32nd International Conference of the TOC Practitioners Alliance - TOCPA www.tocpractice.com
23 March, 2017 – Milan, Italy
How to exploit the system's constraint TOC - Lean - Six Sigma Business case experience
Emanuele Strada THINKING-SOLUTIONS SAGL Switzerland
Emanuele Strada Emanuele Strada is a thought leader on business process transformation at Thinking Solutions. He is an expert in supply chain re-engineering and dynamic process modelling with over 25 years’ experience. He has worked for some of the top manufacturing companies in the world - setting corporate strategy, holding various senior positions with a focus on reengineering and creating systems and structures to deliver substantial improvements in companies. Emanuele is a well-respected expert in leading business change. He has proven capabilities in managing complex turnaround projects at an international level and has earned many awards for them.
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32nd International Conference of the TOC Practitioners Alliance - TOCPA
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Agenda
• TOC - Lean - Six Sigma • Real business case • The challenge • Customer expectations • Gap analysis • Dynamic Process Modelling • Key learning • Open questions
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32nd International Conference of the TOC Practitioners Alliance - TOCPA
5 as a “magic” number…
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LEAN
Six Sigma
TOC
The 5 principles of lean Manufacturing*
The 5 Phases
The 5 Focusing steps
1. Identify value
1. Define
1. IDENTIFY the system's constraint(s)
2. Map the value stream
2. Measure
2. Decide how EXPLOIT the system's constraint(s)
3. Create flow
3. Analyse
3. SUBORDINATE everything else to the above decision
4. Establish pull
4. Improve
4. ELEVATE the system's constraint(s)
5. Seek perfection
5. Control
5. If in the previous steps a constraint has been broken, go back to step 1, but do not allow INERTIA to cause a system's constraint
* by Womack
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32nd International Conference of the TOC Practitioners Alliance - TOCPA
Question: do you agree…?
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FOCUS Every improvement is a change But… is every change an improvement? Doing things right vs Doing right things Improve things that can be improved vs Improve things that must be improved
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32nd International Conference of the TOC Practitioners Alliance - TOCPA
TOC vs Lean & Six Sigma
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FOCUS Why “FOCUS” it’s an important word… • • • • • • • •
do we have infinitive market share? do we have infinitive capacity? do we have infinitive people? do we have infinitive assets? do we have infinitive processes? do we have infinitive budget? do we have infinitive material availability? …
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32nd International Conference of the TOC Practitioners Alliance - TOCPA
TOC vs Lean & Six Sigma
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FOCUS In other words, we do not have… “INFINITIVE LEVERS” “LIMITED LEVERS” • • • • • • • •
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Limited market share Limited capacity Limited people Limited assets Limited process Limited budget Limited material availability …
32nd International Conference of the TOC Practitioners Alliance - TOCPA
TOC vs Lean & Six Sigma
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FOCUS • In addition, those factors are not independent. • In order to deliver a product/service we need to consider that we have to “play” with those factors and with the interaction between and within those factors
Is it correct ?
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32nd International Conference of the TOC Practitioners Alliance - TOCPA
TOC vs Lean & Six Sigma
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FOCUS Can you imagine and environment by which: • We have a product/service, but not a market? • We have a market (market opportunity) but not product/service to deliver? • We have a great process, but no budget to buy RMs? …etc
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32nd International Conference of the TOC Practitioners Alliance - TOCPA
TOC vs Lean & Six Sigma
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What is the VA that TOC?
The capability to be FOCUS on the governing elements • Physical aspect of the system: the weakest link • Logical aspect of the system: the core problem
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32nd International Conference of the TOC Practitioners Alliance - TOCPA
The challenge in Operations…
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(a real business case)
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32nd International Conference of the TOC Practitioners Alliance - TOCPA
The challenge in Operations
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…“If we don’t improve the process performance, our production line* will become very soon “the constraint” due to the agreed growing sales contract” Supply Chain Director
* one of the biggest project in the world in automotive industries for this material type
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32nd International Conference of the TOC Practitioners Alliance - TOCPA
The customer expectations
• • • • • • • • • • • •
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100% up-to-schedule shipping performance Zero off-lines or production losses due to supplier failure 100% quality parts; zero shipping discrepancies Manufacturing flexibility for unexpected plant shortages/requirements Error-proof processes Daily shipments Accurate packaging and execution Electronic communication capability and execution Advance problem notification and quick resolution Internal training procedure/process No supplier constraints …
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32nd International Conference of the TOC Practitioners Alliance - TOCPA
At least the “what” is clear…
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…today, the process performance is far below the expectations
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32nd International Conference of the TOC Practitioners Alliance - TOCPA
…a step back: gap analysis
Casting Ops
Milling Ops
CONSTRAINT cont.line
Downstream Ops & Distribution
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CUSTOMER Ops
1. IDENTIFY the system's constraint(s).
2. Decide how to EXPLOIT the system's constraint(s). 3. SUBORDINATE everything else to the above decision. 4. ELEVATE the system's constraint(s). 5. WARNING!!!! If in the previous steps a constraint has been broken, go back to step 1, but do not allow INERTIA to cause a system's constraint www.tocpractice.com
32nd International Conference of the TOC Practitioners Alliance - TOCPA
From SKUs to Coils
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Customer production Plan
BOM SKUs requirement
Coils requirement CONSTRAINT Coil
Demand INPUT
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32nd International Conference of the TOC Practitioners Alliance - TOCPA
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Yes… BUT
Casting Ops
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Milling Ops
CONSTRAINT cont.line
Downstream Ops & Distribution
CUSTOMER Ops
32nd International Conference of the TOC Practitioners Alliance - TOCPA
From SKUs to Mother Coil
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Customer production Plan
BOM SKUs requirement SKU 0001
SKU 0002
Marriage logic Coils requirement CONSTRAINT Mother Coil
SKU n
SKU m
1 *First challenge: INPUT UNITS @ the CONSTRAINT
Demand INPUT
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32nd International Conference of the TOC Practitioners Alliance - TOCPA
INPUT UNIT of the CONSTRAINT
Casting Ops
Milling Ops
CONSTRAINT cont.line
Downstream Ops & Distribution
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CUSTOMER Ops
Coils
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32nd International Conference of the TOC Practitioners Alliance - TOCPA
INPUT UNIT of the CONSTRAINT
Casting Ops
Milling Ops
CONSTRAINT cont.line
Downstream Ops & Distribution
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CUSTOMER Ops
Mother Coils
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32nd International Conference of the TOC Practitioners Alliance - TOCPA
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The challenge #2 CONTRAINT input • SKU 1
2
Mother Coil X
• SKU 2 • SKU n
*
• SKU a • SKU b • SKU z
*
• SKU j • SKU K
Mother Coil Y
1
1
*Second challenge: Mother Coils Sequencing @ the CONSTRAINT
Mother Coil Z
1
(technical limitations & real downstream NOT equalized needed quantity)
Marriage logic www.tocpractice.com
32nd International Conference of the TOC Practitioners Alliance - TOCPA
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The challenge #3
Mother Coil X
*
Mother Coil Y
2
• SKU 1 • SKU 2 • SKU n
1
• SKU a • SKU b • SKU z
1
*Second challenge: Mother Coils Sequencing @ the CONSTRAINT
1
*
Mother Coil Z
(technical limitations & real downstream NOT equalized needed quantity)
>1 Mio of vehicles / year & www.tocpractice.com
• SKU j • SKU K
**
**
** 3
**Third challenge: Potential different FGs quantity and SKUs type Marriage logic due to different customer >100 SKUs per vehicle production plan 32nd International Conference of the TOC Practitioners Alliance - TOCPA
INPUT UNIT of the CONSTRAINT
Casting Ops
Milling Ops
CONSTRAINT cont.line
Downstream Ops & Distribution
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CUSTOMER Ops
Mother Coils
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32nd International Conference of the TOC Practitioners Alliance - TOCPA
Local optimal and constraint
Output
Input CONSTRAINT D
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cont.line
D
Dummy Coil ?
NO
YES
D • SCRAP • CAPACITY LOST
Several Coil types: • Alloy • Temper • Thickness • Width • pre-treatment • etc…
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32nd International Conference of the TOC Practitioners Alliance - TOCPA
Local optimal and constraint
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Output
Input CONSTRAINT cont.line
Dummy Coil ?
YES
NO
Several Coil types: • Alloy • Temper • Thickness • Width • pre-treatment • etc…
Are we really exploiting the constraint ?
Requested Coil ?
YES
NO
• NON PRODUCTIVE CAPACITY
REAL THROUGHPUT www.tocpractice.com
32nd International Conference of the TOC Practitioners Alliance - TOCPA
Easy questions…
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• How to exploit the constraint ? • How to prove the robustness of the solution… • How to reduce the risk of implementation failure ?
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32nd International Conference of the TOC Practitioners Alliance - TOCPA
Easy questions…
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• What is the batch size logic? • How many SKUs should we consider in our marriage logic? • What is the “best” SKUs sequence to consider, not for local optimal, but for the entire system ?
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32nd International Conference of the TOC Practitioners Alliance - TOCPA
The best sequence
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• What is “best” ? • How can we describe it ? – Ideally every single coil that need to be produced should be part of this definition, and every single coil that is not needed for the production plan of the customer in a short term, should not be considered.
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32nd International Conference of the TOC Practitioners Alliance - TOCPA
The best sequence
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• Is it correct? • ok, but… what about the technical limitations by which the dummy coil is needed? • …and what does it mean “short term”?
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32nd International Conference of the TOC Practitioners Alliance - TOCPA
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32nd International Conference of the TOC Practitioners Alliance - TOCPA
Here we are… the FLOW !
“Equalized” flow speed
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marriage logic & different consumption speed
Looking forward
“Equalized” flow speed
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32nd International Conference of the TOC Practitioners Alliance - TOCPA
Dynamic process model
Resources
Process
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Simulation time
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Resources schedule
Transactions status
32nd International Conference of the TOC Practitioners Alliance - TOCPA
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Project Outcome
96%
Good coils
AS-IS 50%
Good Coils
>96% Good Coils
50%
50%
Before
After
*Dummy Coil: coil needed by the continuous line but not needed by the downstream operations
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32nd International Conference of the TOC Practitioners Alliance - TOCPA
Key learning
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Dynamic Process Modelling can support you not only to Identify the system constraint, but also to exploit it meanwhile validate your assumptions for a robust solution How ? …you can simulate the material and decision flow considering the resources dependencies coupled with statistical fluctuation www.tocpractice.com
32nd International Conference of the TOC Practitioners Alliance - TOCPA
The real bridge
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32nd International Conference of the TOC Practitioners Alliance - TOCPA
Emanuele Strada Emanuele Strada is a thought leader on business process transformation at Thinking Solutions. He is an expert in supply chain re-engineering and dynamic process modelling with over 25 years’ experience. He has worked for some of the top manufacturing companies in the world - setting corporate strategy, holding various senior positions with a focus on reengineering and creating systems and structures to deliver substantial improvements in companies. Emanuele is a well-respected expert in leading business change. He has proven capabilities in managing complex turnaround projects at an international level and has earned many awards for them.
Your logo
Place for the photo of the presenter
[email protected]
Thanks for your time! www.tocpractice.com
32nd International Conference of the TOC Practitioners Alliance - TOCPA
