Question 3:

Q: I’d be interested in your thoughts on the current trend emerging from the Agile community on Kanban, or push versus pull systems? The latter deals with variability by not defining end dates and controlling queues and WIP limits (over-simplifying I know.)

Critical chain, as far as I can see, assumes that schedules are a good thing to manage. Pull systems tell you to manage the workflow (aka TPS).

Stuart’s A: Agile and Kanban are techniques applied to operations environments. The basis of Kanban, as you say, is that it manages flow and inventory by using buffers in a pull system. It allows operators to see defects and stops overproduction. Agile is typically used to manage variety and works best (as I understand it) in T-shaped plants where variety can be added at the end. For example in a car plant where lots of Land Rovers were being built the extras could be added at the end.

The problems occur when you try to apply the same techniques to a service system. What’s different is that that customer is involved at the point of transaction and decides what matters to them there and then. Hence the system has to have the ability to absorb the demand at the front of the system. Think of member packs in marketing communications. Though each pack starts as a white shell, the customer decides at the front of the system what they want in their pack. If the variety is added too late in the system then all that happens is waste is introduced as a result of going back and forward between the client.

In terms of Kanban it can be thought of like this: it’s helpful in processing and production environments to make sure that you understand where the capacity is constrained in the system i.e. who is most likely to be overloaded. The capacity constrained resource must be kept busy, must never do re-work and must get work clean. So because Kanban works in conjunction with a physical or time buffer a good place to start is to make sure that the capacity constrained resource is given clean work and never runs out of work as a result of poor flow. That said, in my opinion in most service organisations there is no real capacity constraint, the degree of waste (unclean info, functional design, rework, behaviour caused by targets and incentives) is such that if the system was changed you’d probably see 50%-60% capacity improvement.

The key in service organisation is to focus on flow.

In projects, Agile doesn’t apply because the network determines where the variety is added, there is no choice. However Kanban is used in critical chain. At the end of the network a time buffer is applied to provide an early warning of late running projects. Also the convergence point (the point at which all work comes together) is usually the constraint hence the resource around that point is managed to make sure that no time is lost here. In that way it’s not the schedule that’s being managed but the consumption of the buffer.

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