Dealing with Variability

What’s possible:

This sounds counter-intuitive, but if a production system is built correctly it can absorb high levels of variability without allowing the variability to disrupt delivery.

This is what the Theory of Constraints approach to production does. We put a system in place that typically has a shorter lead time than Lean-kanban, less WIP than Lean-kanban, yet “absorbs” variability of all types to provide extremely high on-time performance (98% or better, and we prefer 99% or better).

You know, “Murphy” is alive and well in most organizations. Rather than building a system that means the people have to play whack-a-mole every time there’s any kind of a “blip” in circumstances, we build a system that is almost immune to Murphy-strikes. Murphy does its worst and we still hit 99% or better on-time performance in a fast lead time with superb quality and no expediting.

Does this mean we tolerate variability?
No. We want to systematically reduce it or even eliminate it. But first, we make our due-date performance immune to Murphy’s attempts to do harm. Then we can attack variability with impunity.

There is a manufacturer in Vancouver that manufactures a high-tech product. The lead time on materials is too long and subject to great variability. There are constantly new products being introduced; and engineering changes to the existing products. Sales are highly volatile, variable in total demand and in timing and in product mix. Now, add to this that the company’s sales have been GROWING by more than $5 MM PER MONTH for several years, with all the implications on people and machine capacity, on plant layout, on everything … then be astonished to learn that for YEARS with the TOC in place, their on-time performance has been 99.85% while they have turned over their inventories at an astonishingly high rate.