Application of Theory of constraints to Stock Storage Optimization in Ethnographic way

Kartiki Jagtap#, Dr.A.Neelakanteswara Rao*

#M.Tech. (Computer Integrated Manufacturing), Mechanical DepartmentNational Institute of Technology, Warangal, India

kartikijagtap@yahoo.co.in

*Associate Professor, Mechanical Department National Institute of Technology, Warangal, India.

neelu.nitw@gmail.com

Abstract— As a result of ever-increasing competition in the market, for a company, the problem of responsiveness to the market, worsens every passing day. A substantial part of this non-value added time occurs in the warehousing department of the company. The practically proven to be effective concept of Theory of Constraints is been applied here. Better managed storage locations can significantly lower this time. This paper presents a comfortable and easy to learn nomenclature for the warehousing department in an Ethnographic way, so as to reduce the non-value added time in searching for particular location of part.

Keywords— Theory of Constraints, Inventory naming convention, Non-value added time

I. INTRODUCTION

Popularized by Eliyahu Goldratt and his book The Goal (Goldratt and Cox, 1986), the theory of constraints is a management philosophy that seeks to increase system throughput (efficiency or system performance measured by sales) by identifying those processes that are constraining the system‐‐the bottlenecks. It is based on a systems approach that simplifies the improving and managing of complex organizations by focusing on the few physical and logical constraining points. Even more, it provides a way to build and implement the rules or policies that synchronize the whole company to achieve an order of magnitude improvement in the performance of the system as a whole.

The insight of The Theory of Constraints is that only a few elements (constraints) in a business control the results of the entire organization. The Theory of Constraints has three underlying assumptions:

1. Consistency: There are no conflicts in nature: if two interpretations of a natural phenomenon are in conflict, one or possibly both must be wrong

2. Common sense: “A chain is no stronger than its weakest link”, basis for the constraints approach. STOP FOCUSING ON EFFICIENCY.

3. Organizational measurements: Any organization can be measured in terms of three measurements – Throughput, Inventory and Operational expenses.Theory of Constraints is a proven method that can be

used to increase throughput (sales), reliability, and quality while decreasing inventory, WIP, late deliveries, and overtime. The Five Focusing Steps of Ongoing Improvement are:

1. Identify the system’s constraint2. Decide how to exploit the system’s constraint3. Subordinate everything else to the prior decisions4. Elevate the system’s constraint5. If, in the prior steps, the constraint has been broken, go back to step one

Ethnography is the branch of anthropology that provides scientific description of individual human societies and studies origins and social relationships of human beings.

In this paper, use of TOC has been made in order to reduce the non-value added time on the shop floor. Each company requires a standard nomenclature for the

identification of storage locations of each part. This nomenclature is mostly used by the workers in the company who are involved in storing the part at appropriate places when it arrives, handling and retrieving it when it is required on the shop floor. So, the nomenclature should be easy to understand and use and get acquainted with. This will minimize the time involved in the futile activities.

II. METHOD

As first step in applying Theory of Constraints is finding a constraint. So, the total time for a job to get completed, consists of the material handling time. That means this non-value added time in handling of the parts is constraint. This time is majorityly increased by workers in searching for the part. This is mainly due to confusion or lack of acquaintance to the warehouse. To reduce this confusion the storage nomenclature should be in such a way that, it is easy to understand and find the part is less time. So the nomenclature introduced was as in a format:

Fig. 1 Proposed Inventory naming Convention

- This code is 11 digits long.- The first two places standing for a particular product

category in the industry like 4W – for four wheeler section.

- The next two places standing for a particular department in the product category’s plant. E.g. AS – assembly store

- 5th and 6th position corresponds to the form of the storage location. E.g. PL – platform

- 7th position represents the zone in the limited storage location, specified by the previous information. E.g. A, B or C...

- 8th and 9th places stand for row number, ranging from 0-99.

- 10th and 11th places stand for column number, ranging from 0-99, particular to the row number.

The total no of parts that can be accommodated, on a single storage location with this nomenclature would be (99*99) i.e. 9801.

III. DISCUSSIONExample 1: To elaborate over it a little, we consider an industry (one of the automotive industries in India, where I have employed this approach) which manufactures two, three and four wheelers. Raw materials are ordered from vendors, which need to be stored in warehousing department of each product categories plant. There is fabrication shop, paint shop,

manufacturing line and then an assembly store for each product category.

For the current nomenclature, to make applicable to this scenario

Particular department can be designated as

FS – fabrication shopPS – paint shopML – mezzanine floorAS – assembly stores

Next the particular storage locations can be designated as

HR – High rise Rack LayoutsHW – Hardware Rack Components Storage LocationsPL – Platform Storage locationCG – CagesMF – Mezzanine Floor Storage Location

DC – Dock, unloading placeRM – Ramp, Heavy and less frequently needed parts.

IV. CONCLUSIONS

The given case can be applied to any kind of industry, including small scale Indian industries, where automatic storage and retrieval systems are not used. This nomenclature is easy to understand and it is easy to find the desirable part as the 6th and 7th digits clearly indicate the form of storage . a worker, by visual review only, can search for a part, which reduces the non-value added time.

REFERENCES[1] Cox, Jeff; Goldratt, Eliyahu M. (1986). The goal: a process of ongoing

improvement. [Croton-on-Hudson, NY]: North River Press.[2] Goldratt, Eliyahu M. (1997). Critical Chain. Great Barrington, MA:

North River Press.[3] Goldratt, Eliyahu M.. Theory of Constraints. [Great Barrington, MA]:

North River Press