The Goal Flashcards
What is “The Goal”?
To make money!
Increase throughput while decreasing inventory and operating expense!
What is throughput?
Rate at which the system generates money through sales.
What is inventory?
All the money the system has invested in purchasing things it intends to sell
What is operational expense?
All the money the system spends to turn inventory into throughput
What do typical manufacturers try to do?
Run “balanced” without too much capacity or wasted opportunity.
Too much capacity = wasted cost
Wasted opportunity = wasted revenue
What does balancing lead to?
Leads to trimming capacity so no one is idle.
Trimming capacity leads to additional distortions in systems with dependent events and statistical fluctuations.
What do dependent events and statistical fluctuations lead to in terms of throughput?
Accumulation of fluctuations and massive slowdown in throughput over time.
What is rule #1 of manufacturing according to the goal?
Balance flow, not capacity. Don’t work toward increasing capacity of the overall system, work to find bottlenecks and increase capacity on bottlenecks individually.
What is the definition of a bottleneck?
Where capacity is less than or equal to the demand placed on it.
Should capacity be more or less later in a process?
Capacity should be more. The maximum deviation of the previous operation will become the starting point for the next operation. If capacity is greater later, the later process has the ability to catch up. If it is less, it will only get further behind from statistital fluctuations.
