Quality Tools

In: Business and Management

Submitted By Teddy1986
Words 2693
Pages 11
Know the Laws. Use the Tools. Profit.

Factory Physics® Principles for Managers—Fourth in a
A series of articles designed to help managers and executives better control and optimize their operations through a solid understanding of the practical science that governs their environments.

Managing Variability
Variability is an unavoidable fact of life that is best managed through understanding the tradeoffs it presents. Variability is a double-edged sword—it can be good, e.g. having more than one product to offer to your customers, or variability can be bad, e.g. machine breakdowns or order cancellations. As an executive, your strategic solutions for managing variability in your environment are two fold:
First, determine the amount of “good” variability that you require to be successful in your market and
Second, determine the lowest cost combination of buffers (inventory, capacity and time) and efforts at reduction of “bad” variability to ensure you succeed in your market.
For most manufacturing and supply chain managers, the luxury of setting demand levels and product offerings is not one of your options. However, Factory Physics principles provide practical scientific relationships such as the VUT equation and practical buffer management strategies for getting the best possible performance out of the operations in your span of control. In any case, the key to success is in understanding the effects of variability on value stream behavior and then managing the tradeoffs to your advantage.
To review, the Factory Physics framework starts with a fundamental definition of a value stream: a value stream is a structure of flows and stocks providing transformation to meet demand (see “Defining a Value Stream” in the third article in this series). The most profitable situation is when demand and transformation are completely synchronized.
Unfortunately, perfect…...

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