Theory of constraints(toc) & its application in a manufacturing firm
Download as PPTX, PDF3 likes3,828 views
This seminar presentation provides an overview of the Theory of Constraints (TOC). It discusses how TOC was developed by Eliyahu Goldratt in the 1980s and explains the key aspects of TOC, including: identifying the constraint that limits a system from achieving its goal, exploiting the constraint, subordinating all other processes to the constraint, elevating the constraint, and then repeating the process for the new constraint. It also summarizes a case study where TOC was applied to an electromechanic factory facing capacity constraints and helped increase productivity. The presentation covers TOC tools like the five focusing steps, drum-buffer-rope scheduling, and thinking processes to help identify and remove constraints.
Theory of constraints(toc) & its application in a manufacturing firm
- 1. A SEMINAR ON Presented by- SARANG SANJAY DESHMUKH Department of Production Engineering K. K. Wagh Institute of Engineering Education & Research Nashik-42003 (2013 – 2014) Guided by- Prof. K.S. PATIL
- 2. TOC was developed by Dr. Eliyahu Goldratt, a Israeli physicist in the mid 1980’s with his business novel The Goal. Initially Dr. Eliyahu invented a software named OPT This software package quickly and effectively scheduled production in even complex environments by separating bottleneck and non-bottleneck operations. But as this was introduced under license hence many of its topics were not clearly understood and couldn’t fetch the attention of scientists. Hence Dr. Goldratt published his book named as ‘The Goal’ in 1987, in which he suggested and explained TOC after which TOC was widely implemented in various fields.
- 3. The Theory of Constraints is a management policy which provides the determination of the factors which limits a company reaching its objectives and the application of necessary changes to remove these factors generally known as constraints. TOC drives manager to attack these constraints in order to reach the company's primary goal-i.e. to make Money TOC views System as Chain Number of links together form a chain in similar manner as number of elements are responsible for System’s formation. TOC determines an element which limits the system progress and suggest remedy for eliminating that element(Constraint).
- 4. A Constraint is anything that prevents the system from achieving more of its goal. There are many ways that constraints can show up, but a core principle within TOC is that there are not tens or hundreds of constraints. There is at least one and at most a few constraint in any given system. Constraints can be internal or external to the system. There is no choice in the matter of constraints; either you manage the constraints or they manage you. The constraint will determine the output of the system whether they are acknowledged and managed, or not. The system is as strong as its constraint's
- 5. TYPES OF CONSTRAINTS BEHAVIORAL CONSTRAINT Eg. Workers attitude, mental state, mood, etc. MANAGERIAL CONSTRAINT Eg. Management Policies. CAPACITY CONSTRAINT Eg. When Demand > Actual capacity. MARKET CONSTRAINT Eg. When Demand < Actual capacity. LOGISTICAL CONSTRAINT Eg. Problems due to Planning and control system.
- 6. The TOC process seeks to identify the constraint and restructure the rest of the organization around it, through the use of the Five Focusing Steps: 1. Identify the Constraint 2. Exploit the Constraint 3. Sub ordinate everything to the Constraint 4. Elevate the Constraint 5. Repeat for the new Constraint
- 7. Drum-Buffer-rope scheduling method- The DBR process was designed as a means of implementing the five-step process of continuous profit improvement. It is used to represent how a factory should be scheduled based on TOC. The DBR methodology consists of three elements: Drum The drum is the schedule for the system’s constraint(s) and represents a portion of the exploitation phase of the five-step improvement process. It is used to maximize the available time of the constraint and to create the master production schedule (MPS). Like the bass drum in a marching band, it is the drumbeat of the manufacturing facility. All other resources produce in synchronization to the constraint’s schedule. Buffer The buffer is a time mechanism used to allow for those things that will go wrong, and it determines the lead time for products from the gating operations. The buffer is equal to the processing time plus the setup time plus an estimate of the aggregated amount of protective time required to ensure that the product will get to the buffer origin when needed. Rope The rope is the synchronization mechanism for the other resources and consists of the release schedule for all gating operations. Technically the rope is equal to the constraint schedule date minus the buffer time. The release of material determines the timing for parts being processed on the nonconstraint resources.
- 8. The thinking processes are a set of tools to help managers walk through the steps of initiating and implementing TOC. Tools of Thinking processes of TOC TOOLS OF THINKING PROCESS Current Reality Tree(CRT) Evaporating cloud(EC) Future Reality Tree(FRT) Transition Tree Prerequisite Tree(PT) What to Change? What to Change to? How to Change?
- 9. FINANCIAL MEASUREMENT Net Profit- An absolute measurement in rupees Return on Investment- A relative measurement based on investment. Cash Flow- Money coming in VS money coming out OPERATIONAL MEASUREMENT Throughput- Money flowing In Rate at which a system generates money through sales Inventory- Money inside company ▪ Inventory refers to all the money that the system has invested in things that are expected to be sold. Operating Expenses- Money flowing Out ▪ All the money a system spends in turning inventory into throughput
- 10. Potential for tremendous increases in productivity with minimal changes to operations. Most powerful and cost effective tool for increasing production capacity. Very simple to communicate and apply, making it ideal for shop floor teams. Great for fostering teamwork as different areas become aware of the constraint and the need to work together to assist the constraint process. It provides immediate and very tangible benefits. Allows growth of turnover/productivity without the need for additional space or staff. Provides a means to evaluate the true value of changes (using T, O, I), and utilize this to select the best options, and drive the right behavior/decisions.
- 11. The considerable length of training time required to achieve mastery of the theory. The considerable length of time required to complete the problem identification and solving process. The need for the cooperation and enthusiasm of all the people involved with the problem, and Its over reliance on group work.
- 12. Background- • Case study was carried out in a Electromechanic factory located in Istanbul. • This factory is a supplier of keys. • The problem face by the factory was that it was lacking in manufacture of the required quantity of keys as demanded by the company. i.e. The company's demand was 500quantity of keys whereas this firms capacity was 450 quantity of keys in given time. • Then so as to increase productivity TOC was implemented and results were as discussed below-
- 13. Step1. Identify the Constraint- o This steps focuses on finding the constraints that limits the firms capacity. o Hence , the table indicating firms current capacity was prepared.(refer table 1) o From table the column current indicates current processing time of firm and the column Total indicates the processing time required to produce 500 keys. o It clearly shows that all other operation have required processing time less than the current processing time, except the plastic injection machine. o This indicates that the constraint is the Plastic injection machine
- 14. Step2 - Exploiting the Constraint o The machine is continuously working even during meal breaks and other breaks. o An operator works on machine every time so there is nothing to do on this phase, it’s time to examine the next phase. Step3- Subordinating everything else- o In this step other resources are managed to get maximum efficiency at constraint point. o But here it seems that plastic injection is the initial operation so late supply of raw material was examined but there seemed no fault in it. Step4 – Elevating the systems Constraints. o The process of plastic injection was examined. From table it was observed that setup time of plastic injection could be controlled. o Hence a PLC(Programmable Logic control) system was used to reduce the setup time of injection machine.
- 15. o The use of PLC system reduced the setup time from 20mins to 1 min. And eventually reduced the processing time of Plastic Injection Machine to1hr. 26 mins. The adjacent table shows the same. Step5 –Back to Step 1 o As observed in table below the factory now has its increased productivity and company's demand is fulfilled. o Now another constraint arises i.e. Market constraint and hence back to step 1 to eliminate it.
- 16. Hence with help of above case study we can conclude that TOC, with its Five focusing steps and all of its related philosophy including Thinking process and drum buffer-rope scheduling method, provides an approaches for identifying and exploiting bottlenecks in the organization. These steps of TOC leads to improvements in operations, decrease in lead time, decrease in cycle time, improves the due date performance, throughput increases and eventually contributes in improvement of the whole system.
- 17. THANK YOU