As Debra Smith and Chad Smith state in their book, Demand Driven Performance: “Demand driven strategy is about dramatic lead-time compression and the alignment of efforts to respond to market requirements. This includes careful synchronization of planning, scheduling, and execution with actual consumption.” The idea is that organizations position themselves and their operations to be able to respond to customers and the environment in the most agile way possible, and with the least waste (of time, money, and other resources) possible.
We’ve already covered the first step of the design process, placing decoupling points, and this blog will discuss the big ideas behind the second step of the process, which is placing control points. While these blogs will provide a useful jumping-off point, oftentimes the most effective way to successfully create a demand driven operating model for your organization is working with a trained professional who understands the process deeply and can help guide you through it. If you’re interested in learning more or beginning the process, members of our team at Repathis, are certified as Demand Driven Leader Professionals, meaning we have resources certified to analyze and evaluate organizations using the demand driven operating model and demand driven S&OP principles. Contact us here if you’d like to learn more about designing a demand driven operating model and applying demand driven principles.
Let’s tackle the second step in designing a demand driven operating model: placing control points.
What Are Control Points?
Let’s first define what a control point is. Debra Smith and Chad Smith define control points in their book, Demand Driven Performance, as:
“Strategic locations in the logical product structure for a product or family that simplify the planning, scheduling, and control functions. Control points include gating operations, convergent points, divergent points, constraints, and shipping points. Detailed scheduling instructions are planned, implemented, and monitored at these locations.”
The writers encourage organizations to think of them as “places to transfer and amplify control through the system.”
The big ideas behind control points:
- Areas in the system can be controlled from strategically placed control points in lieu of trying to control every resource at all times.
- Control points are usually placed between decoupling points to shorten the lead time and minimize variability between the points, leading to less required stock at the decoupling point.
- Control points don’t act as decoupling points, which are strategically placed inventory between processes to create independence between those processes. Instead, they help better-manage the lead times they are involved with.
- Scheduling of lead-time horizons within the system can be streamlined using control points. Once ideal completion time for a decoupling point or customer delivery is determined, the control point can be scheduled to meet that deadline. That schedule then dictates the schedule of all resources and areas within that lead-time horizon. In essence, control points set the pace of systems.
Where Should I Place Control Points?
There are multiple considerations necessary when choosing the location of control points. Debra and Chad Smith list four considerations for placing control points in their book, Demand Driven Performance:
Points of Scarce Capacity
Capacity constrained resources, or resources with limited capacity related to required load ratio, are ideal control point candidates. Because these resources have limited capacity, if they are disrupted, they could easily become bottlenecks, and therefore their schedule should be controlled and maintained.
Exit and Entry Points
Points of exit and entry are excellent places to put control points as it helps a company to create limits and control the entire process. Examples include releasing or introducing work, delivering finished work to customers or decoupling points/inventory, as well as releasing work to an outside processor. By establishing control limits especially for when work is outside of the company’s supervision, organizations can better maintain schedules.
Points where product structures or manufacturing routings converge or deviate are called common points, and they are useful in controlling many pathways from one control point. While these areas can sometimes be labeled as little-value-added, they offer incredible opportunity by providing a single point that multiple product lines and processes pass through, allowing a wealth of information to be gathered from one control point.
Points That Have Notorious Process Instability
Placing a control point on resources that are regularly instable allows an organization to focus on controlling and minimizing its instability, since the schedule and consistency of control points dictate the schedule of all resources in the related lead-time horizon. By taking the time to truly understand the instable resource, how it’s inputs and outputs work, and why it is so unstable, organizations will improve the flow of its entire operations.
Interested in learning more about control points, decoupling points, designing a demand driven operating model for your organization, or implementing software that compliments demand driven operations, like our manufacturing software, Revive? Contact our team at Repathis here.