Implementing ToC it doesnt have to be hard!

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2001 Presentation on Implementing the Theory of Constraints (ToC) in a manufacturing organization.

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  • Implementing The Theory of Constraints April 18, 2012 (c) 2001 Mark Woeppel
  • Implementing The Theory of Constraints April 18, 2012 (c) 2001 Mark Woeppel Highlight the proven nature of the approach
  • Implementing The Theory of Constraints April 18, 2012 (c) 2001 Mark Woeppel System for managing a chain Provides FOCUS 1. Goal- Make Money 2. Measurement- NP & ROI 3. Why? It controls throughput 4. Want to squeeze most out of it 5. Everything else is subordinate to gain CONTROL 6 &7 Where will it go & force it to go where you want it Overlay on transparency: Steps 1 &2 - Backbone to Organization- Sets Behavior Steps 3,4 &5 - Tactical, day to day- Control/ Auto-pilot Steps 6 &7 - Strategy, future G ood M oney I s M aximum S atisfaction, E lse G o B ack
  • Implementing The Theory of Constraints April 18, 2012 (c) 2001 Mark Woeppel
  • Implementing The Theory of Constraints April 18, 2012 (c) 2001 Mark Woeppel By evolutionary, build on simple changes, then more complex later
  • Implementing The Theory of Constraints April 18, 2012 (c) 2001 Mark Woeppel The first constraint or obstacle you will encounter is resistance to change – driven by fear and ignorance
  • Implementing The Theory of Constraints April 18, 2012 (c) 2001 Mark Woeppel The launch event could be one or more of the above
  • Implementing The Theory of Constraints April 18, 2012 (c) 2001 Mark Woeppel Underlying assumption is that any constraint can and will be broken This step is establishing and subordinating an operations strategy(at least some elements of it)
  • Implementing The Theory of Constraints April 18, 2012 (c) 2001 Mark Woeppel Exploitation issues are these…. All about process and alignment at a basic level, in a single corner of the business., However, it has implications throughout the business.
  • Implementing The Theory of Constraints April 18, 2012 (c) 2001 Mark Woeppel
  • Implementing The Theory of Constraints April 18, 2012 (c) 2001 Mark Woeppel
  • Implementing The Theory of Constraints April 18, 2012 (c) 2001 Mark Woeppel
  • Implementing The Theory of Constraints April 18, 2012 (c) 2001 Mark Woeppel
  • Implementing The Theory of Constraints April 18, 2012 (c) 2001 Mark Woeppel Alignment is essentially a statement of step 3, Subordinate everything else to the above decisions
  • Implementing The Theory of Constraints April 18, 2012 (c) 2001 Mark Woeppel Each of these have important considerations for each major function of the business to take the desired action.
  • Implementing ToC it doesnt have to be hard!

    1. 1. ImplementingThe Theory of Constraints It Doesn’t Have To Be Hard! PINNACLE STRATEGIES, LLC 6505 W, PARK BLVD, S UITE 306 -335 PLANO, TEXAS 75093 (972) 492.7951 W W W . P I N N A C L E - S T R A T E G I E S . C O M
    2. 2. Why Are We Here? How do I take what is in the literature and put it in place? Where are the leverage points in the implementation? How can I implement without killing anyone? What factors, if properly implemented result in a sustainable implementation? (c) 2001 Mark Woeppel
    3. 3. Agenda Introduction The TOC production system Planning a successful implementation Effectively launching your implementation Integrating constraint management into your business Organizational alignment (c) 2001 Mark Woeppel
    4. 4. Introduction Understand the process to build and maintain consensus for change Explore the elements of success How to get your implementation going How the pieces fit together (c) 2001 Mark Woeppel
    5. 5. A Successful Implementation Major functions  Focused on global goal (throughput)  Understand business implications of constraint  Location  Desired action  Strategic Planning  Takes constraint into account  Future location? (c) 2001 Mark Woeppel
    6. 6. Successful Implementation Physical characteristics  Measurement systems  Drum-buffer-rope  Buffer management  Order promising  Internal “jonahs” (c) 2001 Mark Woeppel
    7. 7. The Neck of The FunnelDetermines the Rate of Flow (c) 2001 Mark Woeppel
    8. 8. Capacity Constraint vs.Bottleneck Constraint resource is above capacity majority of the time Bottleneck resource is above capacity occasionally Constraint vs. Bottleneck Resource 120% 100% Capacity 80% 60% 40% 20% Resource A 0% Resource B Month 1 Month 7 Month 9 Month 3 Month 5 Month Capacity 11 Time (c) 2001 Mark Woeppel
    9. 9. What’s Important?1. IDENTIFY the system constraint(s)2. EXPLOIT the identified constraint(s)3. SUBORDINATE everything else in the system to step #24. ELEVATE the systems constraint5. Go back to step #1Each step has business policy and process implications (c) 2001 Mark Woeppel
    10. 10. 5 Steps and You Business processes linked to execution  Be purposeful in process design  Policy issues must be addressed Lasting implementations codify the steps  Devil in the details  Anchors in changing environments (c) 2001 Mark Woeppel
    11. 11. TOC in Manufacturing Throughput, inventory & operating expense measures Drum buffer rope scheduling Buffer management Controlled material release Pull signals from distribution Decision processes around the constraint(s) (c) 2001 Mark Woeppel
    12. 12. A Money Making Machine expense (c) 2001 Mark Woeppel
    13. 13. Drum – Buffer - Rope Drum is synchronization point for factory  Daily schedule  Constraint? Buffer protects the throughput  Aggregates variation  Focus for execution Rope protects the priority system  Limits work in system  Establishes sequences at non-constraints (c) 2001 Mark Woeppel
    14. 14. Why Plan? Well, duh! Incorporate the elements to make the new processes stick Can’t get help without one Establish deliverables Establish direction  Solution  Implementation strategy (c) 2001 Mark Woeppel
    15. 15. Philosophy of Implementation Execution is foundation of improvement Establishing clear objectives critical  Benchmarking  Continuous measurement Early successes build momentum Keep it simple Implementation is evolutionary (c) 2001 Mark Woeppel
    16. 16. Achieving Control Achieving control is prerequisite to implementing a process of ongoing improvement Indicators of control deficits  Poor due date performance (< 95%)  Low inventory turns (< 8)  Poor constraint utilization (c) 2001 Mark Woeppel
    17. 17. Implementation Strategy Two parts  Technical – policy & procedure  Change management – “soft issues” Management’s hot buttons (project objectives) Obstacles to implementation  People (power structures)  Technology (c) 2001 Mark Woeppel
    18. 18. Implementation Planning Establish clear goals Establish measurements Identify the the constraint(s) Develop a strategy for exploitation Subordinate the non-constraints Plan for movement of the constraint (c) 2001 Mark Woeppel
    19. 19. Effectively Launching YourImplementation The project launch lays the foundation for a success Prevents  An unfocussed implementation  A never-ending project  A premature end due to lack of commitment or concrete results (c) 2001 Mark Woeppel
    20. 20. Building Consensus To Change Classic difficulties / obstacles  Turf issues  Fear  Loss of control  Organizational stature (c) 2001 Mark Woeppel
    21. 21. Consensus (cont.) The problem of local optima  Each functional manager has only part of business equation (np/roi)  Supply chain cuts across functional lines  Technology and process focus on local execution  TOC is global, requires sub-optimization of local areas / functions (c) 2001 Mark Woeppel
    22. 22. Consensus Building Eliminate resistance Build momentum Establish leadership (c) 2001 Mark Woeppel
    23. 23. Levels of Buy-In Senior Management  Support  Results  Policy implications Middle Management  Do not block  Understand processes Rank & file  Processes  Outcomes (c) 2001 Mark Woeppel
    24. 24. How To Do It? Demonstrate clear link  Business results  Project outcomes  Process methodology  Is TOC good?  How will the business be changed?  Project methodology  How do I know you can actually do this? (c) 2001 Mark Woeppel
    25. 25. Training Process  What  Why Manage resistance to change Get agreement on new behavior (c) 2001 Mark Woeppel
    26. 26. Training Events Senior Management – 2 days  Build consensus  Overview of TOC  Strategic implications  Implementation issues Middle / operations management – 2 days  Similar to sr. mgmnt.  Detailed procedures Operators – 2 hrs  Basic overview  Eliminate Fear(c) 2001 Mark Woeppel
    27. 27. Launch Events Training event All hands meeting Post a memo on the bulletin board Best  Communicate  Educate  Respond to concerns (c) 2001 Mark Woeppel
    28. 28. Integrating ConstraintManagement Into Your Business Do a thorough analysis Design the processes to fit YOUR organization Position the solution to maximize buy-in Have the right processes (c) 2001 Mark Woeppel
    29. 29. Implement Control Processes Selection of constraint (control points) Development of exploitation policy and procedure Training of directly involved people Implementation strategy (c) 2001 Mark Woeppel
    30. 30. Selection of the Constraint Current location  WIP  Problems Strategic location  Capital investment  Ease of elevation Constraint, bottleneck, control point (c) 2001 Mark Woeppel
    31. 31. Exploiting the Constraint Scheduling Resource allocation Accountability Alignment with the global plan (c) 2001 Mark Woeppel
    32. 32. Analyzing Your Process Process maps  Identify wasted effort  Duplications  Wrong decision processes (incomplete)  Incorrect assumptions TOC analysis  Where to focus?  Incorrect assumptions (c) 2001 Mark Woeppel
    33. 33. Elements of Order Fulfillment Planning Execution Integration & feedback (c) 2001 Mark Woeppel
    34. 34. Planning Influences on Order Fulfillment When will the customer How to translate receive product? How to reconcile customer customer needs to plant What information do we needs to resource availability? instructions? need? S ales Scheduling Gears & P roduction Assem bly O rder Entry Engineering W rite Up Order Review Docs Make the stuff Make the stuff E nter Order Create BOM Check Matl Availability Prepare Drive Card Create W OReserve C apacity & Parts Release to Shop $ $ Inventory Planning Set Stock ing levels Shipping (c) 2001 Mark Woeppel
    35. 35. Planning Influences on Order Fulfillment How to make a quality product effectively? S ales Scheduling Gears & P roduction Assem bly O rder Entry Engineering W rite Up Order Review Docs Make the stuff Make the stuff E nter Order Create BOM Check Matl Availability Prepare Drive Card Create W OReserve C apacity & Parts Release to Shop $ $ Inventory Planning Set Stock ing levels Shipping How much can we invest to support our customers? (c) 2001 Mark Woeppel
    36. 36. Execution Influences on Order Fulfillment What if the customer What if the standard lead Do we have enough capacity? changes his mind? time isn’t good enough? S ales Scheduling Gears & P roduction Assem bly O rder Entry Engineering W rite Up Order Review Docs Make the stuff Make the stuff E nter Order Create BOM Check Matl Availability Prepare Drive Card Create W OReserve C apacity & Parts Release to Shop $ $ Inventory Planning Set Stock ing levels Shipping (c) 2001 Mark Woeppel
    37. 37. Execution Influences on Order Fulfillment Will we finish on time? Which jobs should be worked on first? S ales Scheduling Gears & P roduction Assem bly O rder Entry Engineering W rite Up Order Review Docs Make the stuff Make the stuff E nter Order Create BOM Check Matl Availability Prepare Drive Card Create W OReserve C apacity & Parts Release to Shop $ $ Inventory Planning Set Stock ing levels Shipping Do we have the right amount of (c) product available? 2001 Mark Woeppel
    38. 38. Feedback & Integration Needs Are we meeting our schedule? S ales Scheduling Gears & P roduction Assem bly O rder Entry Engineering W rite Up Order Review Docs Make the stuff Make the stuff E nter Order Create BOM Check Matl Availability Prepare Drive Card Create W OReserve C apacity & Parts Release to Shop $ $ Inventory Planning Set Stock ing levels Shipping What’s the status of the buffer? (c) 2001 Mark Woeppel
    39. 39. Critical Processes Scheduling policy & process Measurements to support processes Execution management  Buffer management  Release control  Schedule control (c) 2001 Mark Woeppel
    40. 40. What Is Alignment?“All elements of a company work together in concertwithin the context of the organization’s core ideology andtype of progress it aims to achieve - its vision or goal.The effect of alignment is that people receive a consistentset of signals to reinforce behavior that supports the coreideology and achieves desired progress”Built to Last: Successful Habits of Visionary Companies, James C. Collins, Jerry I. Porras (c) 2001 Mark Woeppel
    41. 41. Alignment Questions What are we doing to exploit the constraint? Where is the constraint relative to management’s plan or desire? Where is it likely to move next? Is that acceptable? What do I do now? (c) 2001 Mark Woeppel
    42. 42. Breakdown of Alignment Strategic intent Measurement Response (c) 2001 Mark Woeppel
    43. 43. Strategy Development Throughput per minute by product  Which products are most profitable  Identify process improvement targets  Develop pricing policies Buffer reports  Capacity condition  Identify investment needs  Goals for operations plans (c) 2001 Mark Woeppel
    44. 44. Measurement Behavior follows measurement Measure the “right” things  What do customers want  Improve the business  Flexibility and responsiveness (c) 2001 Mark Woeppel
    45. 45. Keys To Success Successful implementations have:  Trained people in the “why”  Paid attention to change management issues  A real plan  Robust processes  Senior management leadership (c) 2001 Mark Woeppel
    46. 46. Leverage Points Get consensus before you begin  Avoid resistance  Well thought-out goals Understand your process Get control  DBR  Buffer management Measurement systems (c) 2001 Mark Woeppel
    47. 47. Results Without Fear Train, train, train  Concepts  Implications  Procedures Reinforce results  Measurement systems  Celebrations (c) 2001 Mark Woeppel
    48. 48. Key Processes Scheduling and resource subordination  Scheduling  Order release  FIFO  Buffer management Order promising Sales & Operations planning  MPS or Action meeting (c) 2001 Mark Woeppel

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