The Three Bucket Theory –Dickeson
Look at the perceivers for the week just past; make a little plan for the coming week to keep the tilt downward. Execute the plan. Did it work? Days On Hand still going down? No? Try something else next week. Continuous improvement, said Dr. Deming. Constraint lifted; go to the next constraint, said Dr. Goldratt.
Take the Wip, for instance. When the materials are committed to a job and move out of Raw inventory, time starts to run on work in process. The Wip clock stops when deliverable product is completed. Wip time is a true measure of production JIT—just in time.
Taichi Ohno taught us to use yellow Kanban cards to “pull” materials through production rather than “pushing” them up into queues. Eli Goldratt teaches us that the rate of production conversion of Raw to Fig is the key to success. In effect, they’re both saying that the DMOH of the Wip measures the rate of conversion—the productivity of the enterprise.
We’ve been speaking of global Wip—total work in process by week. Let’s drill down in the data for a local view—by job. Can you tell me the Wip dwell time on a job-by-job basis for your plant? No? I doubt that any Management Information System supplier is providing this. We’ve never demanded it.
What would we learn? We’d discover more detail of throughput constraint properties, wouldn’t we? What would we do about it? What actions would we take? Think about it. Want continuous improvement of productivity? Isn’t this a prime place to look? Forget that job cost stuff and look at the Wip lag in days or hours, both locally and globally.
There’s an elephant in your conference room. Look at your Fig DMOH. The minute deliverable product is completed it leaves the Wip and the finished goods inventory clock begins ticking. It ticks in Fig until the sale is booked and it enters the A/R (Accounts Receivable) classification. What Fig time says is: “This is how long it’s taking us to get invoices for our jobs into e-mail.” We’re measuring a liquidity constraint. (Don’t do this unless you’re lying down and someone who knows CPR is standing by.) Again, view the days or hours globally for the enterprise and drill down locally by job.