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DBR example from Necessary but not Sufficient
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7/27/2014 at 9:32:59 AM GMT
Posts: 1
DBR example from Necessary but not Sufficient
I am in the middle of Necessary but not Sufficient book by Eli Goldratt. There is an example of a company that implemented an IT system and reduced pre-production stage from 3 weeks to 2 days. Against their expectations, delivery terms remained as they used to be before this IT system - 10 weeks. It means that now production stage takes almost 10 weeks (instead of 7 weeks before the IT system).

As a solution to this problem company management decides to implement DBR system. Their idea is the following - the queue of orders before production stage increases delivery terms. This happens because workers are stressed with workload and make more mistakes because of that. As a result delivery terms get longer.

I cannot make myself agree to this logic due to the following reasons:
1. I thought that DBR serves mainly for reducing amount of inventory, but not for reducing delivery terms. In Goldartt's book The Race, DBR was explained exactly as a tool to battle inventory.
2. From the book it is not really clear where is the company constraint (the situation starts in chapter 10, when Maggy and Lenny arrive to Jerry). As IT system introduction did not decrease delivery terms, one can assume that constraint is located inside production process and not before it. In any case, the main way to decrease delivery terms and increase Throughput is to deal with constraint. Therefore it is unclear how DBR helped to reduce delivery terms that dramatically.

I would be glad to hear your thoughts about this situation and perhaps correct my logic.

9/7/2014 at 11:53:00 PM GMT
Posts: 6
Thanks for your feedback on NBNS. Let me see if I can help. DBR not only will reduce inventory but it will also reduce leadtime because it frees capacity. Remember that lead time and inventory are connected. The less inventory that is in the system is the faster the flow through the system. It is not uncommon in a company that implements DBR to discover they have 20% or more capacity than what they had before due to the reduction of queue in front of the bottleneck. The IT system had absolutely nothing to do with the decrease in the delivery terms. The constraint was indeed inside the production process. The IT system helped codify the new practice of DBR and bring the visibility of what is really required. DBR always reduces lead time because of the reduction of queue in front of the bottleneck. The important thing is to not give this improvement away for the same price in the marketplace otherwise you can swamp your company with demand for the shorter lead time at that price. I hope that helps

Carol Ptak