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Implementing the Theory of Constraints (TOC) In Production

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  • 1. Implementing the Theory of Constraints (TOC) In Production Sai Praveen – D 23 Sumit Nandal – D 27
  • 2. Introduction  The Theory of Constraints was developed and popularized by Eliyahu Goldratt.  TOC, as it is commonly called, recognizes that organizations exist to achieve a goal.  A factor that limits a company's ability to achieve more of its goal is referred to as a "constraint."
  • 3. Example    The demand for parts produced by a computer-controlled piece of equipment known as the NCX10 exceeded the machine's capacity. Since the factory could only assemble and sell as many products as they had parts from the machine. The capacity of the factory to make money was tied directly to the output of the NCX10. The NCX10, therefore, was the constraint.
  • 4. Five step process  To 1. 2. 3. 4. 5. manage constraints ,Goldratt proposes a five-step Process Of On Going Improvement. The steps in this process are: Identify Exploit Subordinate Elevate, and Go back to Step 1
  • 5. 1. Identify      In order to manage a constraint, it is first necessary to identify it. In the above example, the NCX10 was identified as the constraint. This knowledge helped the company determine where an increase in "productivity" would lead to increased profits. Concentrating on a non-constraint resource would not increase the throughput because there would not be an increase in the number of products assembled. To increase throughput, flow through the constraint must be increased.
  • 6. 2. Exploit  Once the constraint is identified, the next step is to focus on how to get more production within the existing capacity limitations.  when the company and the labor union agreed to stagger lunches, breaks, and shift changes so the machine could produce during times it previously sat idle.  This added significantly to the output of the NCX10, and therefore to the output of the entire plant.  To manage the output of the plant, a schedule was created for the constraint. The schedule showed the sequence in which orders would be processed and their approximate starting time.
  • 7. 3. Subordinate     Exploiting the constraint does not ensure that the materials needed next by the constraint will always show up on time. The most important component of subordination is to control the way material is fed to the non-constraint resources. TOC says that non-constraint resources should only be allowed to process enough materials to match the output of the constraint. The release of materials is closely controlled and synchronized to the constraint schedule
  • 8. 4. Elevate The next step is to determine if the output of the constraint is enough to supply market demand. If not, it is necessary to find more capacity by "elevating" the constraint.  In the above example, schedulers were able to remove some of the load from the constraint by rerouting it across two other machines.  They also outsourced some work and brought in an older machine that could process some of the parts made by the NCX10.  These were all ways of adding capacity, or elevating the constraint. 
  • 9. 5. Go Back to Step 1  Once the output of the constraint is no longer the factor that limits the rate of fulfilling orders, it is no longer a constraint.  Step 5 is to go back to Step 1 and identify a new constraint -because there always is one.
  • 10. Case Study  Analysed enterprise is the company producing cardboard and litho-laminated packaging. Production process was monitored without and then with using Theory of Constraints for production planning.
  • 11. Current method of production planning and control  The company schedules individual job orders generally according to delivery time
  • 12. Production Schedule without using TOC
  • 13. Production Schedule using TOC
  • 14. Some measurable benefits of using TOC principles for production planning 1. Better reliability in delivery dates
  • 15. 2. Shortening of the production lead time
  • 16.  In this example, scheduling problem was solved by using TOC principles. It was proven that TOC can help to solve major problems with capacity planning in discrete batch production and reduce number of delayed orders
  • 17. Thank You