Theory Of Constraints
- 1. Theory of Constraints From “The Goal” by Eliyahu M. Goldratt
- 2. Introduction The Goal of Business Will help explain why we are slowing down Dependant Events & Statistical Fluctuations Background for Lean MFG How do you speed up your processes? Direct application to Lean initiatives Thinking Process Helps to know how to proceed Applications to Lean Conclusion
- 3. What is the Goal? The Goal of any business is to make money. Throughput is the rate at which the system generates money through sales. (increase) Inventory is all the money that the system invested in purchasing things which it intends to sell. (reduce) Operational Expense all the money the system spends in order to turn inventory into throughput. (reduce)
- 4. What are Process Dependant Events & Statistical Fluctuations? Dependant Events require one step to happen before another in a process Statistical Fluctuations are the range within a process occurs in (i.e. Batch titer) Accumulation of fluctuations occurs further down a process, dependency limits the opportunities for higher fluctuations, you’ll see lower more often. The slowest (least capacity) process step is where you need to focus efforts to increase speed. But need to avoid looking at local area processes, need to optimize the whole system Only as strong as the weakest link.
- 5. What are the Next steps? Identify bottlenecks & non-bottleneck resources Bottleneck (constraint) = a resource whose capacity is less than or equal to the demand placed on it. Non-bottleneck (non-constraint) = a resource whose capacity is greater than the demand placed on it. Value Stream Mapping (VSM)
- 6. Example VSM
- 7. Bottleneck Rules: Balance the flows of product through the plant with demand from the market Therefore the flow through the bottleneck (constraint) needs to equal (or a bit less) to demand. Thus the capacity of a plant is equal to the capacity of the bottlenecks (constraints) Whatever the bottleneck produces in 1 hr, the plant will produce in 1 hr.
- 8. The 4 Elements of Time Set-up time = time a part spends waiting for a resource Process time = time a part spends being modified into a new more valuable from Queue time = time a part spends in line waiting for a resource Wait time = time a part waits, not for a resource, but for another part so they can be assembled together.
- 9. Reduce Batch sizes If you don’t add anything (like people) how are you adding costs Since for parts going thru a bottlenecks, queue time is the dominate portion of the total elapsed time. Bottlenecks dictate inventory as well as throughput If reduce batch size in half, you reduce by half the time to process a batch, thus queue & wait time reduce and reduces the total time a part spends in a plant = reduced lead times.
- 10. Rules cont… The level of utilization of a non-bottleneck is not determined by its own potential, but by some other constraint in the system. The Process: ID the constraints Decide How to exploit the constraints Subordinate everything to #2 (green/red tags ex) Evaluate the system’s constraints If constraints gets broken go back to #1
- 11. The Thinking Process What to change? What to change to? How to cause the change?
- 12. Lean Six Sigma Link Lean means speed; to all processes Slow processes are expensive Lean metric = process cycle efficiency Batch size must be calculated using flow variables 95% of lead times in most processes is wait/queue time To improve speed, ID & eliminate time traps (bottlenecks): Use 3 laws of Lean Six Sigma
- 13. 3 laws of Lean Six Sigma 0. Law of the Market- Customer critical-to-quality issues must be addressed first. Law of flexibility- Process velocity is directly proportional to flexibility. Flexibility proportional to workstation turnover time. Max flex achieved by min batch size. Law of Focus- 80% of the delay is caused by 20% of the activities Law of Velocity- the average velocity of flow thru any process is inversely proportional to the # of “things” in process and variation in supply & demand.
- 14. Conclusion The Goal of Business Dependant Events & Statistical Fluctuations How do you speed up your processes? Thinking Process Applications to Lean