Professional Documents
Culture Documents
TOC Replenishment
TOC Replenishment
Fundamentals Certificate
Accuracy of
Forecast
Effective Death
Response Response
Zone Zone
BEFORE
Manufacturing
Warehouse
Distribution
Stores
Manufacturing
Warehouse
Distribution
Stores
Raw Refine /
Produce Transport
Materials Prepare
Dairy
Creamery Deliver Retail Customer
Cows
Brakes Car
Lot
Tires
Engine Car
Lot
Transmission
Rolling Steel
Mine Smelter Product
Mill Sales
Did 95% 2%
Didn’t 5% 98%
• Consider:
We missed 1% of parts
• ( 10 bolts count the same as 10 engines)
$1000 in parts late
• Late by one day? No problem.
• Late by 40 days? Destroyed our operations
We need Value (Throughput Threatened Value)
We need Time (Days later than expected)
Periodic Dollar-Days:
Sum of (T threatened) * (Days late) for all late
items over the period.
© Washington State University-2010 18
Use of Throughput Dollar-Days
IDD
TDD
Link
doing
1 day late = 1000 TDD
VMI
Measures
2 days late = 2000 TDD effectiveness
of the links
IDD=50
IDD=80 IDD=190 TDD=100
TDD=2500
IDD=110 IDD=740
TDD=100 TDD= 1100
TDD=200 TDD=650
TDD=50
© Washington State University-2010 26
TDD and IDD
Capability 7 9 5 8 6 parts/day
If B caused the problem, it shows in B’s
measures.
But, what if A and B were grouped? And
they were measured at a Team, would
there be even better performance?
© Washington State University-2010 31
And What About D and E?
Then, what is the logical measure for D and E?
Process A B C D E
RM FG
Capability 7 9 5 8 6 parts/day
D and E team to deliver to the customer. A
missed customer delivery is TDDs.
The IDD (Inventory held * time held) tells
how effective the D and E Team is!
Capability 7 9 5 8 6 parts/day
We really could treat (measure) the effectiveness
of the whole line as one big team.
TDD=Effectiveness in Delivery
IDD =Effective use of resources
(and tracking improvements)
© Washington State University-2010 33
Play the Replenishment Game
Store
Factory Truck
Factory Truck
Load FG
RM FG 21 Items 21 Items
Infinite 10
Loaded
Day 0
© Washington State University-2010 35
Initial Profit Statements on Day 0
• Factory sold 21 to store (put on truck)
• Factory Calculates Sales at $1 per item sold ($21).
• Factory Subtracts Costs at $0.50 per FG item in Inventory (10 at Factory and 21 on Truck = $15.50).
• Factory had No Missed Shipments.
• Factory Profits = $21-15.50=$5.50.
Store
Factory Truck
Store
Factory Truck
• Truck moves closer and closer to Store each day. Delivery of truck
occurs after the end of Day 6 and before Day 7
Store
Factory Truck
Store
Factory Truck
• If…
• Store doesn’t have Item to sell-Penalty $10 per item.
• Factory doesn’t have Item to ship-Penalty $1 per item.
© Washington State University-2010 39
Traditional Replenishment Method
Calculate Profits after Day 12
• Store Receives Truck Goods (adds to Inventory)
• Store Calculates Sales at $1 per item sold.
• Store Subtracts Costs at $0.50 per item in Inventory.
• Store Orders Items for next week.
Continue the six day weeks until
everyone understands how the
traditional system works.
Store
Factory Truck
Store
Factory
Truck
Truck Truck
Truck Truck
Truck Truck
Truck Truck
Truck Truck
Truck
• It still takes six days to get from the Factory to the Store. There are six
trucks on route (one leaves the factory each day, an earlier truck arrives
at the store each day).
• Assume the sales for the previous week were 3 items per day.
• Each truck on its way this week has three times in it.
41
© Washington State University-2010
TOC Method
Initial Profit Statements on Day 0
• Factory sold 18 to store the previous week (put on truck) for $18.
• Factory Costs of Inventory @$0.50(12 at Factory and 18 on Truck) = $15.
• Store pays Factory $3 per week for Daily Delivery
• No Missed Shipments. Factory Profits = $18-15+3=$6.
Store
Factory
Truck
Truck Truck
Truck Truck
Truck Truck
Truck Truck
Truck Truck
Truck
Store
Factory
Truck
Truck Truck
Truck Truck
Truck Truck
Truck Truck
Truck Truck
Truck
• Each day, the closest truck to the Store delivers its load.
• At the end of Day 6, count total sales for Factory and Store. Reduce
Sales by Inventory Costs. Transfer $3 from Store to Factory for Daily
Delivery
© Washington State University-2010 43
Replenishment S&T