Theory of Constrains For Operations


Theory of Constrains For Supply Chain


Critical Chain Project Management


Business Process & IT Strategy


ERP / IT Solution Evaluation


Organisation Change Management

Theory of Constraints for Manufacturing Operations

Manufacturing Operations

Manufacturing Operations includes all the activities and functions related to  transforming raw materials into finished goods.  They are typically characterised by High Degree of Dependency and High Degree of Variability.

Conventional Approaches to Improvement

have always practiced in breaking the entire system into smaller parts and focus improvement efforts on these smaller parts. With this approach, not all improvement efforts have lead to an improvement of the system as a whole and have at best brought incremental improvements locally.

Current Undesirable Effects:
  • Poor customer due date performance
  • High inventory
  • Long lead times and variability in lead times
  • Frequent expediting and high premium shipments
  • Frequent re-planning
  • Poor human relationships
The Improvement Challenge

How to reduce waste and improve flow?

If your manufacturing environment is faced with the above Current Reality, then application of Theory of Constraints Principles could bring a step improvement for the organization as a whole.

Our Offering – TOC Approach

Our offering to improvement is based on Theory of Constraints (TOC) principles which takes an holistic approach to improving the system as a whole. TOC believes that “There are no complex systems in reality. All complex systems are governed by inherent simplicity and Constraints govern the throughput of a system”

Hence in order to achieve step improvement for the system as a whole, focus should be on the constraint that limit the performance of the system as a whole.

The Solution for Manufacturing Operations based on TOC’s principle is called Simplified Drum Buffer Rope (SDBR). A simple, yet powerful mechanism which aligns manufacturing planning and execution to market demand and helps achieve:

  1. High Due date performance
  2. Reduction in lead time
  3. Increase in throughput
  4. Reduction in inventory.
Drum

Drum

Drum is the potential customer demand (the market) – List of Orders with their due dates that must be fulfilled and it dictates the pace of the shop floor and matches it to the constraint’s capabilities

Buffer

Buffer

Buffer is the time assigned for the material to move to completion – from the release of raw materials until the arrival of the finished order to the shipping dock.  It also protects against common cause and random variations that operation is subjected to

Rope

Rope

Rope represents the mechanism for choking the release of material to the shop floor to ensure that Operations works only on those orders which are supposed to be worked on.

Buffer Management

Buffer Management is a simple three color coded mechanism to manage execution of orders on the shop floor. It enables managers to make objective decision on which orders to prioritise,   which orders to expedite, how much to expedite  and how to monitor capacity and promise realistic due dates.

Theory of Constraints for Supply Chain

Supply Chain (Distribution)

Consumption locations are remote from the production location and the tolerance time of the buyer is (much) shorter than the time it takes production & shipping to make product available (at the point of sale or consumption)

Hence, Products are distributed from the manufacturing plants to points of sales Via a distribution network

Conventional Approaches to Improvement

have always practiced in breaking the entire system into smaller parts and focus improvement efforts on these smaller parts. With this approach, not all improvement efforts have lead to an improvement of the system as a whole and have at best brought incremental improvements locally.

In made to stock environments, the supply Chain operates under the “Push” philosophy which pushes inventory to downstream supply  nodes since the belief is “More the inventory closer to points of consumption, higher will be end sales”

Current Undesirable Effects:
  • Significant cash tied up in inventory and product availability is still an issue (lost sales due to product unavailability on many occasions is unquantifiable)
  • Low inventory turnover
  • Co-existence of shortages & surplus
  • High cross shipments
  • High Inventory
The Improvement Challenge

How to increase product availability while lowering overall inventory?

If your manufacturing  and Supply Chain environment is faced with the above Current Reality, then application of Theory of Constraints Principles could bring a step improvement for the organization as a whole.

Our Offering – TOC Approach

Our offering to improvement is based on Theory of Constraints (TOC) principles which takes an holistic approach to improving the system as a whole. TOC believes that “There are no complex systems in reality. All complex systems are governed by inherent simplicity and Constraints govern the throughput of a system”

Hence in order to achieve step improvement for the system as a whole, focus should be on the constraint that limit the performance of the system as a whole.

The Solution for Supply Chain (Distribution)  based on TOC’s principle is called “Pull Based Replenishment”.

A simple, yet powerful mechanism which aligns the entire supply chain including manufacturing operations to the pull of the market and helps achieve:

  1. High Product availability at points of sale thereby increasing sales
  2. Reduced Inventory and inventory obsolescence
  3. High Inventory turns for all the channel partners in the supply chain
  4. Reduced cross shipments

Plant / Central Warehouse

Demand_Agg

  • Demand Aggregation to points where the variability is least
  • The further we move up the supply chain, the lower is demand variability & hence smaller buffer.

Move from “Push” to “Pull”

Inventory_Turns

  • Receive daily consumption from the consumption points (cut order lead time to zero)
  • Move to “Order Daily Replenish Frequently

Dynamic Buffer Management

Buffer_Mgt

  • Buffer Management – Consistent business rule that aligns replenishment and inventory stocking  across the supply chain

Critical Chain Project Management

Projects

A project is a temporary endeavor undertaken to create a unique product , service or result

Project Environments are characterised by:

  • Too often resources needed are not available
  • Necessary things are not available in time (spec, info, approvals, tool, etc.)
  • There is too much rework
  • There are budget overruns
  • There is too much fire fighting
Traditional Project Management
  • Create project plan with tasks
  • Build buffer in task estimations to account for uncertainties
  • Track the project based on task due dates
  • React when something is late
  • REALLY react when something on the critical path is late
  • Measure the project heath based on
    • Individual task completion
    • Overall % completion
Current Reality:
  • Projects rarely complete on-time
  • Challenged / Compromised on scope and budget
  • Impact on profitability
  • Affect company’s competitiveness
The Improvement Challenge

Is there an alternative Approach to manage projects that would Significantly improve probability of on-time or ahead of time project completion?

If your project environment is faced with the above Current Reality, then Managing Projects, the TOC way could help significantly increase probability of on-time / ahead of time project completion

Our Offering – Critical Chain Project Management

Critical Chain Project Management (CCPM) is a methodology for planning, executing and managing projects in single and multi-project environments. It was developed by Dr Eli Goldratt and was first introduced to the market in his Theory of Constraints book “Critical Chain” in 1997.

Project Planning – Critical Chain

CriticalChain

  • Project Plan with task dependency and resource contentions
  • Task Estimates – Aggressive but possible
    • Critical Chain – Longest Chain that determines project duration
    • Feeding chain – Tasks not on critical chain but feed into critical chain
  • Buffer – Aggregate Safety from individual tasks and use it to protect project as a whole
    • Project Buffer – Protects Critical Chain
    • Feeding Buffer – Protects Feeding Chains

Project Execution – Buffer Management

BufferConsumption

  • Execution is managed with Buffer Management – Consumption of project and feeding buffers
    • Delay in task on critical chain consumes project buffer
    • Delay in task on feeding chain consumes feeding buffer
  • It is simple, objective
  • Helps in prioritization of tasks, resources and brings focus to where required

Project Metrics – Fever Chart

FeverChart

  • Three Metrics to assess and track project health
  • % of critical chain completed
  • % of project buffer consumed relative to % of critical chain completed
  • Rate of buffer consumption
  • Pictorial representation in “Fever Chart”

Business Process, IT Strategy

Business Context
  • Gaps in Processes, Inefficient and less effective
  • Limits scaling of business to meet Strategic Objectives
  • Gaps in functionality of existing ERP / Legacy Systems
  • Islands of Automation
  • Lacks seamless integration, end to end visibility & control
  • Limited Capability to leverage digital strategy

Our Value Proposition

Adopt a Structured Assessment and Redesign Methodology to Harmonize Business Processes, IT and align them to Strategic Objectives.

 

ERP/ IT Solution Evaluation and Selection

Business Context
  • Gaps in functionality of existing ERP / Legacy Systems
  • Islands of Automation
  • Lacks seamless integration across functions
  • No end to end visibility & control
  • Limited Capability to leverage digital strategy
  • Inefficient MIS reporting and dash board for quick decision making

Our Value Proposition

Structured framework and Objective Evaluation of existing and potential new ERP / IT  Solutions.

 

 

Organisation Change Management (OCM)

Business Context

Large Business and IT Transformation projects have significant impact on “People” – Both Internal and External

  • Changes in Business processes
  • Changes in IT systems
  • Organization Restructuring
  • Impact on Roles & Responsibilities, Compensation,
  • Location
  • Staffing Changes

Our Value Proposition

Structured Three phased Methodology to Guide Customers Manage “People” side of Change in large Business and IT transformation projects.

 

Next Steps…

Contact us to know more about our Offerings


Contact Us