Add TOC to your flow

The bottleneck sets the plant’s tempo and flow. PHOTO: Thinkstock

A key focus of lean is to do only what’s needed when it’s needed, which is contrary to a traditional economies of scale approach with the long lead times and high inventories that are so troublesome. You might expect a loss of efficiency with this change, which is a legitimate concern and why you must change the way you do things if lean is to be successful.

Large lot sizes are a way of compensating for the fixed costs of a process, such as changeover or set-up, transactions and other “per order” factors. These costs are distributed over a larger number of units and thus become a lesser cost on a per-piece basis. As long as set-up and changeover costs are high, small lot quantities can’t be cost efficient. The obvious answer is to lower or eliminate these “fixed” costs as much as possible so smaller lot quantities become more feasible.

This leads to cellular manufacturing and the complete rearrangement of production facilities from departmental to self-sufficient, multi-process cells or lines. They complete work on a part or product with minimal movement and are designed for little or no cost to change from one product to another so a lot size of one (or a few) is as economical as a large lot on less efficient facilities. This is achieved by restricting the range of products processed. Many companies end up with multiple cells dedicated to specific parts and products.

Lean is viewed by many in industry to be synonymous with flow manufacturing, which focuses on minimizing movement, handling and eliminating the need to process work in large lots. Lead times are greatly reduced and plant flexibility is tremendously improved. Lean also targets the same sources of waste as just-in-time (JIT) and similar initiatives. In essence, these approaches attempt to minimize inventory, handling and any activities that do not contribute directly to making the product.

JIT especially targets inventory and typically uses a physical trigger such as a card or a tag to pull work into a process or inventory into a point-of-use location. The intent is to delay bringing in inventory or engaging in production until the part or product is needed. In this way, extra inventory or work-in-process is not sitting around the plant taking up space, tying up capital and waiting to become lost, damaged or obsolete.

In flow manufacturing, shop work moves through operations continuously. There are no batches or work orders.

The theory of constraints (TOC) is based on the idea there’s a point (one resource) within a plant that determines throughput. Control and manage that constraining resource or bottleneck and you maximize the throughput of the entire plant. Its drum-buffer-rope (DBR) implementation methodology manages flow to greatly reduce work-in-process and increase throughput while dramatically improving on-time shipment.

Three simple elements form the control system. The bottleneck is the drum that sets the plant’s tempo. Sometimes work doesn’t flow quite as it should (machine breakdowns, materials shortages, personnel issues) so a buffer in front of the constraint ensures the flow never runs dry. The rope connects the constraint to the release of new work to the plant. Companies should only release work at a rate that’s the same as the constraint’s production.

TOC is implemented by following five simple steps:

1. Identify the constraint(s). This is usually pretty easy; just look for the piles of WIP and/or ask the plant supervisor where the biggest bottleneck is.
2. Decide how to exploit the constraint. Maximize the amount of work that flows through the constraint, but ensure there’s a smooth flow coming into this process so there’s never a work delay.
3. Subordinate everything else to the constraint. One of the main principles of TOC is that efficiency at other resources doesn’t matter. No point in up-stream processes produces more work than what flows through the constraint, and downstream processes won’t have more than that to do.
4. Elevate the constraint. Increase its capacity by offloading some of the work, subcontracting, buying more capacity or adding a shift.
5. Go back to step 1 and repeat for continuous improvement. Chances are good by elevating the constraint it won’t be the bottleneck. Identify the new constraint and apply the other steps.
6. TOC can be counterintuitive so it takes some study and thought to understand how and why it works. Nevertheless, many companies are using it with great success.

Richard Kunst is president and CEO of Cambridge, Ont.-based Kunst Solutions Corp., which publishes the “Lean Thoughts” e-newsletter and helps companies become more agile, develop evolutionary management and implement lean solutions.

This article appears in the May/June 2014 issue of PLANT.