in the third hour.
And here starts the backlog! Shipment cannot go out now.
The team in Division A however is excited because they make up for their low speeds in the first 2 hours by processing more in the last 3. However, the robots cannot process more than 25 and the Shipment is already in backlog. OK, we get the point!!
Now comes the next problem. How to determine and modify the infinite variables in the plant floor? Going through cartloads of data to find out specific variables that may be causing the issues was an impossible task. Jonah comes to the rescue again.
He asks Fran to identify bottlenecks and non bottleneck resources. Bottle neck resources are resources whose capacity is equal to or lower than the demand placed upon it. Non bottle neck resources are resources whose capacity is equal to or greater than the demand placed upon it.
An ideally balanced plant is one where FLOW OF INVENTORY balances with the market demand. This is really an amazing perspective!
How to identify bottlenecks based on market demand? Get the total number of hours needed to meet market demand (calculated from backlogs and current orders). Calculate the hours needed by every department in the plant to meet the demand. Find out what specific resource doesn’t meet its demand. Well, that’s a geek’s way of looking at it.
But there is not much time. So the crew decides to point to bottlenecks based on experience. They successfully identify two bottlenecks.
However, one of them is a furnace and the other is a machine and there is no way they could be re-positioned in the chain – and that too right in front. Fran doesn’t understand what to do now. The machines produced lesser parts than what was required of them. However, the parts they produced were imperative for Shipments to go out. There was no way they could get capital to get a new machine/ new furnace.
Jonah, now reschedules his trip to LA, and decides to actually make it to the plant.
Here are his suggestions –
1) Jonah sees both the bottlenecks sitting idle during lunch breaks. He says that bottleneck machines cannot take any breaks. They have to produce parts all the time.
2) When asked the value of the item produced by Bottleneck A, Lou retorts 21$. However Jonah disagrees. Bottlenecks directly influence the throughout. If the bottleneck did not exist in the first place, the part would have been made available and the order would have shipped out, thereby increasing throughput. So, the time wasted on a bottleneck operation, directly translates to reducing throughput.
3) Jonah suggests that the engineers work and see if the furnace is actually required for all parts. Maybe some parts don’t require the furnace pre-heat.
4) How about doing the QA process before the parts go through the bottlenecks. 100s of parts get rejected after going through the bottlenecks. However, if the QA process is done before they reach the bottlenecks, only good parts would reach the bottlenecks.
Fran initially decides to kick start with pointers 1 and 4. He also asks the Inventory team to prioritize the orders. Orders that would be processed by bottlenecks would be according to the highest priority (the shipment that was the most delayed!).
After kick starting his new ideas at work, Fran decides to go meet his wife, who he knows is at her moms place. He tries to convince her to come back home.
Jonah appears pleased with the analysis that has gone into understanding productivity on the basis of his variables.
He kicks off the conversation by asking if Fran’s plant has employees who have a lot of idle time. He also asks if the inventory stacks are hitting the roof. Contrary to what may be expected, he believes that a plant where all employees are 100% engaged, was not doing well. He further expands on the statement saying that inventories can hit the roof only if the employee capacity is much more than what is required. Fran retorts that he has a skeleton work force and there was no way he could trim it further. Jonah says that he was only questioning Fran’s ability to efficiently use his work force.
To make it a little easier for Fran to comprehend, he expands on a few other terms. A balanced plant is one where the capacity of every employee is balanced with the market demand. If capacity is lower than what is required, then the firm is depriving itself of throughput. If capacity is higher than what is required, then operational expenses are higher than optimal.
The closer the plant is towards achieving a balanced status, the faster it is heading towards bankruptcy. It is nearly impossible to maintain a balanced plant.
And here comes the twist – decreasing the operational expense and maintaining the same throughput/ inventory was not going to help either. This was because of the presence of two other variables.
Dependent Events - One event determines the outcome of the other.
Statistical Fluctuations - You cannot accurately predict about an outcome unless all other variables are fixed.
The impact of these two variables would not increase profits if lowering operational expenses was the sole driver. Jonah talks about a mathematical proof that shows that when capacity is trimmed to market demands, throughput goes down and inventory hits the roof. And because the inventory costs go up, it is nearly impossible to bring down the operational expenses either.
OK, I was almost thinking that this is heading towards another History lesson where the only end result was ‘Yawn’.
But here’s what makes it amazingly clear.
Fran, compelled by his son decides to accompany his son to a trail camp. Here he takes up the leader’s role. He has to lead the group of 10 boys to their destination.
Here are some interesting episodes to help us understand some concepts better.
1) Initially Fran decides to lead the trail. All the boys follow. But he realizes, after a few minutes that he cannot see the last guy in the line. So he decides to join the end of the line to get a better hold of the situation.
2) The slowest guy in the trail (Herbie) is obviously last in the line. As time progresses, the gap widens between the boys in the trail. Even though the first guy in the line steadily maintains an average speed of 2 miles/hr, the pace of the entire chain is way lower because of slower folks like Herbie in the middle.
3) If Herbie was the 5th guy in the line and he was the slowest, the gap between him and the 4th guy would widen. This also means that all guys behind Herbie have to be slower than him in order to maintain the chain.
4) So Herbie decides to let the others go ahead of him so that he and Fran can complete the trail. However, this doesn’t help either. The pace of the individual doesn’t matter as the trail is successful only if all the members of the scout hit the destination.
5) The energy that the boys need to walk the trail is operational expense. For people like Herbie (poor fat guy!), the operational expense increases as he takes more time and needs more energy to catch up. Throughput is of course the pace that the boys maintain. Inventory increases as the distance between the boys increase (This is an amazing analogy!!).
6) The goal is to reach the destination in time. This can be done if the distances between the boys reduced; the boys pumped their threshold energy in walking and they walked at a steady pace of more than 2 miles/ hour.
7) Solution – Eureka - Make Herbie walk first! Make the other guys follow. OK, so operational expenses reduce (Other guys pump in lesser energy!), inventory decreases (distance obviously reduces!). In order to increase throughput, the boys share the big physical load behind Herbie`s back (cartloads of food here!).
8) Mission Accomplished – The Goal is Reached
And this analogy helps understand dependent events. Now, the entire trail was dependent on the last person in the trail. The throughput directly corresponds to the last person in the trail. And it makes sense if the boy following Herbie decides to stop for a while before walking again (Yep, it is not imperative for all the workers to be working all the time). And if everyone except Herbie was doing well, inventories would indeed hit the roof. And making just one boy(robots!) effective in the trail, is not going to result in success! Makes sense? Hell, Yes!
Fran comes back from the camp with his son to realize that his wife has left him. Some drama follows, though I am pretty sure that everything is going to end well. The book has a cinematic touch, somehow!
Fran comes back to his plant pumped up deciding to apply the same analogy to the plant. Initially his crew doesn’t understand whatever Fran has to offer. But luckily, there is a real world scenario in the plant that Fran utilizes to make his team understand.
A Shipment needs to go out. There are two divisions it has to pass. Step A is manual and Step B is robotic. The crew in Div A can process parts averaging at 25 pieces/ hr. The robots in Division 2 can process parts precisely – 25 parts/ hr. For B to occur, A has to finish. The shipment is headed out from Division B.
Step B is dependent on Step A. Step A has some statistical fluctuations.
Catch – There are only 5 hours to do the job.
So, what happens?
The workers in Division A can process only 19 parts in the first hour. This means that the robots get only 19 parts in the second hour.
The workers in Division A process 21 parts in the second hour. This means that the robots get only 21 parts in the third hour.
And here starts the backlog! Shipment cannot go out now.
The team in Division A however is excited because they make up for their low speeds in the first 2 hours by processing more in the last 3. However, the robots cannot process more than 25 and the Shipment is already in backlog. OK, we get the point!!
Now comes the next problem. How to determine and modify the infinite variables in the plant floor? Going through cartloads of data to find out specific variables that may be causing the issues was an impossible task. Jonah comes to the rescue again.
He asks Fran to identify bottlenecks and non bottleneck resources. Bottle neck resources are resources whose capacity is equal to or lower than the demand placed upon it. Non bottle neck resources are resources whose capacity is equal to or greater than the demand placed upon it.
An ideally balanced plant is one where FLOW OF INVENTORY balances with the market demand. This is really an amazing perspective!
How to identify bottlenecks based on market demand? Get the total number of hours needed to meet market demand (calculated from backlogs and current orders). Calculate the hours needed by every department in the plant to meet the demand. Find out what specific resource doesn’t meet its demand. Well, that’s a geek’s way of looking at it.
But there is not much time. So the crew decides to point to bottlenecks based on experience. They successfully identify two bottlenecks.
However, one of them is a furnace and the other is a machine and there is no way they could be re-positioned in the chain – and that too right in front. Fran doesn’t understand what to do now. The machines produced lesser parts than what was required of them. However, the parts they produced were imperative for Shipments to go out. There was no way they could get capital to get a new machine/ new furnace.
Jonah, now reschedules his trip to LA, and decides to actually make it to the plant.
Here are his suggestions –
1) Jonah sees both the bottlenecks sitting idle during lunch breaks. He says that bottleneck machines cannot take any breaks. They have to produce parts all the time.
2) When asked the value of the item produced by Bottleneck A, Lou retorts 21$. However Jonah disagrees. Bottlenecks directly influence the throughout. If the bottleneck did not exist in the first place, the part would have been made available and the order would have shipped out, thereby increasing throughput. So, the time wasted on a bottleneck operation, directly translates to reducing throughput.
3) Jonah suggests that the engineers work and see if the furnace is actually required for all parts. Maybe some parts don’t require the furnace pre-heat.
4) How about doing the QA process before the parts go through the bottlenecks. 100s of parts get rejected after going through the bottlenecks. However, if the QA process is done before they reach the bottlenecks, only good parts would reach the bottlenecks.
Fran initially decides to kick start with pointers 1 and 4. He also asks the Inventory team to prioritize the orders. Orders that would be processed by bottlenecks would be according to the highest priority (the shipment that was the most delayed!).
After kick starting his new ideas at work, Fran decides to go meet his wife, who he knows is at her moms place. He tries to convince her to come back home.
Friday, June 15, 2007
My review on Rediff!
Ha Ha, A Slightly different Version of my review on Rediff ----
http://www.rediff.com/movies/2007/jun/15rrsivaji.htm
http://www.rediff.com/movies/2007/jun/15rrsivaji.htm
Thursday, June 14, 2007
SIVAJI - Review!
Cool - If I was given just one word to describe the movie!
OK, so it is riches to rags to riches tale.
Yep, there is definitely no logic in the movie. Hell, I can tell you the story (Is there one?) in one line.
The villains are dumb and they are incapable of causing any harm to the hero, in spite of being taller and stronger.
The heroine is super pretty and she falls for our hero rather effortlessly.
Seriously, who the heck cares about all this?
I was sitting in a movie theatre in Atlanta and we pay 21$ for a ticket - Well, that’s a Sivaji Special rate . I would think twice, if I had to pay half that price to watch Spiderman 3.
But honestly, I could give that money one more time just for the movie experience.
There was this guy in the theater who wore a Sivaji Style Wig and entertained everyone even before the movie started. There was another guy who spent around 50$ on pop corn and distributed that to everyone so we could hurl it in the air when Rajini fills the screen space. There was another gang that brought camphor and pumpkins to show to a Rajini poster. They started dancing and yelling way before the movie started.
For every ‘cool’ dialogue that Rajini mouthed, there were whistles, trumpets, claps, yells and the adrenaline was constantly pumping. Well, that’s what you get from a Rajini movie and that’s worth every penny you pay and more!
Dhada Dhadavena nadapathum style, pada padavena siripadhum style, vara vara ellame style...
That pretty much sums the movie experience. Lets welcome the enigma, the rock star, the uncrowned king of Indian cinema one more time!
And will he satisfy his fans? Hell, the movie is going to burn some cash registers for sure!
The movie starts off with Rajini returning from America. Like most Shankar movies, the story revolves around the heroes’ plan to transform India into a developed country.
Like most other Rajini movies, the protagonist overcomes the hurdles and builds his fortune. Clichéd it is, it all ends up going to the benefit of the poor.
The first half is filled with humor and is so steadily paced that the viewer never loses interest. The second half is more action packed with Rajini at the helm of affairs. From romancing Shriya to bashing up the villains, Rajini does everything in style and with great aplomb and ease. The scene where he does a Sivaji, MGR and Kamal Hassan is truly magic!
Shriya looks beautiful and enacts her role well. Vivek brings the house down with his comic timing and dialogues! Suman, as the villain is adequate.
The rest of the supporting cast help build the story. Special credits to Livingston for his laka laka play, full marks to him on that one.
Shankar has done a great job presenting the movie to Rajini fans! From song picturization to screenplay, his efforts are seen in every frame.
Any word to describe Rehmans music would end up turning into a euphemism. His background music simply rocks!
Rajini fans are going to lap this one up like never before.
And i repeat, there is only one reason this movie KICKS ASS! - and that is Rajini. Period.
OK, so it is riches to rags to riches tale.
Yep, there is definitely no logic in the movie. Hell, I can tell you the story (Is there one?) in one line.
The villains are dumb and they are incapable of causing any harm to the hero, in spite of being taller and stronger.
The heroine is super pretty and she falls for our hero rather effortlessly.
Seriously, who the heck cares about all this?
I was sitting in a movie theatre in Atlanta and we pay 21$ for a ticket - Well, that’s a Sivaji Special rate . I would think twice, if I had to pay half that price to watch Spiderman 3.
But honestly, I could give that money one more time just for the movie experience.
There was this guy in the theater who wore a Sivaji Style Wig and entertained everyone even before the movie started. There was another guy who spent around 50$ on pop corn and distributed that to everyone so we could hurl it in the air when Rajini fills the screen space. There was another gang that brought camphor and pumpkins to show to a Rajini poster. They started dancing and yelling way before the movie started.
For every ‘cool’ dialogue that Rajini mouthed, there were whistles, trumpets, claps, yells and the adrenaline was constantly pumping. Well, that’s what you get from a Rajini movie and that’s worth every penny you pay and more!
Dhada Dhadavena nadapathum style, pada padavena siripadhum style, vara vara ellame style...
That pretty much sums the movie experience. Lets welcome the enigma, the rock star, the uncrowned king of Indian cinema one more time!
And will he satisfy his fans? Hell, the movie is going to burn some cash registers for sure!
The movie starts off with Rajini returning from America. Like most Shankar movies, the story revolves around the heroes’ plan to transform India into a developed country.
Like most other Rajini movies, the protagonist overcomes the hurdles and builds his fortune. Clichéd it is, it all ends up going to the benefit of the poor.
The first half is filled with humor and is so steadily paced that the viewer never loses interest. The second half is more action packed with Rajini at the helm of affairs. From romancing Shriya to bashing up the villains, Rajini does everything in style and with great aplomb and ease. The scene where he does a Sivaji, MGR and Kamal Hassan is truly magic!
Shriya looks beautiful and enacts her role well. Vivek brings the house down with his comic timing and dialogues! Suman, as the villain is adequate.
The rest of the supporting cast help build the story. Special credits to Livingston for his laka laka play, full marks to him on that one.
Shankar has done a great job presenting the movie to Rajini fans! From song picturization to screenplay, his efforts are seen in every frame.
Any word to describe Rehmans music would end up turning into a euphemism. His background music simply rocks!
Rajini fans are going to lap this one up like never before.
And i repeat, there is only one reason this movie KICKS ASS! - and that is Rajini. Period.
'The Goal' - Part 1 Summary!
I started reading the 'Goal' on Saturday. The novel centers around an operations manager who is given a deadline to bring his plant back to shape.
Well, so what does 'bring back to shape' actually mean? From the first 10 chapters, it seems like the book is headed towards figuring that out.
In the initial chapters, the scene is set. The Senior Mgt (read Bill Peach) gives the protagonist (I call him Fran!) an ultimatum of 3 months. Our protagonist like most other super-heroes has a strong affinity towards the place he grew up at and wants to do something to make the plant profitable. Clichéd Of course, he has a caring family too. The book indirectly delves into work life balance by hinting at Frans inability to spend time with his family.
Cut there! -- Fran walks out of a corporate meeting that is supposed to address issues pertaining to the plant and sits over some pizza and beer to take a deeper look at his problems. A flashback sequence takes him back to the time he met his Physics professor (Jonah) at an airport. Fran was raving to Jonah about how well his plant was doing back then.
Jonah, from his side had asked three simple questions --
Did inventories go down leading to lower costs?
Did employee expenses come down, as in - were layoffs feasible?
Was the plant shipping more number of products leading to more revenue?
Fran had claimed that the productivity shot up because of the robots that were able to process parts effectively. The management was able to get raw materials for cheap and the robots were able to process the parts quickly leading to higher inventory stacks. This in Frans opinion had increased productivity in terms of efficiency. Jonah had retorted – ‘Is that the real goal’?
Munching his pizza, Fran now decides that his first step was to establish a clear 'goal'. In simple terms – his goal is to make the plant earn revenue. He has to ensure a good Cash flow and a solid ROI. With these three constraints, Fran establishes that his goal for the plant would be to increase net profits while maintaining a high ROI and a good cash flow.
Then he starts to relate everyday activities at his plant to these three constraints. Here he encounters his next problem. He sees the plant supervisor (Eddie) walking down the aisle and asks himself how the supervisor was contributing towards the goal. The supervisor’s world inside the plant revolved around terms like ‘number of man hours’, ‘parts produced per hour’ .Fran is now confronted with the problem of connecting his measurements with measurements his employees understood.
After a lot of contrived plots, he manages to get in touch with Jonah again who gives him 3 more wise-sayings.
Throughput – is the money that comes in. It is the money generated by the system.
Inventory – is the money that is in the system that needs to be converted to revenue.
Operational Expenses – is the money that is needed to convert Inventory to throughput.
He asks Fran to measure productivity on the basis of the three terms above. Interesting!
Now Fran gets his team together and starts brainstorming on whether the robots actually helped the plant reach its actual goal.
The numbers show that profits have been on the downslide since the time the robots were allowed to operate. Further digging shows that inventories of parts that the robots produced went up. However the final product was never assembled either because there were no New Purchase Orders or due to unavailability of other significant parts. So, in spite of the robots producing parts at a higher efficiency , the operating costs went up because of the increase in the size of the inventory.
As Fran gains confidence in his analysis, he decides to put together Jonahs 3 point rule and present it to his management team. After an initial confrontation, the team seems to come together to agree on a common point – To talk to Jonah again :)
Some interesting thoughts come up during the analysis. One of them is to classify machines under operational expenses as well as inventory. The depreciation value of the machine went under operational expenses and the machine (which is saleable) would trail under inventory. Knowledge that would be put to use to make a new product would be operational expense while knowledge that was like a patent (hence saleable) would go under Inventory. Time spent by employees on the plant was again a form of operational expense.
Well, so what does 'bring back to shape' actually mean? From the first 10 chapters, it seems like the book is headed towards figuring that out.
In the initial chapters, the scene is set. The Senior Mgt (read Bill Peach) gives the protagonist (I call him Fran!) an ultimatum of 3 months. Our protagonist like most other super-heroes has a strong affinity towards the place he grew up at and wants to do something to make the plant profitable. Clichéd Of course, he has a caring family too. The book indirectly delves into work life balance by hinting at Frans inability to spend time with his family.
Cut there! -- Fran walks out of a corporate meeting that is supposed to address issues pertaining to the plant and sits over some pizza and beer to take a deeper look at his problems. A flashback sequence takes him back to the time he met his Physics professor (Jonah) at an airport. Fran was raving to Jonah about how well his plant was doing back then.
Jonah, from his side had asked three simple questions --
Did inventories go down leading to lower costs?
Did employee expenses come down, as in - were layoffs feasible?
Was the plant shipping more number of products leading to more revenue?
Fran had claimed that the productivity shot up because of the robots that were able to process parts effectively. The management was able to get raw materials for cheap and the robots were able to process the parts quickly leading to higher inventory stacks. This in Frans opinion had increased productivity in terms of efficiency. Jonah had retorted – ‘Is that the real goal’?
Munching his pizza, Fran now decides that his first step was to establish a clear 'goal'. In simple terms – his goal is to make the plant earn revenue. He has to ensure a good Cash flow and a solid ROI. With these three constraints, Fran establishes that his goal for the plant would be to increase net profits while maintaining a high ROI and a good cash flow.
Then he starts to relate everyday activities at his plant to these three constraints. Here he encounters his next problem. He sees the plant supervisor (Eddie) walking down the aisle and asks himself how the supervisor was contributing towards the goal. The supervisor’s world inside the plant revolved around terms like ‘number of man hours’, ‘parts produced per hour’ .Fran is now confronted with the problem of connecting his measurements with measurements his employees understood.
After a lot of contrived plots, he manages to get in touch with Jonah again who gives him 3 more wise-sayings.
Throughput – is the money that comes in. It is the money generated by the system.
Inventory – is the money that is in the system that needs to be converted to revenue.
Operational Expenses – is the money that is needed to convert Inventory to throughput.
He asks Fran to measure productivity on the basis of the three terms above. Interesting!
Now Fran gets his team together and starts brainstorming on whether the robots actually helped the plant reach its actual goal.
The numbers show that profits have been on the downslide since the time the robots were allowed to operate. Further digging shows that inventories of parts that the robots produced went up. However the final product was never assembled either because there were no New Purchase Orders or due to unavailability of other significant parts. So, in spite of the robots producing parts at a higher efficiency , the operating costs went up because of the increase in the size of the inventory.
As Fran gains confidence in his analysis, he decides to put together Jonahs 3 point rule and present it to his management team. After an initial confrontation, the team seems to come together to agree on a common point – To talk to Jonah again :)
Some interesting thoughts come up during the analysis. One of them is to classify machines under operational expenses as well as inventory. The depreciation value of the machine went under operational expenses and the machine (which is saleable) would trail under inventory. Knowledge that would be put to use to make a new product would be operational expense while knowledge that was like a patent (hence saleable) would go under Inventory. Time spent by employees on the plant was again a form of operational expense.
Wednesday, June 13, 2007
Sivaji - The BOSS!
OK, this is 100% digression! I am going to check out Sivaji - The Boss! tomorrow. Hell, I can’t believe I am so excited! I am going with a bunch of hooligans, who i know will leave no stone unturned to make our presence felt. The last time, they brought camphor and pumpkins to show in front of thalaivars small poster :)) There were a couple of Americans who came to see Chandramukhi and they looked so perplexed, that no amount of explanation could have helped!
I am wondering what makes Rajni special. He started out as a conductor, got into movies and created an enigma that nobody else can dream of! A ticket`s price here in Atlanta is 25$ and all tickets for the next couple of days are sold out! He is no hunk, he can’t shake a leg, his dialogue delivery is flawed, but everything can be overlooked. Makes me understand Brand power - you create a brand, a certain personality, a certain quality over time and rest assured, you SELL!
Anyway, I have always been a huge fan of Rajni. How can i forget his Baasha or his Thalapathi or his Oruvan Oruvan from Muthu? I am glad I got a ticket to watch Sivaji before most people watch it back home in India.
Check back here for the Review..!
Until then, Sivaji - here we come!!!
I am wondering what makes Rajni special. He started out as a conductor, got into movies and created an enigma that nobody else can dream of! A ticket`s price here in Atlanta is 25$ and all tickets for the next couple of days are sold out! He is no hunk, he can’t shake a leg, his dialogue delivery is flawed, but everything can be overlooked. Makes me understand Brand power - you create a brand, a certain personality, a certain quality over time and rest assured, you SELL!
Anyway, I have always been a huge fan of Rajni. How can i forget his Baasha or his Thalapathi or his Oruvan Oruvan from Muthu? I am glad I got a ticket to watch Sivaji before most people watch it back home in India.
Check back here for the Review..!
Until then, Sivaji - here we come!!!
Monday, June 4, 2007
The Next 2 Months...
Two months before the official start of the boot camp!! I am trying to get started to work on my schedule.
I have to finish reading the following books -
10 Day MBA by Steven Silbiger
The Goal by Eliyahu M. Goldratt
Vault Consulting Career Guide
Essentials of Accounting by Robert N. Anthony
I am thinking of covering 10 Day MBA (already started!) and The Goal by the end of June. If I can get started with Accouting in the second half of July, I should be ready to handle the first semester Accounting course load.
That reminds me, I got to get my Excel skills updated as well..!
Well, I also need to focus on finding more ways to relax and have some fun....! I am planning on a trip to Lake Lanier here in Atlanta. I just drove past the lake yesterday and it certainly looked like a great place to spend a day... camping and boating...!
I have to finish reading the following books -
10 Day MBA by Steven Silbiger
The Goal by Eliyahu M. Goldratt
Vault Consulting Career Guide
Essentials of Accounting by Robert N. Anthony
I am thinking of covering 10 Day MBA (already started!) and The Goal by the end of June. If I can get started with Accouting in the second half of July, I should be ready to handle the first semester Accounting course load.
That reminds me, I got to get my Excel skills updated as well..!
Well, I also need to focus on finding more ways to relax and have some fun....! I am planning on a trip to Lake Lanier here in Atlanta. I just drove past the lake yesterday and it certainly looked like a great place to spend a day... camping and boating...!
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