Implementing ToC it doesnt have to be hard!

Implementing The Theory of Constraints

It Doesn’t Have To Be Hard!

(c) 2001 Mark Woeppel

Why Are We Here? How do I take what is in the literature and put it in place?

Where are the leverage points in the implementation?

How can I implement without killing anyone?

What factors, if properly implemented result in a sustainable implementation?


Agenda Introduction The TOC production system Planning a successful implementation

Effectively launching your implementation

Integrating constraint management into your business

Organizational alignment


Introduction Understand the process to build and

maintain consensus for change Explore the elements of success How to get your implementation going How the pieces fit together


A Successful Implementation Major functions

Focused on global goal (throughput)

Understand business implications of constraint

Location Desired action

Strategic Planning Takes constraint into account Future location?


Successful Implementation Physical characteristics

Measurement systems Drum-buffer-rope Buffer management Order promising Internal “jonahs”


The Neck of The Funnel Determines the Rate of Flow


What’s Important?1. IDENTIFY the system constraint(s)2. EXPLOIT the identified

constraint(s)3. SUBORDINATE everything else in the

system to step #24. ELEVATE the system's constraint5. Go back to step #1

Each step has business policy and process implications


5 Steps and You Business processes linked to execution Be purposeful in process design Policy issues must be addressed

Lasting implementations codify the steps Devil in the details Anchors in changing environments


TOC in Manufacturing Throughput, inventory & operating expense measures

Drum buffer rope scheduling Buffer management Controlled material release Pull signals from distribution Decision processes around the constraint(s)


A Money Making Machine

expense


Drum – Buffer - Rope Drum is synchronization point for factory Daily schedule Constraint?

Buffer protects the throughput Aggregates variation Focus for execution

Rope protects the priority system Limits work in system Establishes sequences at non-constraints


Why Plan? Well, duh! Incorporate the elements to make the new processes stick

Can’t get help without one Establish deliverables Establish direction

Solution Implementation strategy


Philosophy of Implementation Execution is foundation of improvement

Establishing clear objectives critical Benchmarking Continuous measurement

Early successes build momentum Keep it simple Implementation is evolutionary


Achieving Control

Achieving control is prerequisite to implementing a process of ongoing improvement

Indicators of control deficits Poor due date performance (< 95%) Low inventory turns (< 8) Poor constraint utilization


Implementation Strategy Two parts

Technical – policy & procedure Change management – “soft issues”

Management’s hot buttons (project objectives)

Obstacles to implementation People (power structures) Technology


Implementation Planning Establish clear goals Establish measurements Identify the the constraint(s) Develop a strategy for exploitation

Subordinate the non-constraints Plan for movement of the constraint


Effectively Launching Your Implementation The project launch lays the foundation

for a success Prevents

An unfocussed implementation A never-ending project A premature end due to lack of

commitment or concrete results


Building Consensus To Change Classic difficulties / obstacles Turf issues Fear

Loss of control Organizational stature


Consensus (cont.) The problem of local optima

Each functional manager has only part of business equation (np/roi)

Supply chain cuts across functional lines

Technology and process focus on local execution

TOC is global, requires sub-optimization of local areas / functions


Consensus Building Eliminate resistance Build momentum Establish leadership


Levels of Buy-In Senior Management

Support Results Policy implications

Middle Management Do not block Understand processes

Rank & file Processes Outcomes


How To Do It? Demonstrate clear link

Business results Project outcomes Process methodology

Is TOC good? How will the business be changed?

Project methodology How do I know you can actually do this?


Training Process

What Why

Manage resistance to change Get agreement on new behavior


Training Events Senior Management – 2 days

Build consensus Overview of TOC Strategic implications Implementation issues

Middle / operations management – 2 days Similar to sr. mgmnt. Detailed procedures

Operators – 2 hrs Basic overview Eliminate Fear


Launch Events Training event All hands meeting Post a memo on the bulletin board

Best Communicate Educate Respond to concerns


Integrating Constraint Management Into Your Business Do a thorough analysis Design the processes to fit YOUR organization

Position the solution to maximize buy-in

Have the right processes


Implement Control Processes Selection of constraint (control points)

Development of exploitation policy and procedure

Training of directly involved people

Implementation strategy


Selection of the Constraint Current location

WIP Problems

Strategic location Capital investment Ease of elevation

Constraint, bottleneck, control point


Exploiting the Constraint Scheduling Resource allocation Accountability Alignment with the global plan


Analyzing Your Process Process maps

Identify wasted effort Duplications Wrong decision processes (incomplete)

Incorrect assumptions TOC analysis

Where to focus? Incorrect assumptions


Elements of Order Fulfillment Planning Execution Integration & feedback


Planning Influences on Order Fulfillment

When will the customer receive product?What information do we need?

How to translate customer needs to plant instructions?

How to reconcile customer needs to resource availability?

SalesWrite Up Order

Check Mat'l AvailabilityReserve Capacity & Parts

Gears & ProductionMake the stuffEngineering

Create BOM

Order EntryEnter Order

Prepare Drive Card

SchedulingReview DocsCreate WO

Release to Shop

AssemblyMake the stuff

Shipping

$$

Inventory PlanningSet Stocking levels


Planning Influences on Order Fulfillment

SalesWrite Up Order



Create BOM


Prepare Drive Card


Release to Shop


Shipping

$$


How much can we invest to support our customers?

How to make a quality product effectively?


Execution Influences on Order Fulfillment

What if the standard lead time isn’t good enough?

What if the customer changes his mind? Do we have enough capacity?

SalesWrite Up Order



Create BOM


Prepare Drive Card


Release to Shop


Shipping

$$



Execution Influences on Order Fulfillment

SalesWrite Up Order



Create BOM


Prepare Drive Card


Release to Shop


Shipping

$$


Will we finish on time?Which jobs should be worked on first?

Do we have the right amount of product available?


Feedback & Integration Needs

SalesWrite Up Order



Create BOM


Prepare Drive Card


Release to Shop


Shipping

$$


What’s the status of the buffer?

Are we meeting our schedule?


Critical Processes Scheduling policy & process Measurements to support processes

Execution management Buffer management Release control Schedule control


What Is Alignment?“All elements of a company work together in concert within the context of the organization’s core ideology and type of progress it aims to achieve - its vision or goal. The effect of alignment is that people receive a consistent set of signals to reinforce behavior that supports the core ideology and achieves desired progress”

Built to Last: Successful Habits of Visionary Companies, James C. Collins, Jerry I. Porras


Alignment Questions What are we doing to exploit the constraint?

Where is the constraint relative to management’s plan or desire?

Where is it likely to move next? Is that acceptable? What do I do now?


Breakdown of Alignment Strategic intent Measurement Response


Strategy Development Throughput per minute by product

Which products are most profitable Identify process improvement targets Develop pricing policies

Buffer reports Capacity condition Identify investment needs Goals for operations plans


Measurement Behavior follows measurement Measure the “right” things

What do customers want Improve the business Flexibility and responsiveness


Keys To Success Successful implementations have: Trained people in the “why” Paid attention to change management issues

A real plan Robust processes Senior management leadership


Leverage Points Get consensus before you begin

Avoid resistance Well thought-out goals

Understand your process Get control

DBR Buffer management

Measurement systems


Results Without Fear Train, train, train

Concepts Implications Procedures

Reinforce results Measurement systems Celebrations


Key Processes Scheduling and resource subordination Scheduling Order release FIFO Buffer management

Order promising Sales & Operations planning

MPS or Action meeting

Implementing ToC it doesnt have to be hard!

Business

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