A B C D E F G H I J K L M N O P Q R S T U V
Activity
Task or lowest level of a work structure; a quantity of work that forms the basis of a plan.
Activity Network
Group or network consisting of two or more activities with a precedence relationship.
Activation
A term expressing the behavior of a resource; active performing of a task.
ACR
— See Additional Cause Reservation
Additional Cause Reservation (ACR)
One of the Categories of Legitimate Reservation used to analyze logic trees. The term “cause reservation” describes the lack of sufficient causes to prompt an expected effect.
A B C D E F G H I J K L M N O P Q R S T U V
Banana
Shown graphically (typically on logic trees) as a flat ellipse around two or more causality arrows, it means “and.”
Batch Processing
Accumulation and processing together of groups of parts in quantities greater than one.
Bottleneck
Any resource with capacity equal to or less than the demand placed upon it.
Buffer
Protection, measured in time, for a particular resource or area. Typically, protected areas are CCRs, assembly areas and shipping. A buffer provides assurance that the vast majority of tasks will arrive at the buffer origin on time.
Buffer Incursion
— See Buffer Penetration
Buffer Management
A two-part management process that reconciles the predicted content of the buffer with the actual content, allowing corrective action to be taken. It also refers to the process of tracking historical condition of the buffers, analyzing data and taking corrective action based on the results of the analysis.
Buffer Penetration (or Buffer Incursion)
Projection of what amount of the buffer is expected to be consumed.
Buffer Size
An estimated duration of time measured from material release to the buffer origin. Components are lead-time (theoretical cycle time), variation and resource contention.
Business Process Re-engineering
A method of revisiting and implementing changes to business processes.
Buy-in
The process of committing to a concept or plan.
A B C D E F G H I J K L M N O P Q R S T U V
Capacity Buffer (or Capacity Constraint Buffer — CCB)
Part of the Drum schedule, it is the buffer that sequences the project and is sized to equal the duration of the drum task in the forerunning project.
Capacity Constraint Resource (CCR)
A resource for which available capacity limits the organization’s ability to meet the product volume, product mix or product demand fluctuations required by the marketplace.
Categories of Legitimate Reservation (CLR)
Used to check causality trees, CLRs are a set of logical fallacies that include: Clarity, Entity Existence, Causality Existence, Insufficient Cause, Predicted Effect, Additional Cause, House-on-Fire.
Causality Reservation
One of the Categories of Legitimate Reservation used to analyze logic trees. A reservation (concern) that a proposed causality exists only theoretically but not in reality.
Cause
That which creates an effect (result). If the effect is always present when the cause is present but never present when the cause is not present, causality is determined. Causes may be independent or linked to other conditions.
CCB
— See Capacity Buffer
CCPM
— See Critical Chain Project Management
CCR
— See Capacity Constraint Resource
CCRT
— See Communication Current Reality Tree
Clarity Reservation
One of the Categories of Legitimate Reservation used to analyze logic trees. A concern (reservation) that an entry on a logic tree is not readily understandable. Use of acronyms or use of descriptions that are too short may produce a clarity reservation.
Cloud
— See Evaporating Cloud or Conflict Resolution Diagram (CRD)
CLR
— See Categories of Legitimate Reservation
CM —
See Constraint Management
Communication Current Reality Tree
Replacing the CRT (Current Reality Tree) in the Thinking Processes in most ToC applications, the CCRT is a current reality tree with an Evaporating Cloud at the base. It was originally developed to promote the buy-in of a specific group of people.
Conflict Resolution Diagram (CRD)
A different name for an Evaporating Cloud type diagram.
Constraint
Any element or factor that prevents a system from achieving a higher level of performance relative to its goal. Constraints can be physical/logistical, managerial/procedural or behavioral/psychological.
Constraint Management (CM)
The practice of managing resources and organizations in accordance with the Theory of Constraints.
Contention
An event occurring when two or more tasks wait for processing at the same resource (also called non-instant availability of resources).
Contribution Margin
An amount equal to the difference between sales revenue and all variable expenses associated with that sales revenue; net from the variable money flow.
Control Points
Strategic locations (or resources) in the production process acting as pseudo constraints where the exploitation and subordination strategies are employed.
Core Conflict
The conflict identified as the reason for at least 2/3 of the existing UDEs in a system. This conflict is placed at the bottom of your CRT.
Core Problem
Used as the entry point on your CRT, this is the problem that generates, through cause-effect-cause relationships, at least 2/3 of the existing UDE symptoms in a system.
Cost Buffer
Used, for example, to manage project cost, it is the contingency or reserve amount added to task estimates to create a baseline budget for the project.
CRD
— See Conflict Resolution Diagram
Critical Chain
The longest sequence of tasks in a project after resource contention has been resolved.
Critical Chain Project Management (CCPM)
A process to plan and execute projects, combining the critical chain approach with the project management body of knowledge (PMBOK™). Addresses the root causes of why projects are routinely late and over budget.
Critical Path
Not considering the resource constraint, it’s the longest set of dependent activities within a project.
CRT
— See Current Reality Tree
Current Reality Tree (CRT)
A logic-based tool that uses cause-and-effect relationships to determine root problems that produce undesirable effects (UDEs) on the system.
A B C D E F G H I J K L M N O P Q R S T U V
DE
— See Desired Effect
Desired Effect (DE)
A positive outcome.
DBR
— See Drum-Buffer-Rope
Dollar Days
Throughput dollars multiplied by days late (throughput dollar days) or days of supply (inventory dollar days).
Drum
The detailed schedule for the control point resource that sets the pace for the entire system.
Drum Buffer
The buffer that protects the schedule of the drum.
Drum-Buffer-Rope (DBR)
A process to plan and manage the manufacturing process featuring the elements of a drum, a buffer, and a rope.
A B C D E F G H I J K L M N O P Q R S T U V
Effect
The result of one or a number of causes.
Efficiency
A measure of how well resources are utilized. Efficiency is typically expressed in time but may expressed as another available component such as money.
Elevate
A term used by Theory of Constraints practitioners to mean increasing a resource.
Enterprise Resources Planning (ERP)
An information system used to identify and plan the enterprise-wide resources needed to take, make, ship, and account for customer orders.
Entity
A condition or something that exists.
Entry Point
A point on a sufficiency tree with no causes leading to it.
ERP
— See Enterprise Resources Planning
Evaporating Cloud
A logic-based tool used to surface and identify assumptions related to a conflict or problem.
Excess Capacity
Resource capacity that exceeds what the market demands and any protective capacity requirements.
Excess Inventory
The amount of inventory in the system beyond what is needed to satisfy market needs and cover for uncertainty in demand or supply.
Existence Reservation
One of the Categories of Legitimate Reservation used to analyze logic trees, it demands proof, using scientific method, that the statement of reality you’ve developed is operationally more useful than alternative statements.
Exploit (or Exploitation)
The action of working to get the most possible out of the constraint resource.
A B C D E F G H I J K L M N O P Q R S T U V
Five Focusing Steps
A process used to continuously improve organizational profit. The five steps are: 1) identify the system constraint, 2) decide how to exploit the system constraint, 3) subordinate all non-constraints to the system constraint, 4) elevate the system constraint, 5) repeat the process if the constraint is broken, while not allowing inertia to set in.
Float
Also called slack. In Critical Path project management, it’s the difference between the critical path and converging path.
Flush
The time from investment to net profit by days, expressed in units of dollar days.
Focusing Steps
— See Five Focusing Steps
Future Reality Tree
A logic-based tool used to construct and test potential solutions prior to implementation. The objectives are to: 1) develop, expand, and complete the solution and 2) identify and solve existing problems while preventing new problems from being created by implementation of the solution(s).
A B C D E F G H I J K L M N O P Q R S T U V
Global Measures
A set of financial and operational measurements used to reflect the overall performance of a company. Net profit, Return on Investment (ROI) and cash flow are examples of financial measures.
Goal
The single end toward which all effort is directed, the purpose for existence.
Goal, The
Eliyahu M. Goldratt’s book that is widely considered to have introduced the Theory of Constraints.
A B C D E F G H I J K L M N O P Q R S T U V
Hockey Stick
A comparatively flat curve that suddenly rises rapidly. Typically, it refers to the shipping pattern of organizations, where most shipments occur in the last period being measured (last week of the month, quarter, etc.)
Hole
A task missing from the planned buffer.
House-on-Fire Reservation
One of the Categories of Legitimate Reservation used to analyze logic trees. It refers to the relationship of cause and effect. The smoke is an effect of the fire, not the cause. We know the house is on fire if we see smoke.
A B C D E F G H I J K L M N O P Q R S T U V
Idle Capacity
Unused capacity.
Idle Inventory
Currently unneeded inventory.
Injection
Action or intermediate objective leading to desired effects (DE).
Intermediate Objective (IO)
Prerequisite to the next injection.
Inventory
All the money the system invests in purchasing items it intends to resell. Typically, this refers to inventory items, but is more broadly defined to include all assets.
IO
— See Intermediate Objective
A B C D E F G H I J K L M N O P Q R S T U V
JIT
— See Just-in-Time
Jonah
An expert in the Theory of Constraints, a designation that originated as the name of a problem-solver character in The Goal, Eliyahu M. Goldratt’s best seller. One who thinks in terms of cause and effect and uses the Socratic method to teach.
Just-in-Time (JIT)
A manufacturing philosophy based on purging of all waste in conjunction with continuous improvement of productivity.
A B C D E F G H I J K L M N O P Q R S T U V
Kanban
A signal for activity, more broadly interpreted to refer to a scheduling system; a method of Just-In-Time production that identifies standard containers or lot sizes with a single card (Kanban) attached to each. A pull system, it uses the Kanban to signal when work centers should begin work.
A B C D E F G H I J K L M N O P Q R S T U V
Lean Manufacturing
A manufacturing method centered on identifying and eliminating waste throughout the value stream. The principles of Lean key to waste elimination include customer focus, value, flow, and pull.
Local Measures
Sub-measurements of the Global Measurements of any
resource, operation, process or part.
A B C D E F G H I J K L M N O P Q R S T U V
Manufacturer’s Guide to Implementing the Theory of Constraints
Book by Mark J. Woeppel, President of Pinnacle Strategies. and available on the internet at http://www.pinnacle-strategies.com
Mean
The average. Typically used in Critical Chain applications. 50% probability.
Mode
Number or value in a set of numbers or values that occurs most frequently.
MRP II system
Planning that strives to incorporate all the resources used by a manufacturing company through linked functions for business planning, sales and operations planning, production planning, master production scheduling, materials requirements planning, capacity requirements planning, and execution support.
A B C D E F G H I J K L M N O P Q R S T U V
Necessity Tree
A logic tree where the items at the arrow tails must exist if the items at the arrow heads are to exist.
Need
Requirement that must be met as it pertains to a goal.
Negative Branch
An expression of the logic tree that is built when an
injection leads to negative consequences.
Non-bottleneck
Any resource with a capacity that exceeds the demand being placed upon it.
Non-instant Availability of Resources
— See Contention
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Operating Expense
The money the system spends to convert inventory into throughput.
Opportunity Time
Time available for improvement activities; idle time inherent in a non-bottleneck that is not needed for processing as protective capacity.
OPT
A scheduling software (optimized production technology).
OPT Concepts
The nine rules of OPT were early expressions of how to manage a manufacturing enterprise using constraint management.
1. Balance flow not capacity.
2. The level of utilization of a non-bottleneck is not determined by its own potential but by some constraint in the system.
3. Activation and utilization of a resource are not synonymous.
4. An hour lost at the bottleneck is an hour lost for the total system.
5. An hour saved at a non-bottleneck is a mirage.
6. Bottlenecks govern both throughput and inventory in the system.
7. The transfer batch may not and many times should not be equal in size to the process batch.
8. The process batch should be variable, not fixed.
9. Schedules should be established by looking at all constraints simultaneously. Lead times are the result of a schedule and cannot be predetermined.
A B C D E F G H I J K L M N O P Q R S T U V
Performance Measures
Measures linking operational decisions to organizational profit.
Pinnacle Pit Crew Technique
The harnessing of a race team pit crew analogy to realize a dramatic reduction in lead times and substantial improvement in labor productivity.
Pinnacle Strategies
The name given to both the strategic thinking behind ToC implementations on three continents and the company that has executed them.
PMBOK™
— See Project Management Body of Knowledge
Policy Constraint
A type of constraint that is characterized as a rule, management policy or thinking pattern.
Predicted Effect Reservation
One of the most powerful Categories of Legitimate Reservation (CLRs) used to analyze logic trees. Used to challenge entity existence and /or causality existence, it says, in effect, “I don’t believe the cause you have postulated produces the predicted effect. I can see other areas where the cause exists, but not your predicted effect.”
Prerequisite Tree
A logic-based tool used to identify and overcome obstacles that block the implementation of a solution or idea.
Priority
The ranking or importance assigned to a project, typically used to determine access to the drum resource.
Process Batch
Number of units processed at a work center before requiring another setup.
Product Structure
The relationship of parts to one another, expressed as parent-child.
Productive Capacity
The time a resource is available to satisfy the needs of the market.
Productivity
An overall measurement used to evaluate the ability to produce a good or service. It is the actual output of production compared to the actual input of resources. Productivity is a relative measure across time or common objects.
Project Buffer
Intended to protect the overall schedule, it is the time buffer that is positioned at the end of the critical chain.
Project Management Body of Knowledge (PMBOKTM)
A project management resource developed by the Project Management Institute; their description of a complete project management system available on the internet at http://www.PMI.org
Protective Capacity
The capacity of a particular resource that compensates for statistical fluctuations.
Protective Inventory
Relative to the protective capacity, the amount of inventory required to overcome variation in supply and demand to achieve a pre-defined rate of throughput, sometimes called the inventory buffer.
A B C D E F G H I J K L M N O P Q R S T U V
Queue
A line of jobs “at the ready” waiting for their turn at to be processed.
Queue Time
The amount of time a job waits during its production time.
A B C D E F G H I J K L M N O P Q R S T U V
Red Curve
The name used for the curve that typically represents a process of ongoing improvement that increases at first, then decreases.
Resource Allocation
Strategy used to assign resources to tasks.
Resource Leveling
Adjustment to prevent the resources required by the plan from exceeding the available resources.
Root Cause
Synonym for ToC Core Problem.
Root Cause Analysis
A method of preventing negative consequences (UDEs) by reviewing and evaluating system performance.
Rope
A schedule for releasing raw materials to the shop floor. Derived as a function of the drum and buffer, it assures proper subordination to the drum.
A B C D E F G H I J K L M N O P Q R S T U V
Sequencing
Scheduling in a way that assures that starting projects do not overload the drum resource.
Scrutiny
Careful inspection of a tree to uncover previously undetected categories of legitimate reservations.
Space Buffer
A physical space placed in a line or process to prevent the drum from being blocked by a disruption at a non-constraint resource. It provides a physical location for inventory allowing the drum to work at full capacity.
Subordinate
The process of creating action that is supports a “superior” process. i.e., all non-constraint resources work at the same pace as the drum resource.
Sufficiency Tree
A logic tree where items at the tail of the arrows make the items at the heads an unavoidable result.
Supply Chain
All the steps in the process from raw material to final consumption; the functions inside and outside the company that provide value to the customer.
Synchronous Manufacturing
A manufacturing management philosophy developed as an outgrowth of the OPT concepts and employed to evaluate every action in terms of the global goal. Synchronous manufacturing harnesses a consistent set of principles, procedures and techniques to move material quickly and seamlessly through the plant in harmony with market demand.
A B C D E F G H I J K L M N O P Q R S T U V
Theory of Constraints (ToC)
The Theory of Constraints is an overall philosophy developed by Dr. Eliyahu M. Goldratt and usually applied to running and improving an organization. ToC consists of Problem Solving and Management Decision-Making Tools called the Thinking Processes (TP).
Thinking Processes
Method of determining 1) What to change? 2) What to change to 3) How to cause the change. The Thinking Processes first define the system and create operational measures for reaching the goal then use the following tools: Evaporating Cloud, Current Reality Tree, Future Reality Tree, Negative Branch, Prerequisite Tree, Transition Tree, Categories of Legitimate Reservation and the Communication Tree.
Throughput
Throughput is the rate at which money is generated by a system.
Throughput Contribution
The incremental element of throughput contributed by each unit of product or service sold.
TP
— See Thinking Processes
Transfer Batch
The quantity of parts moved from one operation to the next during production.
Transition Tree
A logic-based cause and effect tool used to identify and sequence actions needed to accomplish an objective. Each transition represents a stage or number of stages needed for moving from the present situation to the preferred objective.
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UDEs
Negative effects (UnDesired Effects) blocking one or more of the conditions necessary to reach the goal of a system.
Utilization
The ratio of the actual time a resource is producing (run time only) compared to the clock time duration in which the resource is available to produce.
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V-A-T Analysis
Application of CM (Constraints Management) to determine the general flow of parts and products from raw materials to finished products (logical product structure). A V-logical structure begins with one or several raw materials and expands into a number of different products as it flows through routings. Converging points dictate the shape of an A-logical structure as many raw materials are fabricated into a few finished products. A T-logical structure consists of numerous similar finished products assembled from common assembles and subassemblies.
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