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Constaint apoorv ashish
- 1. CONSTRAINT MANAGEMENT PROJECT APOORV KHANDELWAL 0065/48 ASHISH ANAND 0079/48
- 2. Description Scenario 1 A premium commanded by the company in the market. Manufacture of a slew of expensive products in the market. Lack of new products in companies stable. Manufacture of expensive products. No focus on new products. Scenario 2 Lack of availability of products at company warehouses One time production of goods Lower availability of products with the distributors Loss in sales due to unavailability of products with the distributors and retailers. A huge push in sale of the products by the salesmen to achieve their targets even if it was not in tandem with the market demand.
- 3. Description Contd.. Scenario 3 A navigation of possibility on importing goods from a foreign supplier. A concern on maintain the quality of goods supplied from abroad. How to keep accurate forecasting. Problem Statement Identifying the key issue that the manager should address Identifying the root cause for the problem A clear assessment of all the root causes which caused the problem
- 4. CRT – Scenario 1
- 5. CRT – Scenario 2
- 6. CRT – Scenario 3
- 7. Core Problems Scenario 1 High R&D cost on Product Development Expensive new products Discouraged Design and Engineering Team Scenario 2 Inaccurate forecasting by sales persons Production once in a month Improper inventory management at warehouses Scenario 3 Delayed Delivery from suppliers Low quality from suppliers Improper forecasting
- 8. Scenario 2 – EC Core Problem 1 – Inaccurate Forecasting A. Profit Maximization B. Avoid Stock outs and costs on excess inventory D. Invest on better forecasting techniques D'. Do not invest on forecasting techniques C. Savings on forecasting expenses Assumption: ‘Investment’ and ‘Non Investment’ cannot be done at the same time Forecasting techniques contribute a significant amount in the total expenses Forecasting techniques help predict sales and developing a better production plan Increase profit by reducing costs of inventory and increasing sales Less expense on forecasting means less overall expenses and thus, more profit
- 9. Core Problem 1 Arrow Assumption Injection AB Expensive Inventory management Throughput Focus AC Good Production Planning Better Inventory management BD Better Forecasting Better Analytics and Market research CD’ Expensive Forecasting Techniques Better Production Planning D/D’ Can’t do both Investment Constraint
- 10. Scenario 2 – EC/Conflict Resolution Diagram Core Problem 2 – Delayed Delivery from supplier A. Profit Maximization B. Less expenses in logistics D. Inventory replenishment at warehouses once a month D'. Inventory replenishment at warehouses multiple times a month C. Ensuring product availability at warehouses Assumption: Production multiple times a month which would involve higher setup costs hence goal conflict in profit maximization Maintaining safety stock at warehouses and hence lesser demand supply gap Logistical expenses depend on frequency of deliveries Less expenses in logistics means higher profits More sales due to availability of product at all times which would increase profits
- 11. Core Problem 2 Arrow Assumption Injection AB Expensive Logistics One time Production AC Demand in market Better sales and marketing practices BD Accurate forecasting Better Analytics and Market research CD’ Effective Finished Goods Inventory Management Better Production Scheduling D/D’ Can’t do both Inventory Capacity Constraint
- 12. Scenario 2 – EC Core Problem 3 – Improper inventory management at warehouses A. Profit Maximization B. Ensuring availability of product throughout the month D. Production multiple times a month D'. Production only once a month C. Savings on setup costs Assumption: Production can either be once or multiple times a month Production in one-go requires setup only once and thus, reducing setup cost expenses Production multiple times a month can take care of any mid-month gap in the demand and supply Increase in sales and hence, profits Setup costs are a significant part of the expenses. So, less set up costs implies more profits
- 13. Core Problem 3 Arrow Assumption Injection AB Demand at warehouse Better sales practices AC Expensive Setup Cost One time Production BD Effective Finished Goods Inventory Management Better Production Scheduling CD’ Accurate forecasting Better Analytics and Market research D/D’ Can’t do both Production Capacity Constraint
- 14. Future Reality Tree – Core Problem 1 Injections
- 15. Future Reality Tree – Core Problem 2 Injections
- 16. Future Reality Tree – Core Problem 3 Injections
- 17. Negative Effects FRT – Core Problem 1 Better analytics and market research More Forecasting expenses Higher Overhead expenses Better production planning High expenses on inventory management Throughput Focus WIP Control Less finished goods Stock outs at warehouses Stock outs at retail outlets Low sales Lower profit Lower market share Injections
- 18. Negative Effects FRT – Core Problem 2 Good production scheduling Higher expenses on Inventory Management Better analytics and market research More Forecasting Expenses Higher Overhead expenses Sales and Marketing techniques Higher expenses One time delivery Stock outs at warehouses Stock outs at retail outlets Lower Sales Lower Profit Lower Market Share Injections
- 19. Negative Effects FRT – Core Problem 3 Good production scheduling Higher expenses on Inventory Management Better analytics and market research More Forecasting Expenses Higher Overhead expenses Sales and Marketing techniques Higher expenses One time production Less Finished goods inventory Stock outs at warehouses Lower Sales Lower Profit Lower Market Share Injections
- 20. Negative Effects Trimming – Core Problem 1 Build to Order/ Mass customization Better analytics and market research More Forecasting expenses Lower Overhead expenses Better production planning Low expenses on inventory management Build to Order/ Mass customization Throughput Focus WIP Control Less finished goods No Stock outs at warehouses No Stock outs at retail outlets Higher sales Higher profit Higher market share Increase capacity by parallel production lines Corrective Injection Injections
- 21. Negative Effects Trimming – Core Problem 2 Build to Order/ Mass customization Good production scheduling Higher expenses on Inventory Management Better analytics and market research More Forecasting Expenses Lower Overhead expenses Sales and Marketing techniques Higher expenses One time delivery No Stock outs at warehouses No Stock outs at retail outlets Higher Sales Higher Profit Higher Market Share Higher safety stock Corrective Injection Injections
- 22. Negative Effects Trimming – Core Problem 3 Build to Order/ Mass customization Good production scheduling Higher expenses on Inventory Management Better analytics and market research More Forecasting Expenses Lower Overhead expenses Sales and Marketing techniques Higher expenses One time production High Finished goods inventory No Stock outs at warehouses Higher Sales Higher Profit Higher Market Share Higher safety stock Corrective Injection Injections
- 23. Pre-requisite Tree Reduce Work In Process dramatically, i.e. smaller batches Clear priority and visibility of load at key machines Better flow of goods Shorter cycle times Reliability Shorter Lead times More Capacity Traffic and traffic jams, confusion in priority at work center Necessary information for shop floor to meet due dates and for the factory to manage capacity not available Capacity Constraint Resource Intermediare Objectives Obstacles
- 24. Transition Tree Smaller batches i.e. less throughput Record the capacity, load and process time at all the work centres' Exploit the capacity constraint resource Increase Overall Equipent Effectiveness (OEE) i.e. Availability, Performance, Quality Reduce Work In Process dramatically, Clear priority and visibiilty of load at key machines Better flow of goods Shorter cycle times Reliability Shorter Lead times More Capacity Smaller batches will give less throughput Finding process times and load will help identify the constraint and key machines 100% use of CCR will lead to better flow OEE helps in identifying and eliminating the root causes Working Assumptions Intermediare Objectives Actions
- 25. Pre-requisite Tree contd. Intermediate Objectives Reduce Work In Process dramatically, i.e. smaller batches Clear priority and visibility of load at key machines Better flow of goods Shorter cycle times Reliability Shorter Lead times More Capacity Obstacles Traffic and traffic jams, confusion in priority at work center Capacity Constraint Resource Necessary information for shop floor to meet due dates and for the factory to manage capacity not available
- 26. Recommendations Implement Build-to-order This would be beneficial in the following context: Low inventory carrying costs Low procurement costs On- demand supply Better responsiveness leading to higher sales.
- 27. THANK YOU