Understand the differences and similarities between techniques of Lean Manufacturing and Theory of Constraint (TOC) as applied to field of manufacturing management.
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Understand the differences and similarities between techniques of Lean Manufacturing and Theory of Constraint (TOC) as applied to field of manufacturing management.

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Understand the differences and similarities between techniques of Lean Manufacturing and Theory of Constraint (TOC) as applied to field of manufacturing management. Understand the differences and similarities between techniques of Lean Manufacturing and Theory of Constraint (TOC) as applied to field of manufacturing management. Presentation Transcript

  • ©2012 Vector Consulting Group. All Rights Reserved. www.vectorconsulting.inwww.vectorconsulting.in VCG employs the 'Theory of Constraints’ philosophy to bring about quantum jump in performance of organizations in its target industry clusters. LEVERAGING THE POTENTIAL RetailConsumer Goods Equipment Manufacturing Engineering & Construction Automobile & Auto Components
  • ©2012 Vector Consulting Group. All Rights Reserved. 202, Orion Business Park, Kapurbawdi Naka, Ghodbunder Road, Thane (West) – 400610 Phone: +91 22 2589 5896 Fax: +91 22 2589 5897 Email: vcg@vectorconsulting.in Web: www.vectorconsulting.in TOC Insights - Operations Sep 18, 2012 2
  • ©2012 Vector Consulting Group. All Rights Reserved. Basics 01 - Part 01 3 Only 20% of the Japanese Companies have implemented Lean/Six Sigma/TQM/TPM Its not that the remaining 80%didn't try. These firms tried, but failed repeatedly. Did they fail because of lack of seriousness? Did they fail because lack of efforts? Did they fail because lack of Knowledge?Not really!!
  • ©2012 Vector Consulting Group. All Rights Reserved. Basics 01 - Part 02 4 The firms tried and failed repeatedly because: Their Production Environment were fundamental different from Toyota. TPS was developed for Toyota. You cannot “Copy Paste” solution of one environment to the other environment!
  • ©2012 Vector Consulting Group. All Rights Reserved. 5 Reality of implementation of Lean / Six Sigma / TQM / TPM
  • ©2012 Vector Consulting Group. All Rights Reserved. An Insight 6 Application is specific, do not force them on your production environments. 01 Concepts are general, learn them and design application for your environment. 02
  • ©2012 Vector Consulting Group. All Rights Reserved. Basics 02 7 The assembly line developed for the Ford Model T began operation on December 1, 1913. It had immense influence on the world. Assembly Lines (FORD) Features • Flow line concept introduced for Mass Production. • Flow means inventories in the operation are moving. • Inventories are controlled by limiting space between work-stations. What happens when space is full? Production stops i.e. in essence local efficiencies are abolished (Against conventional wisdom of 100% efficiency). Limitations Single Product lines where facilities are dedicated for each component. Output is lost when production stops? Focusing mechanism now available to eliminate shortages.
  • ©2012 Vector Consulting Group. All Rights Reserved. Basics 02 8 AssemblyLines (FORD) Part 02 Generic Concepts Improving flow (or equivalently lead time) is the primary objective of operations. This primary objective should be translated into a practical mechanism that guides operation when not to produce (i.e. prevent over-production). Local efficiencies must be abolished. A focusing process to balance flow must be in place.
  • ©2012 Vector Consulting Group. All Rights Reserved. Basics 02 9 LEAN / TPS (TOYOTA) Challenges to introduce FORD system to TOYOTA Demand for small quantities of a variety of cars, hence dedicated lines could not be justified. Space cannot be used to limit inventories because: If components are unavailable, then Assembly would stop. If space is full, feeder lines would stop. Solution was realized when Taichi Ohno heard about Super-Markets
  • ©2012 Vector Consulting Group. All Rights Reserved. Basics 02 10 Part 02 LEAN/TPS (TOYOTA) Features • Flow is the most important element of TPS • In place of Space, Kanban System introduced to limit the inventory • Only when an allocated container is used, production of that container is triggered (No Card ..... No Production) Frequent switching for small lots means more set-ups and hence loss of production • Just-in-time Evolved i.e. produce only those items which are required in the very short-term. • Set-up reduction techniques were developed (called Lean). • Kanban was further used to guide process improvement efforts. • Gradual reduction in Containers (FIVE WHYs introduced to guide improvement efforts).
  • ©2012 Vector Consulting Group. All Rights Reserved. Basics 02 11 Part 03 LEAN/TPS (TOYOTA) Almost everyone has implemented TPS, but still no one has achieved the same Productivity numbers as Toyota ... Why? Answer lies in the process of choosing local improvements Conventional companies use cost savings as the parameter to decide local improvements whereas Toyota uses “Flow Improvement”. E.g. Setup Reduction was never done to gain cost savings, rather it was done to create better availability at a faster rate. E.g. Quality was not improved to save trivial costs, rather it was improved to remove disruptions caused by defective part. No focus on squeezing better prices from supplier or cut payroll cost (manpower reduction), rather full energy is spent on improving the flow.
  • ©2012 Vector Consulting Group. All Rights Reserved. Basics 02 12 Part 04 LEAN/TPS (TOYOTA) End Results Focusing on Flow instead of local cost considerations resulted in a much better lower cost per unit. Abolishing local efficiencies resulted in much higher efficiency of the workforce. Important Insight All cost reductions have a ceiling (can cost be made ZERO?). Improvement efforts have diminishing returns.
  • ©2012 Vector Consulting Group. All Rights Reserved. Basics 02 13 Part 05 LEAN/TPS (TOYOTA) Generic Concepts Improving flow (or equivalently lead time) is a primary objective of operations. This primary objective should be translated into a practical mechanism that guides the operation when not to produce (prevents overproduction). Ford used space; Ohno used inventory. Local efficiencies must be abolished. Ford used dedicated lines; Ohno introduced JIT & Lean techniques. A focusing process to balance flow must be in place. Ford used direct observation. Ohno used gradual reduction of the number of containers and then gradual reduction of parts per container.
  • ©2012 Vector Consulting Group. All Rights Reserved. Basics 02 14 Part 06 LEAN/TPS(TOYOTA ProductionSystem) Boundaries of TPS Works in Stable environments i.e. the processes and the products do not change significantly for a considerable length of time. Demand over time per product should be relatively stable. E.g. Toyota has only 1 time change yearly per model. Combine specific techniques of Lean with cost saving programs. Total load placed by orders on the various types of resources must be relatively stable. Imagine holding containers for items which have sporadic demand. When load changes frequently, promising firm due dates is challenging. Typical way of implementing Lean in most companies Is this really a true implementa- tion of Lean?
  • ©2012 Vector Consulting Group. All Rights Reserved. 15 Theory of Constraint Way of Production
  • ©2012 Vector Consulting Group. All Rights Reserved. Basics 03 - TOC way of Production - Part01 16 Core Principles Flow is the most important objective of Operations. Practical Mechanism to avoid Over-Production. Achieved by ensuring synchronization from everywhere achieved by reducing lead times cross the chain. Local Efficiencies are abolished. Restrict release of material ahead of time (suitable for unstable environments as it is less sensitive to disruptions in flow. Buffer Management (BM) and Load control are put in place. Focusing process to balance flow must be in place. Analysis of Blacks & Reds guide the improvement efforts.
  • ©2012 Vector Consulting Group. All Rights Reserved. Bottleneck Basics 03 - TOC way of Production - Part02 17 Abolishment of Local Efficiencies If C is to be used 100% • There has to be Continuous bank of work in front of “C”. • Whenever, there are disruptions in “A” or “B”; not only they have to ensure that “C” is fed but also the Bank is rebuilt. Which means “A” / “B” should have excess capacity than “C”. • Similarly, incase of disruptions in “D”; not only it has to produce what “C” is producing, “D” also has to clear the backlog created by “C”. Which again means “D” has excess capacity than “C”. A B C D By this very definition, “A” / “B” / “D” should have much more capacity than “C” just to keep “C” 100% busy. If so then local efficiencies at places other than “C” have to be abolished otherwise inventory will hit the roofs.
  • ©2012 Vector Consulting Group. All Rights Reserved. Basics 03 - TOC way of Production - Part03 18 Time Based Mechanism to control WIP Problem of using Space to control WIP between Workstations • E.g. Conveyers, Trolleys, etc. • When space is full, production stops which may not mean 100% utilization of Bottleneck (“C”) resource. • WIP in front of Bottleneck and Space after the Bottleneck is a function of the “Normal Disruptions” at upstream & downstream resources. o Typically the WIP is designed to be kept to bare minimum which can result in production loss. A B C D
  • ©2012 Vector Consulting Group. All Rights Reserved. Basics 03 - TOC way of Production - Part04 19 Time Based Mechanism to control WIP In TOC, • WIP in the system is not artificially restrained between every 2 work centers; rather it is controlled for the entire system allowing the effects of Murphy to be absorbed throughout the system and yet protect the due dates. • Unlike Kanban, WIP is not maintained everywhere in the system. Rather it is maintained only where needed i.e. to ensure 100% utilization of bottleneck. A B C D
  • ©2012 Vector Consulting Group. All Rights Reserved. Basics 03 - TOC way of Production - Part05 20 Concept of Lead Time • Most of the time, order is waiting in queues in front of the resources. • Generally the time actually spent working on an order is less than 10% of the total lead time. • Therefore at times of Urgency, material can moved very fast through the system. Total Lead Time Waiting TimeTouch Time
  • ©2012 Vector Consulting Group. All Rights Reserved. Basics 03 - TOC way of Production - Part06 21 Choke The Release • Small lead times cause too much expediting (termed as “Hand-2-mouth”) • Large lead times cause Jams, missed priorities • Stables zone is in the middle and hence “Choke the Release” is done by cutting WIP by half ManagementAttention Time Buffer Size Insufficient Reaction time Jams, Missed priorities
  • ©2012 Vector Consulting Group. All Rights Reserved. Basics 03 - TOC way of Production - Part07 22 Priority System • Just “Choking the Release” i.e. reducing WIP by half will not result in more than 90% due date performance. • Therefore a simple yet robust priority system is needed to guide operations. • Buffer Management gives clear priority to all the work-centers to effectively plan and execute orders. Reduced Lead Time
  • ©2012 Vector Consulting Group. All Rights Reserved. Basics 03 - TOC way of Production - Part08 23 Focusing Mechanism (POOGI) • Analysis of RED orders every week. • Identifying the top reason for REDs and eliminating it. 40% 30% 20% 10% Material availability Manpower availability Machine availability Utilities availability Red Reasons
  • ©2012 Vector Consulting Group. All Rights Reserved.©2012 Vector Consulting Group. All Rights Reserved. Thank You ):