Lean techniques were not enough to solve scheduling for a high variety product mix. A blend of Theory of Constraints and software helped JARP achieve estimated ROI < 400%!
Identifying & Placing the Constraint
Most companies likely have some idea of where they think a production constraint might be. Typically they imagine the constraint is internal to the company. For example, manufacturers may incorrectly determine the issue holding them back is that they don’t have enough workers or the right skilled employees they need. In other cases, the constraint could be due to policies the organization has adopted or how they currently address marketplace needs. Sometimes, the assumption is a lack of capital or equipment.
They often don’t see the constraint to flow as an external (market demand or a material availability) issue, but both of these constraint types are fairly common and usually obvious.
The worst case is they don’t see the constraint at all–internally or externally–because they don’t have a systematic approach to analyzing what is preventing organizational progress or production order fulfillment. Making matters more difficult, they may respond with scattershot solutions that do not address root causes of poor performance.
Stop. There are more systematic ways to identify the actual constraint.
Getting to the Constraint
External constraints are easily apparent. It’s pretty clear if there is not sufficient demand in the market to match your capacity to produce goods. Raw material availability is either a short term or longer term issue and is probably shared by your competitors (but not always). Given that you have enough material but still can’t supply enough product to meet demand, you have an internal constraint.
When the constraint is verifiably internal to the company, an initial loading of data into an advanced planning & scheduling software application will clearly demonstrate there’s a load-to-capacity issue. Of course, this conclusion assumes that their data is reasonably accurate.
On-Time Edge starts with the assumption that the data a company has is reasonably accurate, or accurate enough (they are running the business with it currently!), to begin identifying bottlenecks. Once we’ve got a clearer picture of where the constraints might exist, we dig, analyze, and evaluate.
Moving Constraints Into The Right Place
With the support On-Time Edge consultants brings, we hone in on where the actual constraint is located. We may discover the constraint might be in a place that we don’t want it and then make decisions about where it should be. We might find it’s more advantageous to move a constraint either further back or forward in the production process because that gives us a better ability to manage the disruption.
In certain cases, the new placement might mean making a capital investment to build capacity around where the constraint would be best suited in the flow. By managing the constraint we can begin the march toward an increased return on capital (ROC).
And that’s the foundation of a Theory of Constraints approach: helping companies to meet their goal of making money.
On-Time Edge thrives on identifying and managing constraints for profitable, persistent growth and financial return for our clients. Sound good? Let’s talk.