1. March 20, 2008 2008 Dixie Crow Symposium, Warner Robins, GA Slide 1 Critical Chain Management - Reducing Depot Maintenance Flow Days Scott R. Schultz Mercer University / Mercer Engineering Research Center

2. March 20, 2008 2008 Dixie Crow Symposium, Warner Robins, GA Slide 2 About the Author Dr. Scott Schultz – assistant professor Mercer University, and consultant at Mercer Engineering Research Center. Industry Experience: 13 years automotive experience – Ford Motor Company. 2 years furniture experience – Furniture Manufacturing Management center. Consulting – manufacturing and military Teaching Experience: 6 years as Industrial Engineer prof. at Mercer Simulation Production, scheduling, inventory control Operations Research others…

3. March 20, 2008 2008 Dixie Crow Symposium, Warner Robins, GA Slide 3 Abstract In this short course we describe and discuss the concept of critical chain management. Critical chain management was originated by Eliyahu M. Goldratt as an outgrowth of his Theory of Constraints with respect to project management. Critical chain management explores why projects tend to be late, and develops an interesting approach to mitigating this problem. Now what does project management have to do with depot maintenance? Depot maintenance is not so much manufacturing, but is really more like project management. We then link the concepts of critical chain management to depot maintenance and how critical chain management can influence one of the depot’s primary measurables, “flow days”.…

4. March 20, 2008 2008 Dixie Crow Symposium, Warner Robins, GA Slide 4 Why This Talk? Critical Chain Management: Applies to anyone involved in project management. Applies to Depot Maintenance.

5. March 20, 2008 2008 Dixie Crow Symposium, Warner Robins, GA Slide 5 Project Management - PERT/CPM Classical methods of analyzing projects – PERT/CPM CPM – Critical Path Method: addresses the tradeoff of the increased cost to reduce the time to complete a task, versus the cost reduction of completing the project as a whole. PERT – Program Evaluation and Review Technique: deals with project uncertainty by using the mean and standard deviation of individual task times to determine the probability of completing the overall project within certain time ranges.

6. March 20, 2008 2008 Dixie Crow Symposium, Warner Robins, GA Slide 6 Project Management - PERT/CPM PERT/CPM – both methods require knowledge of the critical path. 2 A,5 13456910 7 8 11 B,8C,15 D,12 F,8 E,10 G,11 H,5 I,4 J,2 K,8 L,14 M,5 N,5 0 0 Critical Path – the longest path through the precedence network diagram. Precedence Diagram – graphically describes which tasks must complete before others begin, and which tasks can be performed in parallel.

7. March 20, 2008 2008 Dixie Crow Symposium, Warner Robins, GA Slide 7 Critical Chain Management Developed by Eliyaha M. Goldratt – 1997 An application of his Theory of Constraints as applied to project management. First major work on project management since PERT/CPM. Goldratt References: The Goal, a process of ongoing improvement, 1984 Theory of Constraints, 1990 Critical Chain, 1997

8. March 20, 2008 2008 Dixie Crow Symposium, Warner Robins, GA Slide 8 Theory of Constraints (TOC) Overall Idea – The goal of a company is to make money. The theory of constraints is a methodology to help identify what might be hindering a company from obtaining its goal, and how to achieve the goal. The Goal is a fictional account of a manufacturing plant which significantly improves its production capacity (and other measures) through the application of TOC.

9. March 20, 2008 2008 Dixie Crow Symposium, Warner Robins, GA Slide 9 Theory of Constraints (TOC) Identify the system’s constraint/bottleneck Exploit the constraint (squeeze the maximum capacity out of it without altering capacity capability) Subordinate everything else, don’t put improvement efforts into non-constraints, focus on bottleneck Elevate if still needing more throughput (add more capacity to constraint) Go back to Identify, (continuous improvement)

10. March 20, 2008 2008 Dixie Crow Symposium, Warner Robins, GA Slide 10 Back to Critical Chain Production World – production throughput is like a chain. Production flows from one operation to the next. Op 10Op 20Op 30Op 40 A chain is only as strong as its weakest link The weakest link is the bottleneck operation No value in improving other links of the chain (e.g. Subordinate everything else)

11. March 20, 2008 2008 Dixie Crow Symposium, Warner Robins, GA Slide 11 Chain Physics -If chained machines all working at full capacity, and capacity is equivalent on each machine, and if there exists any variance in production, the chain will never produce at capacity. -The greater the variance, the less the production. -The longer the chain, the less production. Op 10Op 20Op 30Op 40 -Manufacturing managers/engineers attempt to mitigate the chaining effects

12. March 20, 2008 2008 Dixie Crow Symposium, Warner Robins, GA Slide 12 Critical Chain and Project Management Current State of Project Management World – 1.Only way to protect the whole (project) is through protecting the completion date of each step. 2.Therefore, we pad each step with safety time. 3.We then suffer from three mechanisms, when combined, waste most of the safety time. a.Student syndrome (start as late as possible) b.Multi-tasking (switching between tasks without completing) c.Delays accumulate, advances do not 4.Thus, projects tend to complete late.

13. March 20, 2008 2008 Dixie Crow Symposium, Warner Robins, GA Slide 13 Critical Chain and Project Management Why Current State of Project Management? Cause and Effect: Wrong measurement, each task’s (or manager’s) performance is measured to their specific task. No incentive to finish early since re-budget of time/dollars based on “last time” will result. A delay in one step is passed to the next, while an advance in one step is usually wasted before the next.

14. March 20, 2008 2008 Dixie Crow Symposium, Warner Robins, GA Slide 14 Critical Chain and Project Management Project Management World – so what is the bottleneck operation in project management? Ans. – the critical path. 2 A,5 13456910 7 8 11 B,8C,15 D,12 F,8 E,10 G,11 H,5 I,4 J,2 K,8 L,14 M,5 N,5 0 0

15. March 20, 2008 2008 Dixie Crow Symposium, Warner Robins, GA Slide 15 Thus, TOC applies to project management where: The bottleneck/weakest link of the chain is the critical path. Identify the critical path Exploit Subordinate Elevate Go back to Identify, Critical Chain and Project Management

16. March 20, 2008 2008 Dixie Crow Symposium, Warner Robins, GA Slide 16 Thus, TOC applies to project management where: The bottleneck/weakest link of the chain is the critical path. Identify the critical path Exploit the constraint – ensure the critical path is never compromised Subordinate Elevate Go back to Identify, Critical Chain and Project Management

17. March 20, 2008 2008 Dixie Crow Symposium, Warner Robins, GA Slide 17 How do you Exploit the constraint? One way in manufacturing: Ensure the bottleneck operation is never idle by maintaining inventory in front of it. Critical Chain and Project Management X Bottleneck Operation Inventory

18. March 20, 2008 2008 Dixie Crow Symposium, Warner Robins, GA Slide 18 How do you Exploit the constraint? On the critical path: Original: With all safety moved to end of project: Critical Chain and Project Management Step 1Step 2Step 3Step 4 Step 1Step 2Step 3Step 4 Safety Buffer Note, only 50% chance of finishing each task on time, Management must change way of thinking, i.e. OK to be late some times.

19. March 20, 2008 2008 Dixie Crow Symposium, Warner Robins, GA Slide 19 Thus, TOC applies to project management where: The bottleneck/weakest link of the chain is the critical path. Identify the critical path Exploit the constraint – ensure the critical path is never compromised Subordinate – everything else Elevate Go back to Identify, Critical Chain and Project Management

20. March 20, 2008 2008 Dixie Crow Symposium, Warner Robins, GA Slide 20 How do you Subordinate everything else? To the critical path: Restate task times for non-critical steps, removing safety time and starting them such that safety is at the end. Critical Chain and Project Management Step 1Step 2Step 3Step 4 Safety Buffer Step a1Step a2 Step b1Step b2Step b3 Feeding Buffer Feeding Buffer

21. March 20, 2008 2008 Dixie Crow Symposium, Warner Robins, GA Slide 21 Impact of new way of approaching project management - Critical Chain and Project Management Step 1Step 2Step 3Step 4 Safety Buffer Step a1Step a2 Step b1Step b2Step b3 Feeding Buffer Feeding Buffer Need new performance measures – Performance of critical path (e.g. % completion of c.p.) Measure provided by person working on current critical path task, estimating number of days until finished also monitor remaining days in feeder buffers (modify buffers as actual times realized in preceding steps) Use relative buffer consumption to synchronize priorities and make early course corrections.

22. March 20, 2008 2008 Dixie Crow Symposium, Warner Robins, GA Slide 22 Thus, TOC applies to project management where: The bottleneck/weakest link of the chain is the critical path. Identify the critical path Exploit the constraint – ensure the critical path is never compromised Subordinate everything else, Elevate reduce task times, Go back to Identify, Critical Chain and Project Management

23. March 20, 2008 2008 Dixie Crow Symposium, Warner Robins, GA Slide 23 How do you reduce task times? Training Improved methods / technology Improved designs Motivate employees Provide incentives – reward early completion, penalize being late Others? Critical Chain and Project Management

24. March 20, 2008 2008 Dixie Crow Symposium, Warner Robins, GA Slide 24 Thus, TOC applies to project management where: The bottleneck/weakest link of the chain is the critical path. Identify the critical path Exploit the constraint – ensure the critical path is never compromised Subordinate everything else, Elevate reduce task times, Go back to Identify, are there other constraints? Critical Chain and Project Management

25. March 20, 2008 2008 Dixie Crow Symposium, Warner Robins, GA Slide 25 Is the critical path the only constraint? - Critical Chain and Project Management X Safety Buffer X X Feeding Buffer Feeding Buffer Resource X in this case could cause all or some feeding buffers to become exhausted, would this cause all paths to become critical? Hopefully not, must be a better way to manage. X Feeding Buffer Critical path

26. March 20, 2008 2008 Dixie Crow Symposium, Warner Robins, GA Slide 26 Call the resource constraint a critical chain? - Critical Chain and Project Management X Safety Buffer X X Feeding Buffer Feeding Buffer This critical chain could be a longer path than the original critical path. X Feeding Buffer Critical path Critical chain

27. March 20, 2008 2008 Dixie Crow Symposium, Warner Robins, GA Slide 27 Feeding buffers have moved before critical path - Critical Chain and Project Management X Safety Buffer X X Feeding Buffer Feeding Buffer Still a problem for X, top two feeding buffers have X scheduled at the same time. What to do? X Feeding Buffer Critical path Critical chain Feeding Buffer

28. March 20, 2008 2008 Dixie Crow Symposium, Warner Robins, GA Slide 28 Feeding buffers have moved before critical path - Critical Chain and Project Management X Safety Buffer X X Feeding Buffer Feeding Buffer X Feeding Buffer Critical path Critical chain Feeding Buffer

29. March 20, 2008 2008 Dixie Crow Symposium, Warner Robins, GA Slide 29 Depot Maintenance An outsiders view: Depot Maintenance – Is it manufacturing or is it project management? Each aircraft is viewed as a project. Flow days – a key depot performance measure Variability of Process Time – a goal of manufacturing is to eliminate variability the nature of depot maintenance is to manage variability Critical Chain Management – uniquely positioned to manage variability and help reduce flow days.

30. March 20, 2008 2008 Dixie Crow Symposium, Warner Robins, GA Slide 30 Depot Maintenance An insiders view: There is inherent variability in repair work making it difficult to follow schedules. There is competition for mechanics, support resources, facilities, and other equipment within and across aircrafts – work waits in queue. Unpredictable / over and above work cause schedule delays Parts shortages cause delays. Some parts have long lead times. Frequent priority changes forces workarounds and constant shifting of resources (Multi-tasking) Administrative delays (inspection reports, customer approval, etc.) Carry over work from one area disrupts progress in subsequent areas. Operations checks and testing can result in rework that cause schedule disruptions late in the project.

31. March 20, 2008 2008 Dixie Crow Symposium, Warner Robins, GA Slide 31 Conclusions Critical Chain Management - explores why projects tend to be late, and develops an interesting approach to mitigating this problem. Move safety to end of project and to feeding buffers Manage feeding buffers Remove multi-tasking Depot Maintenance – more like project management than traditional manufacturing. Manage variability, can’t eliminate. Critical Chain Management – uniquely positioned to manage variability and help reduce flow days.