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|Manufacturing Annotated Bibliography By James F. Cox III|
By James F. Cox III
Arevalo, J. and M. Birrell (2013). Using the load control mechanism as a focusing tool for sales and marketing. TOCICO International Conference: 11th Annual Worldwide Gathering of TOC Professionals, Bad Nauheim, Germany, Theory of Constraints International Certification Organization.
The Rapid and Reliable Replenishment (RRR) Strategy and Tactic tree (S&T) explains the elements to build the capability to be remarkably reliable and to capitalize on it. The most important element in the capitalize part is the mechanism known as Load Control, where operations can provide sales with safe due dates, so that the company is very likely to meet any due date that sales promises to clients. There are situations where the offer has been effective but sales drop for a while. The impression could be that it is necessary to change the offer when it is just a fluctuation of the market. On the other hand a mechanism is required to provide the company and the sales force a constant and consistent view of the throughput generated by specific market segments and clients, when the company has many segmented product lines that are not interchangeable. In this presentation, the proposition is to use the Load Control mechanism also to buffer against fluctuations in demand; being paranoid but not hysterical. Additionally the load control by product line is connected to the sales activities and focus to determine where the company needs to dedicate its attention to ensure the best possible results.
Bonatsos, S. (2013). Milk run replenishment in Cyprus. TOCICO International Conference: 11th Annual Worldwide Gathering of TOC Professionals, Bad Nauheim, Germany, Theory of Constraints International Certification Organization.
The case study presented refers to the design, application and implementation of the TOC replenishment solution in the biggest Dairy in Cyprus. The two biggest dairies in Cyprus merged their operations under a new operational model in year 2008. The merge affected all aspects of the two companies - manufacturing, supply chain/logistics, sales, IT, HR and administration. This case study analyses how the TOC replenishment solution was designed and implemented to support the creation of the new supply chain that would be able to service daily more than 2500 customers through a fleet of 150 vehicles and through 4 depots supported by a central warehouse. The whole project was realized in less than a year and it was a huge undertaking for the company, which created the new future without missing market presence not even for a single day. There are lessons learned and there is room for further improvement.
Cecere, L. (2013). What happened to the promise of supply chain planning? TOCICO International Conference: 11th Annual Worldwide Gathering of TOC Professionals, Bad Nauheim, Germany, Theory of Constraints International Certification Organization.
Why? • OBJECTIVE: To understand the current state, pain points, goals and issues facing supply chain executives. To be conducted twice a year to track changes. • HYPOTHESIS: There is a gap between importance and performance of supply chain applications. Companies that are more mature in their thinking have a greater gap. What? • Survey topics included: • Supply chain organization definition • Supply chain excellence • IT operations & trends • Supply chain pain points and focal points When and How? • Online interviews were conducted between March 9 – April 9, 2012 • Respondents were recruited via emails from Lora Cecere as well as Plan4Demand Who? • 61 supply chain executives, primarily Vice Presidents, Senior Directors and Directors • Among executives at 44 companies across 12+ industry groups (primarily Consumer Packaged Goods, Specialty Chemical and Food & Beverage).
Chim, W. K. (2013). CUSUM chart application in CCPM buffer management. TOCICO International Conference: 11th Annual Worldwide Gathering of TOC Professionals, Bad Nauheim, Germany, Theory of Constraints International Certification Organization.
Buffer management is a vital component in TOC critical chain project management (CCPM). The fever chart is one of the most common tools in managing buffer consumption. One important aspect of the fever chart is that the yellow and red zones are set based on experience and process knowledge. However, there is difficulties in identifying if a task entered the red zone has really significantly consumed more buffers versus other tasks. In this workshop, statistical process control (SPC) of buffers is briefly discussed. Shewhart charts of burn rate and project buffer consumption rate (PBCR) are presented. The relationship between the fever chart, burn rate and PBCR is discussed. Finally, this workshop demonstratse basic principles of the CUSUM chart and also how to construct a CUSUM chart in monitoring buffer consumption to identify a small drift in mean buffer consumption.
Cohen, O. (2013). Developing local operational indicators and money buffers. TOCICO International Conference: 11th Annual Worldwide Gathering of TOC Professionals, Bad Nauheim, Germany, Theory of Constraints International Certification Organization.
TOC puts extreme importance on measurements as a major influencer on the behavior of people within systems. TOC points out that improper measurements can cause existing systems to perform below their potential. Yet TOC provides just directions for the new measurements. Many companies that implement TOC logistical solutions request more concrete answers to two major questions: One, what measurements should be used in order to motivate management and the workforce to act and behave in line with the company’s goal? Two, practically, how to ensure that there is enough budget to finance the actions that management is expected to take as per the TOC solutions. This master class deals with these two practical questions. First, we define Local Operational Indicators (LOIs) for the organization level of department or a function within the organization. These LOIs help to ensure that the local activity supports the good of the company. We will suggest potential LOIs and the way to numerically and visually use them. The second part of the class suggests the development and the use of money buffers for the TOC logistical solutions. The buffers of the logistical solutions provide early warning and prompt management to take corrective actions before it become too late and too costly. Yet, these actions usually demand additional expense. The money buffers should provide the financial support and control of such actions. The application of money buffers is demonstrated for the different TOC logistical solutions.
Gilani, R. (2013). System productivity. TOCICO International Conference: 11th Annual Worldwide Gathering of TOC Professionals, Bad Nauheim, Germany, Theory of Constraints International Certification Organization.
Every organization would like to improve its productivity. However do we have a clear measure of productivity? Are we talking of workers’ productivity, supervisors’ productivity or managers’ productivity? What about the productivity of functional heads or even the CEO? Most organizations do have some measurements for the productivity of workers or for the lower level employees. Many organizations have Key Result Areas (KRAs) for the middle & senior management. While we have many surrogate measurements for performance or productivity of parts, do we have any one measurement for the whole organization? The only purpose of measurements is to help make the right decisions or taking corrective actions for achieving more and more of the goal units of the organization. Hence the system productivity measurement must state unequivocally if the organization is moving forward, stationary, or slipping back. The second criterion for such a measurement is that it should be simple to measure and people can relate to it intuitively. This is an attempt to suggest one measure for the entire organization--?ystem Productivity.
Hurtado, A. (2013). Increasing flow into customer´s world. TOCICO International Conference: 11th Annual Worldwide Gathering of TOC Professionals, Bad Nauheim, Germany, Theory of Constraints International Certification Organization.
Managers constantly are learning more and more how to PUSH. Discounts, incentives and rewards based on volume, minimum order quantity or sales based on fixed quota. These mechanisms create a lose-lose environment due to surpluses and shortages it contributes to create a long supply chain. Today we know that using TOC Distribution solution we (for sure) will be able to reduce the replenishment lead time and also to synchronize and accelerate the flow along the system. However new additional challenges will appear: how to decide the transition period to progressively introduce products? How to persuade suppliers to become part of the game?, What kind of changes should be implemented in the communication with the customer in order to ensure that results are validated and fully recognized as a consequence of the new operational model? In other words, how to ensure a smooth transition from the conventional wisdom and practices to this new environment? This time we will be sharing the experience from having the management attention focused on finding answers to these kinds of questions.
Marris, P. (2013). TOC + lean + six sigma' or TLS. What is it? Is it a threat or an opportunity for TOC? TOCICO International Conference: 11th Annual Worldwide Gathering of TOC Professionals, Bad Nauheim, Germany, Theory of Constraints International Certification Organization.
Is 'TLS' – the integration or combination of TOC (T) with Lean (L) and Six Sigma (S) – a good idea? What does it mean exactly? How do they reinforce each other? What are the incompatibilities? What are the case studies? Is it an opportunity or a threat for the TOC movement? Industrial improvement efforts over the past 20 years have been handicapped by quarrels concerning the relative merits of the different approaches and of the supposed incompatibilities or fundamental differences among them. TLS considers, on the contrary, that we should seek to combine them thereby creating a system that contains the best aspects of each movement. The author, Philip Marris, is the CEO of Marris Consulting, Paris, France. He has implemented TOC with Lean and/or Six Sigma in industry over 50 times in the past 25 years. He manages the 'TLS – TOC, Lean & Six Sigma' LinkedIn discussion group.
Milroy, P. and T. Arndt (2013). The honeymoon is over – When cost reduction moves into the house of throughput. TOCICO International Conference: 11th Annual Worldwide Gathering of TOC Professionals, Bad Nauheim, Germany, Theory of Constraints International Certification Organization.
TeledyneDalsa is a Canadian company that has been implementing various aspects of TOC in operations since 2009. This presentation covers recent challenges posed by local improvements (cost reductions), and the actions taken to redirect and refine the improvement efforts to ensure the business retains benefits already gained from TOC. We will cover the nature of the cost improvements, and some of the negative effects seen when implemented in isolation of the TOC strategies already employed. We will then cover the process and tools used to gain buy-in to a system-wide evaluation of the impact of cost reduction strategies (typically minimum order quantity and/or lead time increases). Finally we will discuss lessons learned in trying to gain and sustain buy-in when parties don’t necessarily share common goals.
Naik, R. and R. Shailesh (2013). Another Viable Vision from India. TOCICO International Conference: 11th Annual Worldwide Gathering of TOC Professionals, Bad Nauheim, Germany, Theory of Constraints International Certification Organization.
Godrej Security Solutions, a manufacturing organization cuts through chronic problems faced by the entire industry and sets seemingly unrealistic benchmarks for the rest of the field. This is no small player or new player, it is a company that has been in this business for over 50 years and is an established market leader. Implementing TOC in its entire supply chain (raw materials, manufacturing and sales), in two years, the company has more than doubled its output from the same capacity, nearly tripled its profits and doubled its profitability. It is well on its way to achieving a Viable Vision by making its sales equal to profit in five years.
Ozeki, K. (2012). How to dramatically improve TPS (Toyota Production System) flow line performance - 6 days 60% increase. TOCICO International Conference: 10th Annual Worldwide Gathering of TOC Professionals, Chicago, Il, Theory of Constraints International Certification Organization.
How do you find the capacity constrained resource (CCR) in straight flow line if workers are crowded together in a confined space? There is nowhere for WIP to pile up! Simply, place a buffer before in a station(s). Soon, WIP can be seen in front of the CCR station. Furthermore, the maximum practical use of the most precious CCR can be carried out by placing a buffer before and after a CCR to isolate interference by non-CCR. By doing that even for the already fully tuned TPS flow line, 60% of improvement in capability was attained in only six days as a result. It is interesting when management looked at this result, they enforced this technique one after another without hesitation and the production capacity of the whole factory has been improved in a short period of time. The good point of this technique does not need advanced technology.
Padhi, M. R. and P. B. Panda (2010). Tata Refractories Ltd - Early gains through TOC implementation. TOCICO International Conference: 8th Annual Worldwide Gathering of TOC Professionals, Las Vegas, NE, Goldratt Marketing Group.
The goal of this presentation is to highlight the paradigm shift in thinking processes that enables a win:win:win situation for every stakeholder. After the implementation of TOC we realized that there is harmony in any system and that there is no conflict. The early gains in terms of financial and operational numbers are excellent: 15% increase in sales of Dolomite business line, 14% increase in sales in High Alumina business line and 3% increase in FCP business line. Throughput has increased to 24% from 20%. More than 100% plant capacity is used in Dolomite and High Alumina business line. On-time in full is achieved to average of 85% from 25%.
This paper describes the integration of TOC, lean and six sigma tools to form the core of SAB Ltd.'s Focused Lead Time and Variability Reduction drive. Key learning points include: 1. Creating an improvement infrastructure; 2. Ensuring focus on the right areas of the value chain 3. Ensuring bottom line results; 4. Integrating TOC, lean and six sigma processes into organizational work practices; 5. Progress achieved to date. Benefits to attendees: 1. Gaining insights on how to create an appropriate infrastructure and state of readiness for lean/ six sigma implementation. 2. How to ensure bottom line results from your improvement initiative. 3. world class manufacturing (WCM), lean, six sigma and TOC – where to next.
Petrarolo, D. (2009). Navigating the perfect storm: A holistic approach to managing change for survival in an automotive component organization. TOCICO International Conference: 7th Annual Worldwide Gathering of TOC Professionals, Tokyo, JP, Goldratt Marketing Group.
This presentation describes how a mid-sized company in the highly competitive automotive component industry implemented a holistic approach (a systems and scientific approach) to improvement to deal with very difficult business and economic conditions. The presentation covers how the system starting conditions were addressed or changed, how the rules for managing the system were changed and how the system goal was aligned through changes in measurement. The application of change management processes, organizational design and best practice were also combined to support a business strategy for survival.
Rendon, A. (2013). Giving back simplicity to business (Releasing management attention capacity by transforming an ERP entirely to the world of TOC). TOCICO International Conference: 11th Annual Worldwide Gathering of TOC Professionals, Bad Nauheim, Germany, Theory of Constraints International Certification Organization.
The real restriction is the company’s management attention of its executives, the business reality is reflected in symptoms such as: everything is urgent, the response rate should be very high, and if we don’t have real and timely information to make decisions, opportunities are slipping. Given this, the technology has sought to provide solutions, but unfortunately the sophistication and habit of making almost everything complex, have not allowed it to be really effective for that purpose. The ERP’s have been committed years of technology to give managers the power to improve their businesses, failing mostly trying. This presentation aims to show how Plastigomez SA, a TOC company with over 5 years of experience, building, capitalizing and sustaining a decisive competitive edge in their market, recognizes the need for reliable and timely information to release capacity management attention, and turns his attention to developing an ERP project. TOC. OpenERP system was selected, which has over 6 years of operation, positioning itself as an ERP simple and robust, thanks to the efforts of a large community of developers with worldwide presence. TOCware Solutions SA is a partner company that has added knowledge of theory of constraints to each of the business processes implemented in OpenERP, culminating in a developed ready to use, complete and holistic.
Richards, R. and H. Robinson (2010). Short-duration-task critical chain project management. TOCICO International Conference: 8th Annual Worldwide Gathering of TOC Professionals, Las Vegas, NE, Goldratt Marketing Group.
This presentation provides an introduction to the issues and solutions of short-duration-task critical chain project management (CCPM). Short-duration-task CCPM deals with projects in which a significant portion of the activities has durations of minutes or hours, and where status updates are needed on sub-day intervals. In addition, how to deal with the injection of new tasks or whole projects is addressed. Application areas include certain healthcare and manufacturing applications.
When companies manage their production according to drum-buffer-rope (DBR), and their projects according to critical chain project management (CCPM), they improve performance –they improve the flow of the goods or services they provide, and in the process become much better at meeting the commitments they make to their clients, and significantly increase their productivity. However, there are many companies that have operations that are considered 'production,' but have some characteristics that could be characterized as 'more projects than production' – for example, instead of touch time which is negligible relative to the lead time, their touch time comprises 20% or more of the lead time. Or, they have operations that are considered 'projects', but have some characteristics that could be characterized as 'more production than projects' – for example, instead of a highly complex 'A' type flow structure to build what they sell, they have a much simpler, more linear type of process.
The presentation objective is to share insights about managing stocks (make-to-availability) in V-plants in which there is no control over the outputs (low-yield production environments). The presentation includes: identifying an environment that falls under this scenario; a case study of an environment with multiple quality levels; and a generalization to other environments that can use the same mechanism. Attendee benefits include: Learning how to model a typical V-plant environment in the supply chain; understanding how to choose the best modeling for an environment taking into account various considerations; and learning how to deal with high scrap rates in the process. In V-plants, very few raw materials are processed into multiple finished goods. These finished goods are sometimes the result of different processes; different quantities used or sometimes even the result of some uncontrolled variable. In these cases, we’re getting an unpredictable number of different end items. Sometimes we have enough statistics to know how many of these items will turn up as one of the end products. The case study details an environment in which we receive 4 different qualities of an item. All the qualities can be sold, as different customers need different qualities. The challenge lies in how to model the environment in order to receive the best availability coupled with the lowest inventories.
This presentation shares some insights about managing work orders in a manufacturing plant in which the touch time is a relatively high percentage from the production lead time for both make to order (MTO) and make to stock (MTS) environments. A theoretical description and a case study is provided. There has always been a grey area between when to use the production solution versus the project management solution. There seems to be a grey area where neither solution works really well. High touch time is defined as being greater than 20% of the lead time with the total lead time being quite long (weeks or more). Two environments are provided: a high touch time operation that is not competing on a resource (a subcontractor work, a drying operation, a chemical process, an operation dependent on client approval, etc.) and a high touch time operation that comes from using a resource that tends to work slowly (relative to the market expectation for a lead time) (a CNC long operation, a resource which requires a long processing time, a manual operation that requires a large amount of time such as assembly). Buffer penetration is used in simplified drum buffer rope. Elmwood City Forge (a job shop company) is used as an example of the approach. Negative branches were created illustrating theoretical problems of high touch time and the Elmwood City Forge validated these negative branches. Lessons learned are provided.
Schragenheim, A. and A. Weisenstern (2005). Inherent simplicity in managing a job shop. TOCICO International Conference: 3rd Annual Worldwide Gathering of TOC Professionals, Barcelona, Spain, Goldratt Marketing Group.
This presentation describes the use of Inherent Simplicity software in a job shop environment. The flow is from design/engineering to production to integration/assembly. One implementation was for a die manufacturing with each die being different with approximately 1000 manufacturing orders on the floor at one time. The problems include: the integration process takes a long time; the integration might require rework in an unknown amount; and peaks in design and integration causes bad multitasking. The design/engineering and the integration/assembly areas could be treated as a project environment (critical chain (CC) project management) and the production as a production application (drum buffer rope, DBR). Neither approach CC or DBR solved all existing problems. Most of the problems and delays occur at integration/assembly. Therefore three buffers were used; one for each area (design, production, and integration).
Schragenheim, E. (2007). Make to availability and beyond using market buffers and/or capacity buffers to enable both growth and stability. TOCICO International Conference: 5th Annual Worldwide Gathering of TOC Professionals, Las Vegas, NV, Goldratt Marketing Group.
This presentation defines make to availability (MTA) in detail and compares it to make to stock (MTS) and make to order (MTO) environments. MTA is a commitment to the market, or to specified clients, to maintain enough availability at a specific warehouse to be able to deliver immediately upon request at all times. This definition is different from MTS where no firm commitment is given. A MTO environment that requires shorter delivery time than the production lead time, calls for MTS that is similar, but not the same, as MTA. The concepts of market and capacity buffer are presented. The types of protection for make to availability, load and capacity, buffer management, and tolerance time are described. The planned load for MTA should not be over 80% of the time horizon. When excess capacity goes down the replenishment time goes up exponentially.
The strategic approach to commitment to availability. Replenish-to-availability - the assumptions behind the TOC technique. Replenish without commitment to availability. Dynamic buffer management (DBM) – advantages and limitations. Managing clients that are not the end users. Managing suppliers – the role of throughput value days (TVD). The full picture of managing the supply chains.
Schragenheim, E. and K. Kothekar (2013). Implementing the process of high level decision making - A case study. TOCICO International Conference: 11th Annual Worldwide Gathering of TOC Professionals, Bad Nauheim, Germany, Theory of Constraints International Certification Organization.
One year after Eli Schragenheim has presented his vision within the Goldratt Foundation day, comes the demonstration of the proposed process for a manufacturing company producing files and drills, JK Files (India) Limited. The previous presentation was fully theoretical, pointing to a way in the future, without demonstrating real management dilemmas and how the process supports the decisions by surfacing the basic assumptions and how they are translated into bottom line results. Eli Schragenheim and Vector Consulting Group collaborate to materialize the vision and provide the TOC community with a demonstrated process of a case study. In this 30 minutes presentation Eli and Kiran would show several critical high level specific business dilemmas and how they have been analyzed, using the expanded form of throughput accounting of last year.
Schragenheim, E., moderator, et al. (2012). Panel discussion: Sustainable success. TOCICO International Conference: 10th Annual Worldwide Gathering of TOC Professionals, Chicago, Il, Theory of Constraints International Certification Organization.
Sustainable success: What can we learn from its successes or failures? A couple different companies discussed how they sustained success. Fleetguard's identified its biggest problem as subordination to other departments. To overcome the problem we used the carrot and then the stick. The stick had to be used. One huge challenge is the urge to do management by wandering around. People are our biggest asset. But in a downturn people are the first to go. Now, no matter what happens at Fleetguard no one will be laid off. If something happens all employees will be paid for two years. How to sustain success? What is your dream? You define what is your success and how to sustain it. One point is a money buffer for failures. You can learn a lot from failures. A conflict exists when a new manager comes in and you have his ego versus the company that is on TOC. The conflict exists because the new manager thinks he is hired for his ideas amd he wamts to change Fleetguard. The injection for this conflict is that Fleetguard likes to promote within by elevation.
Simplified drum buffer rope (SDBR) is now the official choice of Goldratt Consulting to manage production. We highlight the rational of choosing SDBR over DBR. Some new concepts have been added in the last 6-7 years to the SDBR approach: 1. The planned load: the total load on the weakest link. 2. A unique approach to managing make-to-stock environments has been developed that does not use time buffers, but instead uses one stock buffer. The planned load concept enables SDBR to manage production even when a capacity constraint resource (CCR) is truly active. The approach to make-to-stock also supports the idea of refraining from detailed scheduling of the CCR. Lately some critical additions to the above approach were made. The need to support rapid response orders and at the same time, ensure perfect delivery of existing orders in standard times has led to the development of an algorithm to ensure safe time quotations to customers, which is based on the planned load. However, in a rapid response situation we don't always know how much capacity is required when a regular order shows up, because rapid response orders might follow and consume the available capacity. A mechanism for capacity reservation is suggested. All the above new developments are now translated into software. The authors conclude the presentation by briefly demonstrating the new features of the software, with special emphasis on the planned load concept and how management should use it. The visuals of the software provide a summary of the theoretical approach and show the links to reality. The capacity reservation allocation and management is the core of the discussion. A full paper on the use of SDBR in rapid response implementation is attached. Benefits include: 1. More able to decide between implementation of SDBR or traditional DBR; 2. Understand the concept of the planned load and its practical ramifications. 3. Understand the capacity reservation needs and dilemmas.
The goal of the presentation is to explore the road to mass deployments of TOC from the experience of working with 190 small manufacturing enterprises (SMEs) in Bogotá, Colombia. The selection criteria for SMEs were sales in US $50,000 to $5 MM; mainly manufacturing; greater than 2 years old. The process design was define the goal (strategic and tactic), measurement (TOC finance), what to change (competitive analysis), to what to change (innovation plan), and how to cause the change (TOC solutions: production, distribution, and marketing). The process of ongoing improvement (POOGI) was based on a series of workshops. In most of the companies, no financial manager existed and the only information available was sales and the bank balance. Common problems were no financial judgment, high levels of inventory, late deliveries, low margin sales, few clients, loss of customers, and high production costs. What to change to included finance (judgment on product/service viability), production (choke the release of work), distribution (aligning production to actual demand) and marketing (target market definition and offer design). Results of the interventions are provided. Over 60% of the companies increased sales, throughput and profits significantly. Key learning points include: consulting as a mass product process for SME was useful; the importance of finance and measurements in SMEs and using the thinking processes and first step of the S&T trees were effective.
Smith, C. (2008). Beyond MRP: How actively synchronized replenishment (ASR) solves the material synchronization challenge. TOCICO International Conference: 6th Annual Worldwide Gathering of TOC Professionals, Las Vegas, NE, Goldratt Marketing Group.
This presentation describes the term actively synchronized replenishment (ASR) which is different from the traditional push (replenishment or distribution) solution. It includes manufacturing and MRP with many (6 or more) levels of bills of materials, vertically integrated business unit, etc. The underlying problem is that of the push versus pull distribution system conflict. The company wants to use lean (pull) but the company is also using a forecast to determine demand (push). The undesirable effects (UDEs) of poor material synchronization are listed and discussed. Survey statistics related to the problems of push are provided. The purchasing and fulfillment links seem to be working well in a number of companies but the MRP (all pure pull) is not functioning well. MRP was conceived in the early 50s and commercially coded in the 1970’s. The environment has changed significantly while MRP has not. The details of ASR are provided with buffer locations and the supporting logic. Examples are provided where ASR should be use. ERP (enterprise resource planning, the traditional push solution) has not solved the problem.
Actively Synchronized Replenishment (ASR) provides a no-compromise materials synchronization solution for manufacturers regardless of their preferred manufacturing methodology. In a world of improvement methodology religions, ASR is agnostic. The heart of its power is simple—material and component availability even in complex environments is tied to ACTUAL consumption. If you are frustrated with the compromises and obstacles forced into your environment by MRP this session is a must.
This presentation is a follow-up on the LaTourneau Technologies (LT) presentation given by Dan Eckerman at the last conference. This is my view of what we did versus what Dan presented which was his view. Debra provided an overview of the steel mill and what they build (oil rigs, large heavy equipment loaders). The vertically integrated supply chain with control points and strategic buffers was described. Education provided included a two-week Jonah course. Lessons learned i.e. control points in sales, engineering, front end and back end production, etc. with respect to the bottleneck capacity, measures, portfolio management, etc. were also discussed. The current design for critical chain, drum buffer rope, and the replenishment solution was described. A description of actively synchronized replenishment (ASR) was provided. These concepts were discussed for internal constraints, industry downturn and economic downturn (recession) environments.
This presentation describes the implementation of theory of constraints in a ladies fashion handbag manufacturer in China. Some raw materials come from Italy. Characteristics are: the company seldom has reorders for the same SKU; customers order twice or four times per year (seasonal forecast); flexibility in delivery lead time (20-45 days); delivery lead time (excluding shipment) averages 45 days from date of all information confirmed, material received and validated, etc.; about 20% of orders are required within 30 days; average production lead time is 45 days; high variability in daily production capacity; and WIP is very high. Undesirable effects (UDEs) include: material is in shortage when needed; production priority changes frequently; too much expediting exists; and often resources are not available when needed. The implementation objective was to achieve 0 throughput dollar days (TDD) in 120 days. Current TDD is over 100 million. After implementation lead time was 12 days compared to 45; inventory level was 500 kits compared to 3000 and due date performance was 100% compared to 60%.
Steinemann, A. and F. Nordstrom (2013). Production control: Model implementation to a job shop environment: Comparing DBR, CONWIP and due date models using simulation. TOCICO International Conference: 11th Annual Worldwide Gathering of TOC Professionals, Bad Nauheim, Germany, Theory of Constraints International Certification Organization.
Discrete-event simulation (DES) software has become the tool of choice to verify flow production processes and factory layouts in early planning stages. DES is usually used to verify strategic decisions in early phases of high priority projects to secure investments. The implementation of DES to job shops is rather limited due to the complexity of these environments. This paper presents the deployment of different production control models to a characteristic job shop environment and compares drum buffer rope (DBR), constant work in process (CONWIP) and due date models using DES software. The analyzed environment is related to a manufacturer with job shop production based mainly on a manually operated machine park with highly skilled operators. The business runs on a two-shift production and splits its load into 60% related to product type A, 36% to product type B and only 4% to product type C, while 64% are related to spares. The yearly output of 20,000 parts covers 1,500 different components of the three product types. The high product variance of the product portfolio results in a complex scenario with an indicated need for prior simulation with DES in order to assess the best control model and to exploit the capacity constraint resources (CCR).
This presentation shares our road-map-to-success experience. The strategy and tactics (S&T) tree used as the roadmap includes: Yr1: Securing working capital (meeting loan requirements), whilst improving operational performance. Yr2: Acquiring additional company (integrating it operationally). Yr3: Increasing sales from €12M-to-€34M in 3 years. Yr4: Securing €48M in fourth year (end 2011). We share how to use the S&T as a roadmap (revising assumptions) yearly (2008-2011); how to get the buy-in new employees (from acquired company) to support strategy and how to implement the S&T fast/effectively. We also discuss leverage of make to availability and critical chain project management (MTA/CCPM) to increase sales in spoiled market.
Thompson, J. (2013). Developing depth on the management bench. TOCICO International Conference: 11th Annual Worldwide Gathering of TOC Professionals, Bad Nauheim, Germany, Theory of Constraints International Certification Organization.
Ambition in business requires an injection of healthy new thinking, a challenge to common practice. • Growth is based on creating significant differentiators in the market place. • Differentiation means addressing a market need in a way that no significant competitor can. • Operations must achieve new levels of performance to support the emerging market offers. • By definition – this requires management challenging their existing business beliefs and practices. Embarking on a growth strategy will stretch the current management to the limit. With increasing implementation success, management quickly becomes the organization’s ‘strategic constraint’. The organization will simply run out of management capacity. This question will constantly repeat itself: 'If you a want to grow, who is on your Team?' An interesting dilemma emerges due to the new demands placed on the company: A: Sustainable profitable growth B: Quantum levels of improvement. D: Focusing on major constraining activities/ resources only. C: Ensure corporate stability D': Focus on incremental improvement. Management is the ultimate constraint of a business. The management resource must be developed throughout the organization. The direction of the solution lies in achieving quantum improvement with the experienced management. However, equal and parallel effort must be taken to develop the next generation, small incremental improvement is the opportunity to nurture, incubate and provide opportunity for the next generation to develop technical and teaming skills plus the confidence that improvement is always possible and managing change is the path to success. Companies that exhibit sustainable growth, also have a passion to develop and grow managers as a core strategy… constantly placing challenges and demands on managers. This becomes a type of natural selection, a process by which managers push each other to achieve higher levels of skill. Much the same as Olympians push each other to the highest level of performance. Examples include: General Electric Company, Sony Corporation etc. known as a place of people development as much as delivery of goods and service. These giants have pools of emerging talent that can be unleashed on new opportunities. Developing this type of organization requires a mindset change: primarily thinking of the organization as 'Leadership Factory' producing leaders and managers, an environment where goods and service are second. Develop people and results will follow: the objective is to populate the company with competence. Leaning objectives: 1. Management is the ‘strategic constraint ‘of any ambitious company. 2. Growth is not sustainable if experienced management cannot rely on a pool of emerging talent within the organization. 3. Incremental improvement is an opportunity to identify, incubate and develop the next generation on management. Likely questions: 1. Do we have to develop everybody in the organization? 2. What about the personalities that clash when pushed to excel – will create a negative competitive atmosphere? 3. How do you motivate those how just don’t want to learn, be challenges or even speak up in a meeting?
Tobita, K. (2013). Quality improvement without improving quality - How to use TOC to make a breakthrough in the Gemba where Kaizen / 5S efforts show diminishing returns. TOCICO International Conference: 11th Annual Worldwide Gathering of TOC Professionals, Bad Nauheim, Germany, Theory of Constraints International Certification Organization.
This presentation will show the study of a wrong assumption causing diminishing return and a new assumption to drastically improve quality. In case, quality is one of the subjects, management will direct Gemba to do 5S among Japanese manufacturers, since management believes that neatness of Gemba brings good quality. So it’s necessary the first step to clean up Gemba by 5S. However, these kaizen/5S activities are just corresponding to the effects not to the causes. Therefore, the kaizen/5S efforts show diminishing returns gradually. In this case study, quality has been improved drastically by solving flooded Gemba, i.e. stagnated flow has been dissolved by TOC. How important is it to correspond to the primary cause and not to the effects is revealed in this presentation.
van der Zel, K. and M. Levit (2013). TOC demand-pull saves Colovos from liquidation. TOCICO International Conference: 11th Annual Worldwide Gathering of TOC Professionals, Bad Nauheim, Germany, Theory of Constraints International Certification Organization.
Why change? More than 50 banks rejected the company, Colovos, after defaulting on its loan. The existing bank hired a turnaround firm to start liquidating Colovos. What to Change? A shortage of cash to buy products from its Asian vendors drove Colovos’ poor performance. Inventory turns dropped as low as 1.5 times. What to change to? A simulation showed that the $3 million in cash that Colovos so desperately needed, was tied up in its inventory. Within 3 months inventory was reduced by 20%, releasing $1m in cash. This progress secured outside investment of $500k and a partial refinancing loan while the turnaround plan continued. Inventory was then further reduced to more than 50% or $3 million (from $6.1m), which allowed for full refinancing. How to cause the change? This was the BIG problem: how does one convince a bank to stop liquidation proceedings with a turnaround plan that reduces the bank’s main asset and precious collateral (inventory) by more than half?
Scheduling challenges include: organizations require distinct scheduling algorithms; and significant misunderstanding of what algorithm is appropriate. Most algorithms are cost world focused. System definition must have the system design and one must have the different scheduling algorithms harmonized and focused on throughput. The TOC systemic approach is: 1. Define the goal of the organization & the necessary conditions that the organization cannot violate. 2. Define the system within which the organization exists … the foundation …3. Define the strategy / tactics to manage the system so that the organization reaches its goal. 4. Define the metrics that the organization will use to manage its pursuit of its goal. 5. Identify the system’s constraint that prevents the organization from achieving more of its goal. 6. Exploit the system’s constraint … and the day to day … 7. Subordinate the rest of the organization to the system’s constraint. 8. Elevate the system’s constraint (go back to step 5). Remanufacturing (MRO) environments are different and have higher risks than traditional manufacturing. The enterprise resource planning (ERP) system must have replenishment, EVM/throughput accounting, critical chain and drum buffer rope as the major components. Planning is accomplished through MRP II, ERP and TOC; synchronization is accomplished through integrated enterprise scheduling; and control is accomplished through buffer management.
Warchalowski, J. and P. Duncan (2003). Impact of changing business environment on TOC implementation. TOCICO International Conference: 1st Annual Worldwide Gathering of TOC Professionals, Cambridge, England, Goldratt Marketing Group.
This presentation describes a case study of a vinyl cover stock manufacturer. Products are used in automobiles and industrial applications. Two large equipment, capital intensive V-plants produce revenues of $250 million. Business issues include a large order backlog, high expedited freight, marginal corporate profitability, large capital investment, aging and poorly maintained capital equipment, seasoned and senior leadership team with new, young president (daughter of chairman and owner), and recently reduced work force in both facilities. The presentation describes the TOC journey and results. The core conflict for the automotive supply chain preventing it from making more money is the focus on the requirement of satisfying the end customer by implementing rules that satisfy this need versus the requirement that each link in the chain optimize its operations by letting each link establish rules to minimize its cost (for example). This conflict dictates that the automotive release (push) system is used throughout the automobile industry. Lessons learned include: don’t implement TOC applications in isolation – understand the overall industry and consider the company’s role in their supply chain – holistic application; don’t ignore previous decisions the company has made that have yet to impact the organization; make sure the leadership team can make the journey – it takes 3 to 6 months to get a new VP up to speed; and don’t let your own pride prevent you from changing the direction of the solution.
Bedford Reinforced Plastics (BRP) is recognized as a worldwide leader in the manufacture of fiberglass reinforced plastics. By implementing an extremely aggressive Redline growth campaign, BRP has nearly doubled its production and fabrication capacities over the past two years and has expanded out to nearly 190,000 square feet of manufacturing space. Bedford modified its strategy and tactics (S&T) tree to include reliability, vendor managed inventory and rapid response to manage strategic variation. Market segmentation was used to manage market demand variation. throughput based employee bonuses, throughput/ operating expense; througput / direct labor; throughput / Inventory, and throughput , operating expense and inventory were used for investment decisions to account for decision process variation. Simplified drum buffer rope and planned critical chain project management were used to manage operational variation both within and between tasks. Management and financial variation were also addressed by change management techniques and the management skills workshop tools and adequate cash to cash analysis. Growth was spectacular!
Yadav, B. (2012). What do we mean by 'everything else remaining equal'? TOCICO International Conference: 10th Annual Worldwide Gathering of TOC Professionals, Chicago, Il, Theory of Constraints International Certification Organization.
Beginning: Consider a company which has two lines of business - one is a made-to-stock (MTS) and the other is a projects environment. Question: is there a sufficient market for these products? The answer was YES. This was further verified by the data available. Solution: Implement solution for make to availability (MTA) and critical chain project management (CCPM) for the respective businesses. Journey: Once the implementation started and progressed, which happened at a fairly good speed, quite a few facts started emerging – these were coming up as the focus was on ‘flow’. These were essentially assumptions which, if not checked and validated in favor of the implementation, could completely derail the implementation. These are: 1. Availability of good technical resources within (and outside) the organization leading to difficulty of hiring specialized technical skilled resource. 2. Alignment of person to role (example: a good technical resource was doing the job of purchasing!). 3. Quality issues due to technical process adherence. The rejections due to these quality issues led to – high re-work, an increase in customer complaints, loss of sales, loss of production capacity at the constraint, etc. 4. Company’s product technology is outdated compared to competition. 5. Company’s vendor base is small and scattered and largely opportunistic (resorting to diverting capacity for more profitable orders). 6. Customer’s payment policies – little advance and the rest of the payment on credit (sometimes 6-9 months after dispatch!) leading to serious cash flow issues. In addition, 10% of the payment is made 365 days after installation! 7. The industry faces seasonality – orders were almost finalized during Nov-Dec and all deliveries were expected by March. This created the famous feast and famine syndrome in all its glory. So while the material and information flow issues were resolved, the company’s excess capacity was revealed (to the extent of nearly 30%). This translated into more order execution capability. However, due to the commercial policies and receivables of past projects, the company was not able to generate enough cash. This was compounded with the seasonality syndrome. While effective pipelining of orders helped, but the sheer volume of business in the second half of the year stretched the company’s borrowing limits. Result: The implementation of the entire solution was done keeping all the strategy and tactics (S&T) principles in mind. The operational improvements achieved did not result in expected sales growth. On exploring the causes it seemed that they were essentially pertaining to the key assumptions under S&T tree 2.1 Strategy A decisive competitive edge is gained by the market knowing that the company’s availability is remarkably high, when all other parameters remain the same.
Process Equipment Company (PECo), a US manufacturer, has faced and continues to face fierce global competition in challenging economic situations. PECo looked beyond the choice of either TOC, lean or six sigma and realized that all methodologies had strengths if utilized in an integrated fashion. PECo turned to AGI’s focused system improvement (FSI) process, a true TOCLSS (TLS) integrated process, to maintain competiveness and actually grow market share. This same FSI process guides PECo as they continue to sustain profitable growth during this latest economic downturn.
Zaru, B., et al. (2008). Is this the theory of constraints or the theory of liberating minds study of Nat Steel Equipment Pvt. Ltd. TOCICO International Conference: 6th Annual Worldwide Gathering of TOC Professionals, Las Vegas, NE, Goldratt Marketing Group.
NAT Steel Equipment Private Limited (India) created a red curve strategy of financial growth at an equipment manufacturing company. A company history, product and customers is provided. National Steel was an average company until it implemented TOC. With all the conventional rules, National Steel achieved its Viable Vision (VV) in one year. Recall a VV means that your sales today will be equal to your profit in four years. The difference was the perspective of a TOC practitioner. Two goals were set: to deliver on time and to generate a positive cash flow. Rule 1 is to list and prioritize all of the pending orders. Rule 2 is that no more than orders for three machines are on the shop floor at one time (no machine can be started unless 100% raw materials availability). Previously we tried to make twenty machines at a time. Lead time is 3 days now. Rule 3 is to never believe the customer. We developed a process to create honesty in the customer. We had a daily meeting to determine and reinforce priorities. We affixed a white board inside the entrance of the factory with the priority list….
Zephro, C. (2008). Implementing throughput accounting at a multibillion dollar high tech company. TOCICO International Conference: 6th Annual Worldwide Gathering of TOC Professionals, Las Vegas, NE, Goldratt Marketing Group.
This presentation describes the implementation of theory of constraints accounting at Seagate Technology. Seagate is the world’s leading provider of hard disc drives; provides storage solutions for enterprise, desktop, mobile computing, consumer electronics and retail markets; has ownership and vertical integration of critical technologies (heads, media and motors); has approximately 54,000 employees; etc. Throughput accounting (TA) provides explicit consideration of the role of constraints; profitability analysis at the system level instead of gross margin analysis at the product level; considers the production process as a single system; and avoids the cost conundrum. The presentation defines the basics of TA. Seagate uses a web portal for TA with the primary users Sales, Operations and Planning to identify those drives that have high yield, spend moderate time at the constraint and have high throughput. Decisions related to product emphasis, pricing, customer requests, product planning and rework, waterfall, or scrap. Common questions and answer concerning TA are provided.
Zulechner, K. and R. Burkhard (2013). Sourcing – An unresolved issue. TOCICO International Conference: 11th Annual Worldwide Gathering of TOC Professionals, Bad Nauheim, Germany, Theory of Constraints International Certification Organization.
The business-to-business (B2B) business interface remains a difficult proposition for most businesses. Needed collaboration is hampered due to the naturally adversarial situation suppliers and their clients are in. Both parties have the same goal to make as much money as possible. This, sort of, common goal is the source of insufficient collaboration. What business culture needs is a way to collaborate properly without having to relinquish their goal. This paper/ presentation proposes a way to not only make the desired collaboration possible (without endangering the goal) but will start participating businesses on a path of increased effectiveness. These businesses should be able to achieve more of their goal than before. The tool uses technology to bring businesses together through shared information. The information clients and suppliers share and the tool itself will be structured in such a way to lead businesses to focus on the appropriate direction for supply chain improvement.