1. ETM 627 Fall 2014 Dr. Joan Burtner The Certified Manager of Quality/ Organizational Excellence 3 rd Edition Westcott, ed. Chapter 14 Process Management

2.  Theory of Constraints (TOC)  Thinking of the organization as a system  Promoted by Eliyahu Goldratt  Popularized in the novel, The Goal (1984)  TOC principles TOC definitions  TOC metrics  TOC tools  Process improvement methodology ETM 627 Fall 2014 Dr. Joan Burtner Associate Professor and Chair, Department of Industrial Engineering and Industrial ManagementSlide 2

3.  Treat the whole organization as a system.  Continual improvement is necessary.  The system is only as strong as the weakest link.  The weakest link is the system’s constraint.  Solving individual undesirable effects (UDEs) and neglecting core problems leads to short-term solutions.  See pages 411-412 of your text for additional principles. Dr. Joan Burtner Associate Professor and Chair, Department of Industrial Engineering and Industrial Management ETM 627 Fall 2014Slide 3

4.  Throughput (T) – the rate at which the entire system generates money through sales of product or service  Inventory (I) – all the money the system invests in things it intends to sell  Operating expense (OE) – all the money the system spends turning inventory into throughput Dr. Joan Burtner Associate Professor and Chair, Department of Industrial Engineering and Industrial Management ETM 627 Fall 2014Slide 4

5. Dr. Joan Burtner Associate Professor and Chair, Department of Industrial Engineering and Industrial Management ETM 627 Fall 2014Slide 5

6.  Current reality tree  Root cause analysis (RCA) method to identify undesirable effects  Future reality tree  Identifies the desirable effects if the processis changed  Prerequisite tree  Identifies obstacles to implementation  Transition tree  Details for implementing change  Conflict resolution diagram  Aids in the resolution of conflicts by identifying assumptions that appear valid but are suspect Dr. Joan Burtner Associate Professor and Chair, Department of Industrial Engineering and Industrial Management ETM 627 Fall 2014Slide 6

7.  1. Locate the weakest link  2. Squeeze more capability from the constraint.  3. If step 2 does not eliminate the constraint, use minor changes to adjust the system.  4. If steps 2 and 3 were not sufficient,, make major changes to eliminate the constraint.  5. When steps 3 or 4 have eliminated the constraint, go back to step 1 to deal with the next constraint. Dr. Joan Burtner Associate Professor and Chair, Department of Industrial Engineering and Industrial Management ETM 627 Fall 2014Slide 7

8. Remember:  Process improvement is a never-ending cycle. Goals:  Increase throughput  Decrease inventory  Decrease operating expenses Dr. Joan Burtner Associate Professor and Chair, Department of Industrial Engineering and Industrial Management ETM 627 Fall 2014Slide 8

9. Dr. Joan Burtner Burtner_J@Mercer.edu