For example, reducing labor to reduce operational expense may decrease throughput.Be wary of a change that affects only one of these metrics - there may be second-order effects that backfire.For example, if you install robots, it should increase throughput by increasing sales, decrease inventory needed, and/or reduce labor costs.Ideally, you should try to improve all three at once.If it’s not part of the packaged product being sold, it’s an operational expense. It’s better not to consider where value is added - don’t get caught up over whether a dollar is investment or expense.Includes labor, leases, R&D to improve throughput.Operational Expense: the money the system spends in order to turn inventory into throughput.In contrast, R&D to improve throughput can’t be sold and isn’t inventory. * R&D that can be sold, like a patent, is inventory. * Any investment that you can sell is inventory. * In other words, this is money that is currently stuck in the system Rope: allow up to a threshold max surplus inventory, after which the non-bottleneck is idled.Buffer: provide enough buffer inventory upstream of bottleneck to prevent idling.Drum: pace non-bottlenecks production rates with bottleneck rates.If both the bottleneck and non-bottleneck go full steam ahead, the non-bottleneck will produce surplus inventory, which adds cost and causes traffic jams. The non-bottlenecks should be synchronized with the bottleneck, which means idling at non-bottlenecks is acceptable.
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