Tag Archives: constraints

Work Moves Sideways – Output Capacity

Every system has a output capacity over time. If a machining system requires twenty minutes to complete a process, it can produce no more than 24 units in an eight hour shift, and that’s if nothing goes wrong. If there are variations in the process that require setup time, the capacity moves down from 24 for each twenty minutes of setup time. If a tool, in the machine, gets dull, that twenty minute process might increase to 23 minutes and reduce the output capacity.

Sales may have no similar constraint, and arrive back at the office with sales orders for 175 units promised by Friday. You do the math. Some of those sales orders will turn into back orders and some of those backorders might turn into canceled orders. What’s the problem?

The problem is that we have a discrepancy between the output capacity of sales and the output capacity of production. It may look like a communication breakdown or even a personality conflict between the sales manager and the production manager.

There are several levers you might use to optimize the output capacity of the two systems. You might need one less sales person. You might need to schedule promise dates. If the market is strong and sustainable, you might need two of those machines to increase the output capacity of production to 48 units per eight hour shift.

Your Business Model and Constraints

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Every business has a model, an internal structure that helps to understand the way it interacts with its market. Business Model Generation defines these elements –

Customer Segments
Value Proposition
Channels
Customer Relationships
Revenue Streams
Key Resources
Key Activities
Key Partnerships
Cost Structure

I suggest another element surfacing as the world comes back on line in this pandemic – constraint.

Every system (business) has a constraint. That constraint is connected to a-capacity-of-something. Initially, constraints show up as whack-a-moles and we arm ourselves with mallets to snuff them out. Eventually we understand that every system will always have a constraint, our job is to put the constraint where we want it (strategic constraint). Some constraints are internal to our business model, sometimes they are outside (external systems, like the market, regulation, finance, labor, technology).

Examine your business model and its constraints. Capacity may have shifted due to the pandemic, your constraint may have moved, your business model may be wobbly because something subtle (or not-so-subtle) has changed.

How to Set Context With Your Team

From the Ask Tom mailbag –

Question:
I hear you say that management is about setting context. I think I understand what that means, but I do NOT understand how to do it.

Response:
Culture is context. Setting context is the prime objective for every manager. Context is the environment in which work is done. Work is making decisions and solving problems. This is fundamental managerial work. Three moving parts –

Communicate the Vision. This is the future picture of a project, picture of a product in a package, the output from a service. This is what a clean carpet looks like.
Performance Standard. This is the what, by when. This is the objective in measurable terms. This is the goal – QQTR, quantity, quality, time (deadline or evaluation period), resources. The vision is full of excitement and enthusiasm, specifically defined by the performance standard.
Constraints. There are always constraints and guidelines. Budget is a constraint, access to resources is a constraint, time can be a constraint. These are the lines on the field. Safety issues are always a constraint. When the project is finished, you should go home with all your fingers and toes.

That’s it, then let the team loose to solve the problems and make the decisions within the context. Do not make this more complicated. It’s always about the fundamentals. -Tom