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TOCICO International Conference - PROGRAM

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July 16-19, 2017
Melia Hotel in Berlin, Germany.


Anthony Fouque, Consultant and Trainer at AGILEA S.A.S


 

The company is working on the equipment of Oil & GAS market. It means that we are proposing dedicated equipment to support the building of different kind of refineries. The environment is typically an Engineering to Order activity where 90% of the Bill of Materials has to be drawn and will be never used anymore.

Usually BOM and Routine are designed, then Purchasing department is placing Supply orders which are machined or go directly to the assembly shop. Then the assembly shop is building the final product that customers come to inspect before shipment.

The current issues of the company are the following one: Late deliveries to customers, difficulties to synchronize Supplier’s flow and very high inventory despite everybody is running to get things done. Basic facts are about 20% On Time Delivery, 6 months inventory, and high emergency expenses (overtime, express shipment, etc.). Moreover, the assembly shopfloor is full of shortages and production stop due to them. At the beginning, we only had 2 final products ready to be assemble compared to a customer demand around 10 per day ! So we started to build the current reality tree about this system. We discover many policies, measurement, behaviors and conflicts which were increasing this phenomena. For example, everybody has to be busy. So the production manager is chasing idle operators while the operators are pushing to get incomplete kits to show they are working. Doing the CRT, we discovered that these kind of examples connected to our main conflict which was to manage or not the uncertainty of the system, was pushing us against the flow.

Consequently we identified our constraint and decided to protect it with a specific buffer. Additionally to that, in the machining shopfloor, we also add a bottleneck and non-bottleneck, we decided to protect while pulling flow using DBR approach and methodologies. Actually, this second part was more related to the potential we had once we solve the current real issue. 3 weeks later having implemented this buffer to synchronize the upstream flow, the assembly shopfloor did not have any stop blocking them to release around 10 final product per day. It is still the case 5 years later ! Due to the fact, that parts are more synchronized, the flow increased a lot and was more smoothly. Consequently Raw Materials Inventory almost divided by 3 in 12 months and the site is still the best in terms of inventory turn. The second on the ranking is closed to this site because we duplicated our approach with them. To duplicate our solution, we build with them their CRT/FRT and
let the team adapt their solutions by themselves which was much quicker from a change management point of view.

From the current site where we first applied this approach, the financial net profit doubled in 12 months moving from 10 to 22% ! for the second one, the profit went up from 15% to 34% in 18 months!

The major failure we had very quickly is that we neglected that our customers was not trusting us. Consequently we had a huge amount of final production waiting our customers to inspected. At this stage, we discovered that our customer took also their own protection against us ! So due to the fact, that we were better in delivery, customers were not in the hurry to inspect their orders or when they were coming, they were looking for good/bad reasons to not validate the products (eg. We had a customer who did not give us the shipment agreement because the documentation was not in the good word police…). Internally, we had a big capacity whole to take control of that and add to make insourcing decision to use our capacity.

The other major obstacle was with our machining shop floor because we had very quickly extra capacity we did not know how to use. Despite the training, reading of CRT/FRT, etc., people were afraid of not having job anymore and did not understand why nobody was blaming them anymore about their idle time. We had to find other way to use our extra capacity. First of all, we insourced lots of parts we were buying to our suppliers. It helped a lot to increase profit but we still had lots of extra capacity. This is why, we needed to market a wider analysis and had to increase speed in development and technologies which is the second case study.

One of the negative branch we faced was the sustainability. The best way for us to do that was to train our team and be trained by TOC experts. Since 5 years, several managers had be trained on CCPM (Skip Reedy), DBR (C. Ptak) and Thinking Process (Bill Dettmer). We founded it was much better that way instead of only internal overlap between managers. Today results are still there and improving while 3 supply chain managers came into the position (not knowing each other), schedulers change as well as purchasing manager. The other reason why the sustainability is still there is also due to the fact that all the managers went promoted to different internal role like Europe Supply Chain, Site Director, Engineering Manager, etc. It helped to duplicate the thinking and keep the approach on good hands.

As said previously, at this stage, the main challenge was to know how to use our extra capacity inmachining.

The company is working on the equipment of Oil & GAS market. It means that we are proposing dedicated equipment to support the building of different kind of refineries. The environment is typically an Engineering to Order activity where 90% of the Bill of Materials has to be drawn and will be never used anymore.

Usually BOM and Routine are designed, then Purchasing department is placing Supply orders which are machined or go directly to the assembly shop. Then the assembly shop is building the final product that customers come to inspect before shipment.

Due to our DBR implementation, we add lots of extra capacity in our machining area. Due to the fact that the machining process is very technical, it is very dangerous to not keep the resources inside the organization. Consequently we had to find solutions about that. Machining could be considered as an internal suppliers.

One of the aspect is that, this internal supplier is challenged as external ones with cost per unit approach. By the way, this supplier also belongs to the scope of European Supply Chain function which is in charge to develop Supply Chain Flow solutions for the company. This function is typically oriented on projects. Their jobs are to set up Supply Chain Solutions to improve Sales (through LT reduction), Reduce inventory (with Pull Flow approach) and reduce expenses (with Cost per unit). Everybody was managing quite a big quantity of projects (around 60 with 5 employees…).

Our first comment was to say that our team had probably much more potential than we first imagine! So we build the CRT with them and agreed on usual project issues like release of projects ASAP, Multitasking, KPI based on cost and % of achievement. Moreover, we discovered that the team had been lots of pressured and so trust in management was very limited.\

Consequently in the direction of the solution, we decided to focus more on Management Policies, Behavior than technical TOC solutions like buffers and so
We implemented very quickly pipelining while we were freezing useless projects. The way we reduced projects had been a proof for the team that management is willing to change. We ask them : give us the list of projects where a manager did not came to you for an update for more than 3 months ? in 20 minutes, we froze and/or cancelled almost 30% of the list of project. Then we looked for the % of project achievement and decided to freeze every projects below to 60% of achievement. It helped a lot to improve focus on the team of what was to be done.

Then we built with them Project Network Diagram of the projects still in progress in order to understand much better their projects. We implemented visual management of the tasks and pull the flow of tasks in order to eradicated multitasking of each projects. The direct consequence is that in few weeks, the team closed almost the same quantity of project than the previous year !! We did not release new project until we achieved an acceptable level of projects WIP. Once it was done, we were releasing project according Throughput of the system. Several projects could be released and offered to the market, especially those which could use the machining capacity :

  • Develop a spares parts market
  • Develop late customization program with customers
  • Set Up 3D printing technology to support prototypes before Customer agreement
  • Improve insourcing strategy of the machining
  • Develop a quick ship service : Customer are ready to pay more to get their orders quicker.
  • Etc.

As said previously, the team was working in the Europe and Middle East area. In few month, the team finished the same amount of projects which was done at worldwide level !
The major obstacle, we had, was to admit that our level of competency in project management was much lower we imagined. It was true that management changes helped to get (very) good results. However, when we started to go into the scheduling and execution, we discovered that Project Network Diagram building or daily review of projects was not part of the best practices of the company. The negative branch was that the results were already very good without that and we had to validate that not doing such level of details will not ensure the sustainability of this change management process.

The sustainability of this case study was mainly the same as the one of DBR : Training and mixing the team together. Actually we reinforce the team by increasing their knowledge on the project network diagram. Due to the high variety of types of project, the scheduling is an problem but not an issue. However, not knowing how to build a project network diagram is critical. It is now a part a the induction plan to be trained into Project Network Diagram building.

To conclude these case studies, our main lessons learned is that Management Attention is the main constraint of organization while it is the easiest lever to manage it. Team who are still driving changes share that Thinking Process are probably one of the best process they know to deep dive problem in a participative way. Once these types of changes are agreed, change management is smoother even if we had to be very careful to complete the job to ensure sustainability of the system. Finally, we feel that tools may have helped (specially CCPM tools) in order to accelerate some parts of our plan.

  • Now in a consulting position in France to promote TOC body of Knowledge across the country.
  • 12 years of experience as Supply Chain Management, Continuous Improvement Leaders, Plant Operations Manager & EMEA Supply Chain Directo
  • 12 years of experience in Supply Chain & TOC Implementation for Aircraft and Oil and GAS companies.
  • Experience in S&Ops implementation and Lean/TOC Strategic Planning process development, Full Critical Chain implementation.
  • Trained by Bill Dettmer on LTP, E. Schragenheim on Decision Support to TOC, Skip Reedy on CCPM.
  • TOCFE, SC&CCPM implementer – DDMRP Instructor
  • Questiologue & Synergologist
Contact me : Anthony.fouque@agilea.fr or Linked In