Theory Of Constraints


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  • Statistical fluctuations example is the story about matches into processes.
  • Apply some thinking to how to apply to NIMO?
  • Min Batch size = (customer Demand rate) x (workstation turnover time)
  • Theory Of Constraints

    1. 1. Theory of Constraints From “The Goal” by Eliyahu M. Goldratt
    2. 2. Introduction <ul><li>The Goal of Business </li></ul><ul><ul><li>Will help explain why we are slowing down </li></ul></ul><ul><li>Dependant Events & Statistical Fluctuations </li></ul><ul><ul><li>Background for Lean MFG </li></ul></ul><ul><li>How do you speed up your processes? </li></ul><ul><ul><li>Direct application to Lean initiatives </li></ul></ul><ul><li>Thinking Process </li></ul><ul><ul><li>Helps to know how to proceed </li></ul></ul><ul><li>Applications to Lean </li></ul><ul><li>Conclusion </li></ul>
    3. 3. What is the Goal? <ul><li>The Goal of any business is to make money. </li></ul><ul><li>Throughput is the rate at which the system generates money through sales. (increase) </li></ul><ul><li>Inventory is all the money that the system invested in purchasing things which it intends to sell. (reduce) </li></ul><ul><li>Operational Expense all the money the system spends in order to turn inventory into throughput. (reduce) </li></ul>
    4. 4. What are Process Dependant Events & Statistical Fluctuations? <ul><li>Dependant Events require one step to happen before another in a process </li></ul><ul><li>Statistical Fluctuations are the range within a process occurs in (i.e. Batch titer) </li></ul><ul><li>Accumulation of fluctuations occurs further down a process, dependency limits the opportunities for higher fluctuations, you’ll see lower more often. </li></ul><ul><li>The slowest (least capacity) process step is where you need to focus efforts to increase speed. </li></ul><ul><li>But need to avoid looking at local area processes, need to optimize the whole system </li></ul><ul><li>Only as strong as the weakest link. </li></ul>
    5. 5. What are the Next steps? <ul><li>Identify bottlenecks & non-bottleneck resources </li></ul><ul><ul><li>Bottleneck (constraint) = a resource whose capacity is less than or equal to the demand placed on it. </li></ul></ul><ul><ul><li>Non-bottleneck (non-constraint) = a resource whose capacity is greater than the demand placed on it. </li></ul></ul><ul><ul><ul><ul><li>Value Stream Mapping (VSM) </li></ul></ul></ul></ul>
    6. 6. Example VSM
    7. 7. Bottleneck Rules: <ul><li>Balance the flows of product through the plant with demand from the market </li></ul><ul><li>Therefore the flow through the bottleneck (constraint) needs to equal (or a bit less) to demand. </li></ul><ul><li>Thus the capacity of a plant is equal to the capacity of the bottlenecks (constraints) </li></ul><ul><ul><li>Whatever the bottleneck produces in 1 hr, the plant will produce in 1 hr. </li></ul></ul>
    8. 8. The 4 Elements of Time <ul><li>Set-up time = time a part spends waiting for a resource </li></ul><ul><li>Process time = time a part spends being modified into a new more valuable from </li></ul><ul><li>Queue time = time a part spends in line waiting for a resource </li></ul><ul><li>Wait time = time a part waits, not for a resource, but for another part so they can be assembled together. </li></ul>
    9. 9. Reduce Batch sizes <ul><li>If you don’t add anything (like people) how are you adding costs </li></ul><ul><li>Since for parts going thru a bottlenecks, queue time is the dominate portion of the total elapsed time. </li></ul><ul><li>Bottlenecks dictate inventory as well as throughput </li></ul><ul><li>If reduce batch size in half, you reduce by half the time to process a batch, thus queue & wait time reduce and reduces the total time a part spends in a plant = reduced lead times. </li></ul>
    10. 10. Rules cont… <ul><li>The level of utilization of a non-bottleneck is not determined by its own potential, but by some other constraint in the system. </li></ul><ul><li>The Process: </li></ul><ul><ul><li>ID the constraints </li></ul></ul><ul><ul><li>Decide How to exploit the constraints </li></ul></ul><ul><ul><li>Subordinate everything to #2 (green/red tags ex) </li></ul></ul><ul><ul><li>Evaluate the system’s constraints </li></ul></ul><ul><ul><li>If constraints gets broken go back to #1 </li></ul></ul>
    11. 11. The Thinking Process <ul><li>What to change? </li></ul><ul><li>What to change to? </li></ul><ul><li>How to cause the change? </li></ul>
    12. 12. Lean Six Sigma Link <ul><li>Lean means speed; to all processes </li></ul><ul><li>Slow processes are expensive </li></ul><ul><li>Lean metric = process cycle efficiency </li></ul><ul><li>Batch size must be calculated using flow variables </li></ul><ul><li>95% of lead times in most processes is wait/queue time </li></ul><ul><li>To improve speed, ID & eliminate time traps (bottlenecks): Use 3 laws of Lean Six Sigma </li></ul>
    13. 13. 3 laws of Lean Six Sigma <ul><li>0. Law of the Market- Customer critical-to-quality issues must be addressed first. </li></ul><ul><li>Law of flexibility- Process velocity is directly proportional to flexibility. Flexibility proportional to workstation turnover time. Max flex achieved by min batch size. </li></ul><ul><li>Law of Focus- 80% of the delay is caused by 20% of the activities </li></ul><ul><li>Law of Velocity- the average velocity of flow thru any process is inversely proportional to the # of “things” in process and variation in supply & demand. </li></ul>
    14. 14. Conclusion <ul><li>The Goal of Business </li></ul><ul><li>Dependant Events & Statistical Fluctuations </li></ul><ul><li>How do you speed up your processes? </li></ul><ul><li>Thinking Process </li></ul><ul><li>Applications to Lean </li></ul>