TOC Mining Operations general appreciation
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This document presents a series of heuristic flows related to mining operations that emphasize the Theory of Constraints and the importance of optimizing flow over local efficiency. It critiques common beliefs that lead to inefficiencies in operational processes, highlighting how bottlenecks and variation affect overall performance and costs. The conclusion illustrates that adopting an optimized flow approach can significantly enhance performance, customer satisfaction, and profitability.
TOC Mining Operations general appreciation
- 1. TOC for Mining Operations General Appreciation The Theory of Constraints approach to Operational Excellence These Slides have been prepared and presented by Arrie van Niekerk and form part of a series of presentations that were developed over several years. They represent a personal view of the subjects and are not to be interpreted as official documents of any kind. Heuristic FLOW 1 Goldratt Group (Southern Africa) © 2004 Heuristic Flow © 2008
- 2. TOC in Context Own Distribution Suppliers Purchasing Market Processes Channel Heuristic FLOW 2 Goldratt Group (Southern Africa) © 2004 Heuristic Flow © 2008
- 3. The Impact of Our Ideologies RESULTS WORDS ACTIONS IDEOLOGY We very seldom take a step back and challenge our core beliefs as the reason why some things just do not work Heuristic FLOW 3 Goldratt Group (Southern Africa) © 2004 Heuristic Flow © 2008
- 4. “The significant problems we face today cannot be solved with the same level of thinking we were at when we created them.” – Albert Einstein Heuristic FLOW 4 Goldratt Group (Southern Africa) © 2004 Heuristic Flow © 2008
- 5. Basic Frame of Reference Understanding the world of FLOW, Variation and Interdependence Heuristic FLOW 5 Goldratt Group (Southern Africa) © 2004 Heuristic Flow © 2008
- 6. Managing a Complex Environment 15 12 16 13 12 17 IN 11 15 16 14 10 13 12 9 OUT 11 18 11 20 19 • Complexity stems from the number of agents (21), number of linkages (35), time dependence, time delays, technical details, social considerations, cause and effect relationships, etc Heuristic FLOW Goldratt Group (Southern Africa) © 2004 Heuristic Flow © 2008
- 7. Examples of sequential flow processes Hydraulic Valve Manufacturing Raw Machine Drilling Welding Saw Assembly Packaging Material Station Station Station Valve Sand Mining Sand Trucks Wash Loader Screen Load Transport Product Source (x2) & Dry Occupational Health Screening BP & Patients Admin Chest Hearing Eyes & Certify Patients Lung arrive Reception X-Ray Test Urine (Nurse) Leave Capacity Heuristic FLOW Goldratt Group (Southern Africa) © 2004 Heuristic Flow © 2008
- 8. A Few Trivial Questions A B C D E F • You are instructed to cut costs by 10% in order to meet the challenge of a lower Sales Price – How would you go about it? – What process would you follow? • Is there another, more meaningful way? Heuristic FLOW 8 Goldratt Group (Southern Africa) © 2004 Heuristic Flow © 2008
- 9. A Few Trivial Questions A B C D E F 65% 60% 72% 92% 75% 80% • You are faced with the above efficiency report: – Where will you focus most of your attention? – Where will you not put any attention now? • What is the most probable action you will take in order to get quick results? Heuristic FLOW 9 Goldratt Group (Southern Africa) © 2004 Heuristic Flow © 2008
- 10. A Very Basic Operation A sequential flow line with processes of different average capacity (e.g. Tons per Hour) Mineral Resource 15 16 14 10 13 12 Product What bothers you about this chain? Expected output of this chain = ? How will you go about improving it? Heuristic FLOW 10 Goldratt Group (Southern Africa) © 2004 Heuristic Flow © 2008
- 11. A Perfectly Balanced Chain? Mineral Resource 16 16 16 16 16 16 Product Output of the chain = ? Mineral Resource 10 10 10 10 10 10 Product Output of the chain = ? What are the deep rooted beliefs that cause us to develop chains like these? Heuristic FLOW 11 Goldratt Group (Southern Africa) © 2004 Heuristic Flow © 2008
- 12. The World of Local Efficiency Heuristic FLOW 12 Goldratt Group (Southern Africa) © 2004 Heuristic Flow © 2008
- 13. THE WORLD OF Local Efficiency When we prepare our budgets, what is the governing mental model? Mineral Resource 10 10 10 10 10 10 Product Output of the chain = ? What causes us to develop chains like these? Heuristic FLOW 13 Goldratt Group (Southern Africa) © 2004 Heuristic Flow © 2008
- 14. The world of Local Efficiency: A Perfectly Balanced Chain? Mineral Resource 10 10 10 10 10 10 Product For this system we believe that: A The output of the chain will be 10 (or close to it) If every resource in the chain is optimised, B we will have an optimised chain C Balancing Capacity results in Optimised Flow D We have to utilise all resources to their full capacity Heuristic FLOW 14 Goldratt Group (Southern Africa) © 2004 Heuristic Flow © 2008
- 15. Fact No1 in a Chain: ALL RESOURCES VARY OVER TIME Input Output Resource Max 12 Performance Ave 10 Min 0 Time Heuristic FLOW 15 Goldratt Group (Southern Africa) © 2004 Heuristic Flow © 2008
- 16. Fact No2 of a Chain: RESOURCE DEPENDENCY IS HIGH and works forwards and backwards Mineral Resource A B C D E F Product Upstream: STARVATION Downstream: BLOCKAGE Heuristic FLOW 16 Goldratt Group (Southern Africa) © 2004 Heuristic Flow © 2008
- 17. In Combination: Variation and Interdependency kills the synchronisation of FLOW 10 10 10 10 10 10 12 Performance 10 5 0 Time Heuristic FLOW 17 Goldratt Group (Southern Africa) © 2004 Heuristic Flow © 2008
- 18. Context “If a company tell me they have moving bottlenecks, my response is: You have no bottlenecks and most of your resources have at least 30% spare capacity” – Dr Eli Goldratt Heuristic FLOW 18 Goldratt Group (Southern Africa) © 2004 Heuristic Flow © 2008
- 19. How Much Will It Produce in Reality? 10 10 10 10 10 10 ? Availability 94% (0.94)6 = 73% of design capacity Availability 90% (0.90)6 = 58% of design capacity Availability 80% (0.80)6 = 31% of design capacity Heuristic FLOW 19 Goldratt Group (Southern Africa) © 2004 Heuristic Flow © 2008
- 20. World of Local Efficiency Mineral Resource 10 10 10 10 10 10 Product Guaranteed Outcome: Performance well below standard, Costs per part go through the roof! What will the resulting behaviours be? • Relentless cost control measures • Adjustments of all input costs, downwards (easiest) • Increased pressure on all levels to improve local efficiencies • Focus on every link in the chain – cost and efficiency • Undiscussable issues everywhere – “stop complaining and just do your job!” (We know better) • ……………… Heuristic FLOW 20 Goldratt Group (Southern Africa) © 2004 Heuristic Flow © 2008
- 21. How do we normally handle improvement? Mineral Resource 16 16 16 16 16 16 Product Output of this chain = 8 We throw money at the problem We start with … 6/7 Mineral 15 16 14 10 13 12 Improve! Resource Or we Cut Costs Mineral Resource 10 10 10 10 10 10 Product Output of this chain = 5 These chains suffer from the same flaw! Heuristic FLOW 21 Goldratt Group (Southern Africa) © 2004 Heuristic Flow © 2008
- 22. Another World, The World of OPTIMISED FLOW Heuristic FLOW 22 Goldratt Group (Southern Africa) © 2004 Heuristic Flow © 2008
- 23. Every Chain has a Weakest Link and it determines the FLOW of the total chain 10 • How well should it be run? • What is the implication of standing time? • What is required from Maintenance? • What about operator availability and skill? • What about quality control? • What about product value? Heuristic FLOW 23 Goldratt Group (Southern Africa) © 2004 Heuristic Flow © 2008
- 24. Next: Buffer the FLOW of the critical resource from fluctuation in the rest of the chain 10 • We have to Protect the Constraint from the rest of the chain by buffering • We must effectively buffer the FLOW chain from every possible negative effect Heuristic FLOW 24 Goldratt Group (Southern Africa) © 2004 Heuristic Flow © 2008
- 25. Next: Ensure that the rest of the chain can support the needs of the constraint ? ? ? 10 ? ? 10 Protective Protective Capacity 10 Capacity (Flexibility) (Flexibility) We need 20% protective capacity in front and behind the constraint in order to maintain the FLOW Heuristic FLOW 25 Goldratt Group (Southern Africa) © 2004 Heuristic Flow © 2008
- 26. Impact of Buffers on FLOW ? ? ? 10 ? ? 12 Performance 10 With buffers 5 Without buffers 0 Heuristic Time FLOW 26 Goldratt Group (Southern Africa) © 2004 Heuristic Flow © 2008
- 27. Buffers & Protective Capacity A B C D E F Protective Capacity • Establish and maintain a buffer of work in front of the constraint • Establish and maintain a space buffer behind the constraint • Without protective capacity, buffers cannot be managed • Making sure that we will not stop the FLOW Heuristic FLOW 27 Goldratt Group (Southern Africa) © 2004 Heuristic Flow © 2008
- 28. COMPARING Local Efficiency and Optimised FLOW in terms of ability to MAKE MONEY Heuristic FLOW 28 Goldratt Group (Southern Africa) © 2004 Heuristic Flow © 2008
- 29. Comparing the Production Costs Availability (0.94)6 = 73% of design capacity 12 12 12 10 12 12 94% 10 10 10 10 10 10 A B C D E F A B C D E F Costs 6 x 10 = 60 (5x12) + 10 = 70 Output 7,3 Units 9,4 Units Cost/Unit 60/7,3 = 8,2 70/9,4 = 7,5 Availability (0.80)6 = 31% of design capacity 80% 10 10 10 10 10 10 16 15 14 10 13 12 A B C D E F A B C D E F Costs 6 x 10 = 60 (16+15+14)+10+(13+12)= 80 Output 3,1 Units 8,0 Units Cost/Unit 60/3,1 = 19,4 80/8,0 = 10 Heuristic FLOW 29 Goldratt Group (Southern Africa) © 2004 Heuristic Flow © 2008
- 30. Production Costs: Closer to REALITY Availability (0.90)6 = 58% of design capacity 13 13 13 10 12 12 90% 10 10 10 10 10 10 A B C D E F A B C D E F Costs 6 x 10 = 60 (3x13)+10+(2x12) = 73 Output 5,8 Units 9,0 Units Cost/Unit 60/5,8 = 10,3 73/9,0 = 8,1 Availability (0.80)6 = 31% of design capacity 80%, but 10 10 10 10 10 10 16 15 14 10 13 12 Constraint 85% A B C D E F A B C D E F Costs 6 x 10 = 60 (16+15+14)+10+(13+12)= 80 Output 3,1 Units 8,5 Units Cost/Unit 60/3,1 = 19,4 80/8,5 = 9,4 Heuristic FLOW 30 Goldratt Group (Southern Africa) © 2004 Heuristic Flow © 2008
- 31. Comparing the Profit: 90% Availability 10 10 10 10 10 10 13 13 13 10 12 12 A B C D E F A B C D E F Costs 6 x 10 = 60 (3x13)+10+(2x12)= 73 Output 5,8 Units 9 Units Cost/Unit 60/5,8 = 10,3 73/9 = 8 Reducing the Cost/unit produced by 22% Income 5,8 x 15 = 87 9 x 15 = 135 Costs 60 73 Profit 87 - 60 = 27 135 - 73 = 62 Extra profit created through “additional costs”: 35 Costs of lost opportunity is not even measured and it is the biggest cost to the company- buffering pays for itself many times over Heuristic FLOW 31 Goldratt Group (Southern Africa) © 2004 Heuristic Flow © 2008
- 32. Comparing the Profit: 90%BC vs 80%Flow 10 10 10 10 10 10 16 15 14 10 13 12 A B C D E F A B C D E F Costs 6 x 10 = 60 16+15+14+10+13+12= 80 Output 5,8 Units 8,5 Units Cost/Unit 60/5,8 = 10,3 80/8,5 = 9,4 Reducing the Cost/unit produced by 9% Income 5,8 x 15 = 87 8,5 x 15 = 127 Costs 60 80 Profit 87 - 60 = 27 127 – 80 = 47 Extra profit created through “additional costs”: 20 Costs of lost opportunity is not even measured and it is the biggest cost to the company- buffering pays for itself many times over Heuristic FLOW 32 Goldratt Group (Southern Africa) © 2004 Heuristic Flow © 2008
- 33. Context “If you want to make money, ... most of your resources MUST be IDLE form time to time” – Dr Eli Goldratt Heuristic FLOW 33 Goldratt Group (Southern Africa) © 2004 Heuristic Flow © 2008
- 34. Comparing the Chains: Operation 10 10 10 10 10 10 16 15 14 10 13 12 A B C D E F A B C D E F Balanced Capacity Balanced FLOW Murphy Exposed Murphy Protected Unstable Flow Stable Flow Control Everything Control Leverage Points Manage by Budget Manage by Constraint Uncontrolled Idle Time Managed Idle Time Higher Cost/Product Lower Cost/Product World of Scarcity World of Abundance Heuristic FLOW 34 Goldratt Group (Southern Africa) © 2004 Heuristic Flow © 2008
- 35. Comparing the Chains: Mental Models 10 10 10 10 10 10 16 15 14 10 13 12 A B C D E F A B C D E F Balanced Capacity Balanced FLOW Can we describe the Can we try to describe types of thinking the mental models behind this type of behind this type of chain? chain? Heuristic FLOW 35 Goldratt Group (Southern Africa) © 2004 Heuristic Flow © 2008
- 36. IN SUMMARY Heuristic FLOW 36 Goldratt Group (Southern Africa) © 2004 Heuristic Flow © 2008
- 37. IN SUMMARY In the world of Local Efficiency: – The overall performance will inevitably be well below expectation, – Deliveries will almost always be late – Product availability will be low – You are guaranteed to have frustrated customers – The costs will inevitably be higher than expected – Company performance is bound to go down Heuristic FLOW 37 Goldratt Group (Southern Africa) © 2004 Heuristic Flow © 2008
- 38. IN SUMMARY In the world of Optimised Flow: – The overall performance will be better than expected, – Deliveries will almost always be on time – Product availability will be exceptionally high – You are guaranteed to have satisfied customers – The costs will inevitably be lower than expected – Company performance is bound to go up Heuristic FLOW 38 Goldratt Group (Southern Africa) © 2004 Heuristic Flow © 2008
- 39. KEY FOCAL POINT / “Constraint” Heuristic FLOW 39 Goldratt Group (Southern Africa) © 2004 Heuristic Flow © 2008
- 40. BUFFERING Heuristic FLOW 40 Goldratt Group (Southern Africa) © 2004 Heuristic Flow © 2008
- 41. SUBORDINATION Heuristic FLOW 41 Goldratt Group (Southern Africa) © 2004 Heuristic Flow © 2008
- 42. PROTECTIVE CAPACITY Heuristic FLOW 42 Goldratt Group (Southern Africa) © 2004 Heuristic Flow © 2008
- 43. “The closer you are to a balanced capacity chain, the closer you are to bankruptcy” – Dr Eli Goldratt Heuristic FLOW 43 Goldratt Group (Southern Africa) © 2004 Heuristic Flow © 2008
- 44. It is all about FLOW, not CAPACITY The flow through the bottleneck determines the output of the chain as a whole! Key question to ask: HOW CAN WE HELP THE BOTTLENECK TO PERFORM BETTER? Heuristic FLOW 44 Goldratt Group (Southern Africa) © 2004 Heuristic Flow © 2008
- 45. New Holistic Mechanism In order to … We must … 16 16 16 16 16 16 Maximise A B C D E F In order to … FLOW Make More 16 15 14 10 13 12 Money We must … A B C D E F (Now and in the Future) Control 10 10 10 10 10 10 A B C D E F COSTS We must … In order to … DIRECTION: Mental frameworks that are aligned with the LAW that Governs Flow Heuristic FLOW 45 Goldratt Group (Southern Africa) © 2004 Heuristic Flow © 2008
- 46. Our ‘logic’ is indeed flawed! Mineral Resource 10 10 10 10 10 10 Product A The output of the chain will be 10 (or close to it) If every resource in the chain is optimised, B we will have an optimised chain C Balanced Capacity results in Optimised Flow D We have to utilise all resources to their full capacity A B C 10 E F Protective Capacity Heuristic FLOW 46 Goldratt Group (Southern Africa) © 2004 Heuristic Flow © 2008
- 47. The Theory of Constraints? The Power of Leverage “Doing the right thing” A DIFFERENT WORLD! Heuristic FLOW 47 Goldratt Group (Southern Africa) © 2004 Heuristic Flow © 2008
- 48. We followed the 5 focusing steps based on the laws of FLOW Continuously improve overall performance A chain is only as strong as its weakest link Step 1: Step 2: Step 3: Step 5: Subordinate Step 4: If you have Identify Decide how everything Elevate the broken a weakest the to exploit to the weakest link then go back weakest the weakest previous link to step 1 link link decisions Remember: Old habits die hard Heuristic FLOW 48 Goldratt Group (Southern Africa) © 2004 Heuristic Flow © 2008
- 49. Enhanced Management A B C D E F 70 80 90 60 100 Time + 50 Buffer • Key Focal point(s) • Constraint Rate & Schedule • Buffer Management Heuristic FLOW 49 Goldratt Group (Southern Africa) © 2004 Heuristic Flow © 2008
- 50. Synchronized Flow The DRUM-BUFFER-ROPE way Raw Material Flow Time Finished Space Buffer Goods Buffer A B C D E F “Rope” that ties the first process Constraint or “DRUM” to the Constraint operation that determines the flow rate of the system Heuristic FLOW 50 Goldratt Group (Southern Africa) © 2004 Heuristic Flow © 2008
- 51. Management for Complex Production = Active Constraint 100 – = Next Constraint 90 – = Near Constraint Capacity (Items per hour) 80 – = Non Constraint 70 – = Sprint Capacity 60 – Internal Constraint (Lowest Capacity) 50 – Minimum Acceptable Utilisation Level for Break Even 40 – 30 – 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 10 | Process / Line Number Heuristic FLOW 51 Goldratt Group (Southern Africa) © 2004 Heuristic Flow © 2008
- 52. TOC Breakthrough Thinking 1. Optimised flow and optimised capacity cannot be achieved simultaneously (except on the constraint itself) 2. In order to optimise flow you MUST have buffers and protective capacity (resilience) 3. For services, the customer becomes the “raw material” and any bottleneck causes a queue (and customer dissatisfaction) 4. Superior Flow and/or Customer Service necessitates protective capacity at all times 5. Optimised Flow paves the way for significant reduction on costs per part produced Heuristic FLOW 52 Goldratt Group (Southern Africa) © 2004 Heuristic Flow © 2008
- 53. Generic “Model” for Optimal FLOW in Open Cast Mining Operations SAFETY Quality Quality Flowing OUT Ore Overburden Drill & Load & Crushing Treat Product Body Removal Blast Haul Exposed Floor ROM Plant Ore Stock Buffer Stock Slimes Pile Flowing Total Subordination to the CORE PROCESS IN PEOPLE Material Equipment Maintenance Services Simulate - Measure - Improve Heuristic FLOW 53 Goldratt Group (Southern Africa) © 2004 Heuristic Flow © 2008
- 54. Generic “Model” for Optimal FLOW in Underground Mining Operations SAFETY Quality Quality Flowing OUT Ore Develop Product Opening Up Equip Stope Tram Hoist Plant Body Pay Pay Boxes Ore Plant Face Equipped Pass Stock Length Panels Pile Flowing Total Subordination to the CORE PROCESS IN PEOPLE Material Equipment Utilities Services Simulate - Measure - Improve Heuristic FLOW Goldratt Group (Southern Africa) © 2004 Heuristic Flow © 2008
- 55. Typical TOC Flow Model for a Shaft Gold Primary Safety Rate kg/d Development Rate m/d= create buffer + match Loco & hopper stoping rate 1:10 Buffers Head Grade Ore Timber Cars Proven Reserve on Surface Raise Buffer Reserves Development Months Timber Pay Face Ledging Buffer A1 Equipping A2 Rate t/d per level HG/LG Equipped A3 Stoping panels Buffer Man A4 Carriages Rate m²/d A5 Panel Temp < 29 Stoping A6 S/W width Sweepings Rate t/d Buffers Labour Material Services Timber Equipment Utilities Spares Heuristic FLOW Goldratt Group (Southern Africa) © 2004 Heuristic Flow © 2008
- 56. Example – Managing a Tramming Bottleneck Buffer of 6,0 hours People available Timber Cycle Rate t/d 4,5 h skills Shaft Stoping Panels Schedule Timber Cars Shaft on Surface Stores Daily Routine Buffer 1,5 hr Buffer Loco Drivers Timber Material & Explosives Stope Boxes Tramming U/G Crews Stores Reef Development Timber Cycle Man Carriages People Drill Blast Material Waste Tons Trammed Clean Tramming Bottleneck Spares Hoppers Locos Maint Regular Services Haulage Conditions Skills Preventive Engineering Rail Maint Crews Maintenance Heuristic FLOW 56 Goldratt Group (Southern Africa) © 2004 Heuristic Flow © 2008
- 57. Buffer Management in a Stope, Day Shift Total Shift Time Total Face Shift Time Available Face Time T T R WP R A MS Critical Path A V DP DRILLING NP Chrg Face V E E Transport Time L L Build Packs FB Buffer T T I Winch Winch I M M Feeding E E Buffer Face Prep time Amount of timber required Tons per blast Time to make safe Number of holes Transport time Face cleaning time Time to move services Depth of holes Number of Stope workers Strike gully cleaning Time to charge up Number of RDOs Time to build packs Centre Gully cleaning Amount of explosives Drilling time for face & Size of buffer Number of winch drivers Night shift preparation stick side Heuristic FLOW Goldratt Group (Southern Africa) © 2004 Heuristic Flow © 2008
- 58. Example – Managing a Stoping Bottleneck Support & Safe time Buffer of MO Crews 6,0 hours Drilling time available Fully skills 4,5 h Scraping time Functional Crew Support transport time Preparation time Daily Routine 1,5 hr Buffer Ventilation Critical Material, Spares Stoping Panels & Equipment Total Water Material & Explosives Other Panel Crew Support U/G Compressed Stores air Timber & Support Timber Panel Crew People Equipped Panels Man Carriages Adequate Ledging & Gullies Panels Equipping Reef Tramming Stope Pay Face Boxes Length Waste Tramming Shaft Development Shaft Stores Tons Trammed Heuristic FLOW 58 Goldratt Group (Southern Africa) © 2004 Heuristic Flow © 2008
- 59. Lost Blast Analysis: Reflect the total chain • Questions to ask: – Where in the cycle did we lose the blast? – What part of the system failed? – What can we do to ensure it does not happen again? Materials Own Downstream Upstream PEOPLE Total Shift Time Face Shift Time Machinery T Critical Chain Time T R R WP Critical Path Equipment A MS A V DP DRILLING NP Chrg V E Face E Utilities Transport Time L L Build Packs FB Buffer T Winch Winch T Services I I M Feeding M Heuristic E Buffer E FLOW Goldratt Group (Southern Africa) © 2004 Heuristic Flow © 2008
- 60. Full TOC Implementation Queue must be Information Information Sales / kept as short as Warehouse Bw Bc Income possible 1 Consumer Inventory 1 Quality Speed Bm Bc Consu- Cost Consumer Warehouse 2 mables 2 Bw Maintenance Manufacturer Bc Consumer & Service 3 Throughput G Warehouse Operating Bw Bc Expense Y Consumables 3 Consumer 4 R &Spares Ore Develop Product Equip Stope Tram Hoist Plant Body Opening Up Face Equipped Boxes Ore Plant Length Panels Pass Stock Pile Subordination to the Core Flow PEOPLE Material Equipment Utilities Services Heuristic FLOW Goldratt Group (Southern Africa) © 2004 Heuristic Flow © 2008