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TABLE OF CONTENTS
1. Introduction.............................................................................................................................................................2
2. Synchronous Manufacturing...................................................................................................................................3
3. The Five Steps of the Theory of constraints...........................................................................................................4
3.1. Identify the Constraint......................................................................................................................................4
3.2. Decide how to exploit the constraint...............................................................................................................5
3.3. Subordinate everything else to the action taken in Step 3.2...........................................................................6
3.4. Elevate the constraint.......................................................................................................................................6
3.5. WARNING: If the constraint is eliminated, do not let inertia become the new constraint...........................6
4. Bottleneck Scheduling.............................................................................................................................................7
5. Drum - Buffer - Rope Scheduling.........................................................................................................................10
6. Ponder these Questions.........................................................................................................................................12
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INTRODUCTION TO THE THEORY OF CONSTRAINTS
1. INTRODUCTION
The Theory of Constraints is largely the work of one man, Eliyahu Moshe Goldratt, a physicist
by education. Goldratt was asked by a friend to design a scheduling system which would
increase the output of a plant making chicken coops. His investigations led to the formulation
of the Theory of Constraints and the creation of scheduling software which he marketed in the
USA. Even though the package was effective, it failed to gain popular acceptance due to
controversial questions raised by the packages’ scheduling logic.
In an effort to increase the acceptance of his theories Goldratt wrote the book, The Goal: A
Process of Ongoing Improvement (1986) which explains the theory in the form of a novel. The
book not only addresses production planning and control issues, but also stresses the
importance for a company to define its objectives and then schedule production and related
activities in a logical manner in order to achieve the objectives.
Goldratt also realised that performance measurement has a dramatic effect on the
manufacturing policy and that the measurement of performance at each individual step within
the manufacturing process can cause the management to enforce policies that detract from the
performance of the process as a whole. He stresses that the rate at which the system generates
money as a whole is more important than maximising the utilisation and efficiency of each of
it individual processes.
The major differences lie in the methods employed in managing the manufacturing process and
in how fluctuations in the process are catered for. TOC accepts the fact that most
manufacturing processes are subject to constraints or bottlenecks and seeks to exploit them. In
fact, all the management focus is directed at these constraints, to the extent that issues like
process fluctuations are only addressed if they affect the bottlenecks adversely.
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INTRODUCTION TO THE THEORY OF CONSTRAINTS
2. SYNCHRONOUS MANUFACTURING
Synchronous production is “a manufacturing management philosophy that includes a consistent
set of principles, procedures and techniques where every action is evaluated in terms of the
global goal of the system”. If you are hearing “The Goal”, you are absolutely right.
Both the theory of constraints and JIT are examples of synchronous production. The essential
difference amongst many similarities is that JIT recommends the elimination of bottlenecks,
whereas the theory of constraints recommends their exploitation.
We have already seen how JIT handles shop floor management (kanbans, etc.), so the rest of
our discussion in this section will be devoted to bottlenecks and the theory of constraints.
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INTRODUCTION TO THE THEORY OF CONSTRAINTS
Market Constraints
These constraints exist when the market demand for an item is less than the capacity of the
slowest step in manufacturing the item.
Policy Constraint
Policy constraints are due to the current policies employed in managing the production
process, e.g. a policy governing the batch sizes of items produced or the policy governing
priority or product mix management.
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A bottleneck centre on the shop floor can be very easy to identify - it is usually the work
centre which has the most inventory queued up in front of it waiting to be worked on. This
is not always the case - if the constraint is due to product mix or shop floor management
policy, it may shift from work centre to work centre depending on current prevailing
circumstances.
It should never stop for lunch, tea and pee breaks. Steps must be taken to ensure that the
bottleneck is adequately buffered with good quality stock to ensure that it does not stop for
lack of materials.
If possible, the machine speed should be kept at the safe maximum (speeds above this
would result in more breakdowns). Maintenance should be planned for after hours or
during quiet periods.
The traditional annual shutdown should possibly not apply to the bottleneck - this time can
be spent on maintenance and on processing the backlog as well as possibly building some
buffer stock.
Bottleneck breakdowns should enjoy the highest priority. Spares not immediately
available should be flown in, irrespective of cost. It is often a good idea to keep a stock of
the wear parts on a bottleneck resource. Summarised, the cost of the machine standing is
likely to be much greater than any cost savings that one can incur with a service trade-off.
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INTRODUCTION TO THE THEORY OF CONSTRAINTS
Any setup reduction programme should concentrate its initial efforts on the bottleneck.
External setup functions should be maximised for this machine/work centre. The reduction
of setups will not only make more time available for actual production, but will also
enable the bottleneck to produce a greater variety of products, which will reduce or
eliminate bottlenecks resulting from the mix of products being manufactured.
3.5. WARNING: IF THE CONSTRAINT IS ELIMINATED, DO NOT LET INERTIA BECOME THE
NEW CONSTRAINT.
In some cases, once a constraint is elevated, it ceases to be the constraint. This may
mean one of two things: The constraint is now a market constraint, or the constraint has
moved to another part of the process. In both cases, it now becomes necessary to re-
evaluate the process, using the same five steps. This illustrates how the TOC
philosophy drives continuous improvement of the process.
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INTRODUCTION TO THE THEORY OF CONSTRAINTS
4. BOTTLENECK SCHEDULING
Bottleneck scheduling refers to the practice of scheduling only the bottlenecks in the plant.
Similar logic to bottleneck scheduling is used in rough cut capacity planning.
TOC suggests that bottleneck workcentres are to be treated differently to other work centres.
They are to be scheduled first since they control the throughput of the plant. Once the
bottleneck workcentres have been scheduled the remaining work centres can be scheduled to
agree to the bottlenecks.
Dispatching (priority sequencing of work at each work centre) is done by due date at the
bottlenecks.
There are ten principles which must be applied when scheduling bottlenecks:
4.1. The utilisation of a non-bottleneck resource is not determined by its own potential,
but by some other constraint on the system - By this we mean that we do not schedule
work on a non-bottleneck unless it is required by the bottleneck. It is therefore
acceptable for non-bottleneck work centres to be inactive.
4.3. An hour lost at a bottleneck is an hour lost for the total system - Since the
bottleneck in a process sets the rate of output for the whole process, any time lost is
irrevocably lost. Any attempt at “recovering” the time implies that the bottleneck has to
increase its performance which is, by definition, impossible.
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4.5. The transfer batch may not, and many times should not, be equal to the process
batch - TOC introduces the concept of different size batches for transfer between work
centres and for processing at a specific work centre, e.g. the process batch at a work
centre upstream of the bottleneck may be 1000 units but as soon as the first 200 items
are produced, they can be transferred to the bottleneck for processing.
4.6. The process batch size should be variable and not fixed - The process batch should
be variable in order to best satisfy the demand and current product mix through the
bottleneck work centre.
4.7. Capacity and priority need to be considered simultaneously and not sequentially - In
traditional planning systems, capacity and priority are considered individually. The
TOC approach states that it is impossible to divide the two and that they must be
simultaneously considered in order to optimise the schedule.
4.8. Murphy is not an unknown and his damage can be isolated and minimised -
Murphy's Law "If anything can possible go wrong it will - and usually at the worst
possible time” is by now very well known to most people. TOC philosophy recognises
the reality of "unexpected" problems but stresses the need for intelligent prediction of
possible difficulties and making allowance for them.
4.9. Plant capacity should not be balanced - A perfectly balanced plant, i.e. one in which
all theprocesses produce at the same rate is ideal - as long as there is no variation of
output. In the real world it is very rare to find such a plant - each step in a
manufacturing process is usually subject to variations in output to a greater or lesser
degree. Such variations, in a balanced plant, will cause reduced plant throughput.
Take, for example, a balanced plant which is capable of a throughput of 100 units per
hour but in which each of the steps is subject to a variation of 10%. If the first process
only produces 90 items in the first hour, the next process will only be able to produce
those 90 units supplied to it. If, in the second hour, the first work centre’s throughput
increases to 110 units, there is no certainty that the downstream process can produce at
the same rate in order to "catch up". Such fluctuations tend to have a cumulatively
negative effect on the total throughput of the plant.
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4.10. The sum of local optimums is not equal to the optimum of the whole - This is
known to management scientists as the principle of suboptimization. Unfortunately it is
usually very difficult to find the global optimum for the system - for example, the batch
size of an item which will maximise the profits for the company.
It is easier to find, for example, the batch size that will minimise the setup costs and the
inventory holding costs for each specific item manufactured (the classical EOQ
approach). The TOC approach ignores setup and holding costs. Production and transfer
batches are sized in order to maximise throughput through the system, thus attempting a
globally optimal, rather than locally optimal, solution.
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The whole process is subordinated to this drumbeat, from the release of raw material to the
shop floor to the dispatch of finished goods. Let us consider a product going through a
number of operations, one of which is a bottleneck.
The system throughput is governed by the bottleneck or Drum. If material is released to the
shop floor without considering the drumbeat, work in process inventory will increase
uncontrollably upstream of the bottleneck. In order to make sure that this does not occur,
we need to link the release of material to the gateway operation (i.e. the first operation) to
the rate of consumption of the bottleneck. This link is known as the Rope.
In addition, we need to protect our bottleneck from any process fluctuations and manifestations
of Murphy’s Law upstream of it so that it never runs the risk of running out of material
supply to it. To do this we ensure that there is a controlled amount of material queued in
front of it - this is known as the Buffer.
Buffer sizes are determined by the degree of uncertainty of supply from the upstream work
centres and are considered to be time buffers. For example, if it is known that any problem
occurring upstream of the bottleneck can be rectified in two days, a buffer equaling three
days of bottleneck production should be sufficient to ensure that the bottleneck is not
stopped.
All schedules for the plant are then subordinated to the schedule through the bottleneck: if the
time buffer is full, the rope ensures that no more material is released to the system and all
upstream processes stop. Downstream processes can only process those parts supplied by
the bottleneck and therefore are scheduled sequentially - all the way to final assembly.
If the major constraint in a system is the market, the same logic can also be applied. To ensure
that customer due dates are met, a time buffer is built after the final assembly operation
(The market being the drum). A rope then links this buffer to the release of material to the
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INTRODUCTION TO THE THEORY OF CONSTRAINTS
gateway operation. Once again, the buffer size is dependent on the certainty of supply and
the time required to resolve any supply problem.
The TOC approach usually requires a higher work in process inventory than the JIT approach
due to the time buffers, but as the process is reviewed any problems, such as machine
reliability and long setup times, are addressed. It then becomes possible to reduce the
buffers and, hence, the inventory holding in the whole system.
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6.3. What type of constraints does your company have? Suggest ways in which they can be
exploited.
6.4. “Murphy is not an unknown and his damage can be isolated and minimised”. How can this
be done in your company.
6.5. Do you have any Policy Constraints in your company? How would you identify them?
Can they be eliminated?
6.6. What is meant by: “Activating a resource is not synonymous with utilising a resource”
Does your company have resources which are merely being activated? Why?
6.7. Do you agree with the statement: “An hour saved at a non-bottleneck is a mirage”. Does
your company’s performance measurement system take this into account? If not, how
would you change it?
6.8. How would you elevate your company’s constraint? Would you expect it to remain a
constraint? What would you expect the next constraint to be?
6.9. Is your current process’ total throughput rate equal to the throughput rate of your real (as
opposed to the current policy) constraint?
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