Critical Chain

Johnny tells a story about working with a vice president named Don Pederson at UniCo, where Johnny spent his sabbatical for the past year. Don asked Johnny to help figure out the specifics of a steel mill UniCo was purchasing, and Johnny spent 10 days interviewing people and inspecting equipment at the mill, concluding that they had over 20 constraints to fix. Don largely ignored Johnny’s research, and, presenting to the mill’s management, Don used a “current-reality tree,” showing how the standard measurement of tons of steel per hour created all the issues Johnny and management identified. Because of the tons per hour measurement, each department overproduced inventory, fell behind on specific orders, and frequently missed deadlines. Don identified the tons per hour measurement as the biggest constraint at the mill, then he tied all other issues into it. Johnny calls this method the “evaporating cloud,” in which two seemingly incompatible truths are compared to discover the nature of the conflict, just as Johnny performed between the “cost world” and “throughput world.” Because each department tried to match the “cost world” expectation of maximizing tons per hour, the result was chaos, and Don, using TOC, made the mill profitable in only one month of operation without buying new equipment or changing employees.

In class, Richard finds only one report on his desk, meaning the students did not complete their homework. When asked, everyone but Mark, Ruth, and Fred claims they could not get answers on how much safety is included in time estimates. Richard says that they only needed a percentage chance that work would be completed on time, since an 80% chance indicates 200% safety. The students provide anecdotes confirming that logic, and the class develops three points at which safety is added to time estimates. Workers add safety to protect themselves, managers add safety on top of that to protect themselves, and the safety of the project itself adds onto those to protect against cuts and catastrophes.

Fred brings up the issue that some individual tasks do not seem to have enough safety, delivering later than anticipated despite no delays or issues. Richard notes that this means there is likely wasted safety, and the class develops three ways in which safety is wasted. First, the “student syndrome” is the tendency of workers to delay a project because they know they have safety time factored in. Second, multitasking increases the lead times of all tasks, as a team will delay individual components of paths to focus on other paths entirely. Third, individual tasks, even when completed early, rarely provide additional time for subsequent tasks, as they are often not reported complete until their time is finished, or the subsequent task does not start until its initial schedule point, leading to wasted time for the project. The assignment for the following week is to find concrete examples of each form of safety estimate and each form of wasted safety.

Richard meets with Page, expecting to receive his tenure, but Page tells him about B. J.’s freeze on tenure. Page also tells Richard that they are not offering extensions, meaning Richard will not be teaching at the business school at all. Richard fears that Judith will leave him, and he reaches out to friends in the industry for consulting positions. When he realizes he cannot become a consultant easily, he decides to go to Jim. Jim explains the freeze on tenure and sees no way around the freeze. Richard goes directly to B. J., presenting his research into safety estimates, issues of start times, and struggles with focus, but he does not have solutions to these issues, yet. B. J. tells him to get 10 more students for the MBA program, and, in exchange, she will extend him for one year. Richard laments the change in academia, resenting that he is becoming a salesman instead of a teacher.

Richard meets with Jim, Johnny, and Charlene, another business professor. Richard, Jim, and Charlene need Johnny to explain more about TOC, as their students all seem to have more knowledge than them on this new methodology. Johnny agrees and begins drawing the chain on a chalkboard, but Richard interrupts, demanding a more specific example inclusive of potential pitfalls. Johnny complies, noting a bottleneck, assuming machine breakdowns, and illustrating how production is limited in both time and inventory by the bottleneck. As such, each center feeding the bottleneck needs to exceed the bottleneck in production to build a storage of inventory at the bottleneck, thus allowing the bottleneck to pull from excess inventory when there are production shortages, fulfilling the subordination step of TOC.

Switching to a different example to show timing, Johnny changes the links of the chain into soldiers building a road. To keep the soldiers from spacing out as they work, they agree to chain the soldiers together in an assembly line. The issue of the assembly line is that it builds inventory in front of each soldier, so they resolve that the first soldier in line should be tied to the bottleneck soldier, allowing all the soldiers in front of the bottleneck to work at full capacity and build a pile of inventory at the bottleneck. Richard struggles to translate this example from production to projects, as projects are completed once, rather than continuously cycling material into products.