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Theory of Constraints:

A look at the Drum-Buffer-Rope and


Critical Chain Project Management
approach
EMGT 364 Term Paper

Jesse Crispino and Ryan Saulsbury

Theory of Constraints
Developed by Eliyahu M. Goldratt
A systems management philosophy
developed in the 1980s
Boost process performance by looking
at the entire process
Identifying and reducing bottlenecks
Often applied in conjunction with TQM,
JIT and ABM

Theory of Constraints
Project managers have always analyzed
individual components of a process
Maximizing components may not improve
the process
Goldratt views the entire process and finds
the weakest link--Capacity Constrained
Resource (CCR)
All projects contain one, but not many
CCRs

Theory of Constraints:
Principles
If a system is performing as well as it can,
only one of its component parts will be.
If all parts are performing as well as they
can, the system as a whole will not be.
Inertial is the worst enemy of a process of
ongoing improvement. Solutions develop
weight that resists change.
Ideas are not solution.

Theory of Constraints:
Steps
Goldratts Five Steps
Identify the systems constraints
Decide how to exploit the constraints
Subordinate everything else to the
exploitation of constraints
Elevate the systems constraint
If any constraints have been violated,
repeat the process

Theory of Constraints:
Defined
Constraint: Anything that limits a
systems performance relative to its goal
Inventory: All the money used to
purchase things the system intends to sell
Operating expense: The money a system
spends to turn inventory into throughput
Throughput accounting: An accounting
system used to measure TOC operations

Theory of Constraints:
Defined
Throughput: the difference between net
revenues and direct material cost
limited by internal constraints (plant capacity)
limited by external constraints (market demand)

Two critical assumptions:


The goal of product or customer mix and volume
should be to maximize throughput
Assumes that once a certain capacity exists,
operating expenses are fixed

Theory of Constraints:
Applied
Soldier analogy:
Gaps appear due to
Dependent events
Statistical fluctuation

Drum-Buffer-Rope (DBR) system links


first soldier with the slowest one

Drum-Buffer-Rope (DBR)
Logistical tool that balances flow of a
system
Drum: A schedule for capacity of the
constraint
Buffer: Built in time for parts to reach
the constraint early (in process inventory)
Rope: A schedule, or information
connection, for releasing raw materials

Drum-Buffer-Rope:
Implementing
Identify CCRs-Paretos Rule may help
Schedule CCRs to capacity (drum)
Protect from statistical fluctuations with
time buffers (buffer)
Monitor CCRs to ensure the timely
release of materials upstream (rope)
Monitor Buffer--Buffer Management (BM)

Drum-Buffer-Rope: Case
Study #1
Oregon Freeze Dry: Four step process

wash/prepare food
freeze food in cold room
dry food to remove ice crystals (sublimation)
packaging/shipping

Difficulty finding space in cold room-wash/preparation was very quick


Considered buying new cold room

Drum-Buffer-Rope: Case
Study #1
Reduced the amount of raw food going into
wash phase
Cold room scheduled by using a BTU
calculation for max efficiency
Less product in cold room created faster
freezing rates.
Oregon Freeze uses only 30% of cold room
capacity and produces a higher quality
product

Drum-Buffer-Rope: Case
Study #2
Wendell August Forge: Hand-hammered
aluminum commemorative items
Six production cells
Expected hammering to be drum
Walk on shop floor showed buffing
backup to be CCR
Union mandated breaks

Drum-Buffer-Rope: Case
Study #2
Break schedule staggered--exploitation
Capacity immediately increased 12%
Implemented a Rope to limit raw
materials
Work in progress inventories decreased
Managers educated on TOC attitudes
Capacity up 27% by years

Critical Chain Project


Management
Traditional project management, Critical Path
Method (CPM) used for over 40 years
DoD projects: 100-200% more expensive, and
exceeded duration 40-50% of the time
Commercial projects: 70% more expensive,
and exceeded duration 40% of the time
Goldratts 1997 book Critical Chain--new
paradigm for PMs
People plan and execute projects

Critical Chain Project


Management
Accounts for human nature factors
Individuals always desire a safety buffer
Goldratts student syndrome
Parkinsons law--Work expands to fill the
time allotted
PM multi-tasking reduces efficiency and
penalizes the highest priority
No early finishes

Critical Chain Project


Management
CPM: Tasks scheduled as soon as
possible (ASAP)
CCPM: Tasks scheduled as late as
possible (ASLP)

Reduce work in progress


Reduce up-front costs
PMs focus on first tasks
Increased knowledge as project progresses

Critical Chain Project


Management
ALAP drawback: As the project
progresses, all tasks become critical to
project completion
Goldratts solution: Drum-Buffer-Rope
logistical scheduling and consolidated
safety buffers

CCPM: Re-define Your


Paradigm
CCPM requires individual and organizational
behavior changes
Locate and remove hidden safety buffers
Embrace uncertainty vs attempting better
estimates
A 50% change of completing a task on-time is
acceptable--Do not measure against baseline
Tell me how you will measure me and I will
tell you how I will behave

CCPM:
Implementing
Assume all material and information for
tasks are on-hand
Resolve resource conflicts
Locate the Critical Chain--longest chain
of tasks that consider both task and
resource dependencies
Critical Path--longest chain of tasks
based upon task dependencies

CCPM:
Implementing
Individual projects no longer have safety
buffer
Two types of safety buffers are inserted into
the project as a whole
Project Buffer: protects against overruns
on the critical chain
Feeding Buffer: protects against overruns
on tasks that feed the critical chain

CPM vs CCPM
CPM:
Tasks have scheduled start and finish dates
Early finishes on critical path do not
accumulate
Project is on time or late

CCPM:
Relay race analogy
Tasks are scheduled by preceding tasks
completion

CPM vs CCPM
CCPM will finish tasks faster
Project teams moral and effectiveness
will improve
Project teams/project managers can
produce early finishes
Overall costs will decline

CPM

Start

Finish

- Indicates critical path

CCPM
Rope

Resource
Buffer

Start
Feeding
Buffer

- Indicates critical chain

Project
Buffer

Finish

Critical Chain:
Case Study #1
Harris Semi-conductor: $250M new wafer
fabrication plant
Typical construction time 54 months
CPM analysis yielded 6000 tasks
Critical chain analysis reduced to 150
tasks
40 day delay for weather
15 day delay for equipment problems

Critical Chain:
Case Study #1
Buffers allowed for project delays
Project completed 3 days ahead of
schedule
Plant constructed in 13 months
Overall cost only 4% above estimate
Wafer Fabrication plant able to produce
products 40 months faster than the
industry standard

Critical Chain:
Case Study #2
Habitat for Humanity: World Record
attempt for building a house
Old record: 4hrs 39min, Nashville--1998
Critical Chain method predicted 4 hours
Bathroom finished 1 hour longer than
estimated
Overall finishing time: 3hrs 44min

In Class Example:
You are a new plant manager for LETZ GETZ
BLITZED BREWING CO INC.
You need to re-work the production line soon
because your boss, CEO Always Hammered is
getting thirsty for the profits so to speak.
Your Suppliers Bottle Cap Billy, and Hops McGee
are consistently late. Your line supervisor Mr.
Schmidt explains that those producers are from
Denmark and the delays are due to rotten
shipping.

In Class Example:
Current Situation:
The Hops & Malt used in the brewing process is suppose to arrive on
the 1st of each month but it can arrive 1 day late.
Yeast is purchased in bulk and is delivered on the 4 th of the month.
The line supervisor claims yeast requires 4 days of preparation before
being added to the WORT.
Packaging is delivered on the 11th of the month and requires
imprinting and then fix/assembly (2days total)
Your bottles are delivered on the 15th. You can fix the labels and
assemble the packaging after your bottles arrive.
Bottle caps are suppose to arrive on the 16 th but lately they have
been a day late.
You are unable to obtain new suppliers because of existing contracts
signed by the CEO.

In Class Example:
The following is a general concept of how to make
the beer in your factory:
Step 1: You can start by creating the WORT. A process that
includes adding water, hops, malt and then a
boiling/cooling process. ( 1 day)
Step 2: Transfer to the fermenter where the yeast is added
Step 3: Fermentation (10 days-Cannot be reduced)
Step 4: Final Preparation includes: Siphon beer to remove
yeast sediment, Add Sugar-Bitters added to product to
produce, and carbonation (4 days)
Step 5: Bottling/Packaging (2 days)

In Class Example CPM:

In Class Example CCPM:

Develop a CCPM for the Beer Making Process


Remember: Reduce the Critical Path by 50%,
Project Buffer(5 days)
Feeder Buffer(2 total)

Critical Chain vs Critical


Path for Army/UMR?
Must teach both techniques
CCPM
CPM

Army constrained by resources


Operations difficult to apply
Maintenance has potential

Key differences
ASAP vs. ASLP
Buffer Management

Drum-Buffer-Rope &
Critical Chain Method

QUESTIONS ??