Tag: constraints management

What’s the Difference Between a Manufacturing Bottleneck and a Constraint?

Bottlenecks and constraints are two terms that are often used interchangeably in Demand-Driven Manufacturing as well as in discussions on Lean Manufacturing and flow. It’s easy to use one term when you actually mean the other. However, since these two limiters on throughput need to be addressed differently, it’s important to understand the distinction.

What is a Manufacturing Bottleneck?

A bottleneck represents a temporary overload on a resource. The cause of the overload can be wide-ranging: a malfunctioning machine, an absentee operator, missing tools, an unexpected materials shortage, newly hired personnel, etc. While a bottleneck can cause serious delays, these are all issues which can be “fixed.”

What is a Manufacturing Constraint?

A constraint is a long-term and persistent limiter to flow. For example, the constraint might be a work center that cannot go any faster because the equipment is already operating at maximum speed or a process, such as a chemical reaction, that takes a set amount of time. Constraints can be found outside the organization as well. For example, a persistent shortage of skilled workers in their industry is a constraint that many manufacturers face.

Based on these explanations, cast your vote on whether Lucy and Ethel’s situation in the chocolate factory represents a bottleneck or constraint. (This is completely anonymous and just for fun. Once you vote, you can see how others voted.) Vote here.

Manufacturing Bottlenecks Are a Prime Opportunity for Continuous Improvement

As I mentioned earlier, bottlenecks are temporary – or at least they should be. In fact, they are often a prime opportunity for continuous improvement.

If WIP regularly backs up in front of a work center because a machine is down, the operator is late getting back from lunch, or the necessary tools have gone missing again, it may not be an easy problem to fix, but the power is in your hands. As part of your continuous improvement efforts, you should be trying resolve recurring bottlenecks.

One thing I’ve learned over the years, is that you can’t resolve these types of problems sitting behind a desk. If you’re pouring over reports in your office, all you’ll see is the variability. No amount of data can tell you what caused it.

You can ask your shop floor supervisors, and they’ll give you their perspectives, but nothing beats getting down on the shop floor on a regular basis and seeing the reality behind the data.

Turn Your Gemba Walk Into a Power Walk.

Constraints: If You Can’t Remove Them, Manage Them

Constraints are also an opportunity for continuous improvement. According to Constraints Management (a.k.a, the Theory of Constraints), there are five steps to addressing a constraint:

1/ Identify – You can’t address a problem if you don’t know it’s a problem. That applies to constraints as well. You probably have a pretty good idea of where your constraints are, but value-stream mapping has shown more than one manufacturer that things aren’t always as they seem.

2/ Exploit – Get as much as you can out of the constraint “as is.” For example, you might reorganize the work center in small ways to smooth the flow of work and increase productivity.

3/ Subordinate – Here, everything else is synchronized to the rate of the constraint. Experts also suggest re-evaluating your constraints at this stage because the process of subordination can cause the constraint to shift to another work center.

4/ Elevate – Take whatever action is necessary to eliminate the constraint, e.g., replacing or refurbishing outdated equipment, adding manpower at the constraint, or reorganizing the factory to remove wasted motion.

5/ Return to Step One. You will never eliminate all constraints. (Nor would you necessarily want to, but that’s a subject for another day.) Elevating a constraint so that it is no longer a constraint just means that something else will become the limiting factor on flow. As part of your continuous improvement efforts, you need to return to step one, identify the constraint and assess whether its capacity is enough to meet demand.

Learn How to Subordinate to a Constraint

For many, step four seems the most challenging because it often involves a capital expense. Even if the business can afford the investment, a business case still needs to be made.

Read: Smart Capital Investing in a Recovering Economy

However, step three is where real performance improvements take place, so be sure you don’t skip over it! We call this step constraints management, and it is a larger part of a demand-driven (or pull-based) production system. For a more detailed explanation of how constraints management works, please download our new white paper – Demand-Driven Manufacturing Principles: Eliminate Bottlenecks; Manage Constraints.

August 20, 2018
The Best Time to Kick Off a Continuous Improvement Initiative

Prosperity is perhaps one of the greatest obstacles to continuous improvement in manufacturing. When things are going well, we don’t feel the need to make improvements quite as keenly. For example, instead of focusing on removing waste in our factories to become more cost competitive, we might opt to add capacity so we can keep up with demand.

There really is no better time to make improvements than when things are going well. In this post, we’ll take a quick look at what the research says about the short-term outlook for manufacturers. Then, I will explain why now is the best time to kick your continuous improvement efforts into high gear.

Things Are Looking Up

After nearly a decade of belt-tightening, many sectors are returning to a renewed sense of optimism. This is especially true in manufacturing. An amazing 93.5% of respondents to NAM’s 1st Quarter 2018 Manufacturer’s Outlook Survey registered a positive outlook, the second highest level recorded in the survey’s 20-year history.

Of course, because NAM is reporting on human sentiment, there’s always the chance that their results aren’t indicative of what’s actually happening in the market. Humans are not always the most objective source of “data.”

MAPI (Manufacturer’s Alliance for Productivity and Innovation) looks at a number of variables to project growth rates for the manufacturing sector. In March of this year, they nearly doubled their projected average growth for the U.S. manufacturing sector for the 2018-2021 period from 1.5% to 2.8%.

It’s not that you can’t find anyone who thinks things are not as rosy as they seem, but much of the negativity stems from a concern that the economy will grow too fast. That sounds to me like what an old colleague of mine in the manufacturing sector used to call “a happiness problem.” For now, most manufacturers I know are just trying to make the most of the opportunity presented to them.

Optimistic Workers Make the Best Change Agents

As anyone who has ever tried to implement a continuous improvement effort knows, the more secure your shop floor workers feel, the more likely they are to support change. While neither the NAM survey or the MAPI analysis look at worker sentiments, there’s no doubt that the optimism at the top has a way of filtering down.

Consider these two very different scenarios:

Scenario A: The Mandate to Cut Costs

A machinist has just stepped out of a company-wide meeting in which executives issued a cost-cutting mandate due to a slowdown in orders. With support from the COO, production managers decide the best way to cut costs is to lower inventory levels by implementing constraints management.

Now they need to explain it to the machinist and other team members in similar roles.

What the operations manager says: “We’ve identified the painting station as the constraint in our operations, so we’re going to set the pace of production to maximize capacity at that station. We don’t want you working on anything other than what the system tells you to. This may mean you have more downtime, but that’s OK. We’re not measuring utilization rates right now.”

What the machinist hears: “We need to cut costs, so we’re going to cut back on production. We know you’ve been making more than you needed to anyway. You’ll probably have more idle time because we won’t always have enough work to keep you busy.”

During one of those idle times, the machinist starts to wonder how long it will be before the cost-cutting measures include his job.

Scenario B: Let’s Pick Up the Pace!

This time, the company meeting is about increasing the pace of manufacturing. The sales pipeline is fuller than it’s been in a long time, and sales believes that if the company can decrease lead times they’ll be able to have a banner year and increase market share.

Once again, the operations managers decide to implement constraints management. This time the focus is on increasing velocity.

What the operations manager says: “We’ve identified the painting station as the constraint in our operations, so we’re going to set the pace of production to maximize capacity at that station. We don’t want you working on anything other than what the system tells you to. This may mean you have more downtime, but that’s OK. We’re not measuring utilization rates right now.”

What the machinist hears: “Business is good, but we need to determine how to step up our pace. We’re going to try this thing called constraints management. It will seem a little strange at first, but it’s all part of the process.”

In this scenario, the machinist does some reading on Lean and attends a few workshops during his downtime. Instead of worrying about his future, he starts to think about how he might contribute to the initiative. Maybe he’ll even work to become a green belt and advance in his career.

Making Hay While the Sun Shines

Nothing lasts forever, and that includes a great economy. The continuous improvements you implement now can set you up to weather the hard times ahead with both better processes and better people. The sun is shining on much of the manufacturing sector. Now is the time to take advantage of it.

In this post, I focused on constraints management, but there are many other types of continuous improvement initiatives. If you’re still defining your approach, we have plenty of resources you can mine for ideas. Here are just a few.

Paper: 4 Ways SyncKanban eKanban Technology Drives Continuous Improvement

Paper: Get Lean on Scrap

Post: How the Internet of Things Can Shorten Lead Times

Post: How the Internet of Things Can Help Lower Inventory Levels

Video: How Orbital ATK is Leveraging the IIoT and Visual Factory Technology to Drive Continuous Improvements

Post: Turn Your Gemba Walk Into a Power Walk

For additional ideas, visit our Resources page on our website.

July 23, 2018
Fast Results Using TOC for Demand-Driven Manufacturing – Part Two
Manufacturers use constraints management first to gain the most demand-driven change

Last time, we talked about focusing on enterprise improvements rather than local efficiencies using constraints management (TOC). We discussed that continuous improvement tools such as TOC, Lean and Six Sigma work like “sandpaper” on an organization’s processes, smoothing various stages of their demand-driven journey.

I likened TOC to the “coarse” grit of sandpaper—the one to use first to get the best results–faster. Before discussing the other tools (which I’ll address in future articles), I wanted to share how the TOC principles we discussed last time have brought real results to two manufacturers.

Constraints management improves throughput, on-time delivery, more

My first example, a discrete manufacturer of test equipment for semi-conductors, decided that they could do better and that TOC was going to be the philosophy they utilized to do it. They had a lot of difficulty in production and in meeting their client requirements. They began by implementing drum buffer rope (DBR) scheduling. As part of this, they identified a drum for the organization and began managing it as the constraint. It is important to note that TOC people do not regard constraints as bad things per se, instead, they look at them as leverage or control points that allow you to simplify management of your system. There are many people that I come across who think TOC is about identifying and eliminating constraints. However, Goldratt viewed constraints as a positive item in that in an interconnected environment, the constraints provided the leverage points that greatly simplified management of the system. Goldratt once told me that the constraint within an organization should not move any more than once every two to three years.

Once the drum was identified, the next steps were to exploit the constraint and subordinate all other resources to the constraint. As part of this, the company identified a number of policy and process changes. First, they changed what they did when a constraint resource needed a first-article inspection before continuing to run. They began moving the parts requiring inspection to the front of the queue and, in some cases, removing parts from the test equipment in the middle of the test, in order to service the constraint faster. Soon, the team carried this first-in-line mentality throughout the organization with a laser-like focus on clearing anything that got in the way of the constraint producing to current customer demand. Here are their results:
- Increased constraint throughput by 120%.
- Increased on-time delivery from low 70% to 95%+.
- Cut cycle time and lead-time in half.
Before this change, the company was outsourcing 50% of the work for the constraint. They have since brought it all in house where the yields were much higher, plus, they added another 20% of throughput.

All of this was accomplished within four months and without making one physical alteration to production. No 5S, no kaizen events, no SMED, no value-stream maps, no re-laying out of the production process, no Six-Sigma projects. Also, no additional people or capital equipment were needed. The tools of Lean and Six-Sigma were critical to continuous improvement and refinement of the process, but Constraints Management (harkening back to the sandpaper analogy) served as the coarse sandpaper, taking a rough board and making the dramatic change of smoothing it out.

60% on-time delivery to 90+

Another example – During my work with a discrete manufacturer of capital equipment, with hundreds of parts needed to move through a spaghetti-type flow and meet up in final assembly. Chaos and stress reigned throughout this organization, with the head of final assembly serving as chief expediter. Our aim was to increase their on-time delivery rate which was in the low 60% range and their replacement part fill rate which was less than 50%.

We turned it around by focusing on synchronization and the pacemakers of production. We began by “choking work” into production at the rate the system could handle and subordinated all other resources to the constraints and to final assembly. Soon parts were delivered on time to final assembly, and, ultimately the customer. The results?
- On-time delivery up to 95%+
- Increased fill rate to the upper 90% range
- Returned profitability to the organization for first time in four years
- The head of assembly spent time managing assembly rather than expediting parts.
All of this happened in less than six months. Again, not a resource was added, not a single resource was moved; the physical flow of material was unaltered– yet these were the results.

In both of these cases, it was still critical to employ the tools of Lean and Six Sigma to continue the path of continuous improvement, and we’ll talk about that the next time I write to you. However, these cases prove that nothing gets results as fast as the use of Constraints Management. The board will never get as smooth as when Lean and Six Sigma are used after TOC– but to take a really coarse board and make it relatively smooth quickly and efficiently, you need the coarse sandpaper (TOC) –and then the medium (Lean) –and then the fine (Six Sigma)– to make it as smooth as glass.

This is part two of a three-part series. Here are the links to the entire series.
- Part 1, What Sandpaper Will You Use?
- Part 2, Fast Results Using TOC for Demand-Driven Manufacturing
- Coming soon
-John Maher

John’s passion for demand-driven manufacturing is equal to his interest in how this method improves the lives of employees within these environments. “I’m here to help, not to judge” comments John whose posts reflect why demand-driven matters and are based on his experience working in manufacturing environments and expertise in ERP, MRP, APS, supply chain, manufacturing planning and scheduling systems and constraints management.
April 23, 2018
How the Internet of Things Can Shorten Lead Times

A new study in Modern Materials Handling reports that 86% of industrial organizations are currently adopting IoT (Internet of Things) solutions, and 84% believe those solutions are very or extremely effective. Manufacturers lagged behind the industrial segment as a whole, with only 77% of manufacturers implementing IoT in their facilities.

So, what is holding manufacturers back? Anecdotally, I can share that many of the manufacturers I talk to intend to implement the IoT in their facilities or have already started a project. But, they are less sure about their results than the respondents to the study.

In this series of posts, our goal is to break through the hype and the uncertainty around the IIoT (Industrial Internet of Things) by focusing on projects you can execute and for which you can achieve a measurable ROI in 2018.

In the first post, we looked at how the IIoT can help manufacturers lower inventory levels. (Read the full post here.) We also shared how one of our customers was able to reduce inventory by as much as 55% in one factory, while at the same time reducing lead times from twelve weeks to two.

Some of the customers I talk to are initially skeptical that they can both reduce inventory AND reduce lead times. Achieving these results at the same time seems counter-intuitive because they think they need to keep high levels of inventory on hand and in process to meet customer demand. In today’s post, I want to unpack that by focusing on how the IIoT and Demand-Driven Manufacturing (DDM) can help you achieve both objectives in your facility by implementing one specific manufacturing philosophy.

The IIoT in action: TOC

Today’s IIoT project leverages the Theory of Constraints (TOC) or constraints management principles. Like the Kanban project we talked about (see How the IoT Can Help You Lower Inventory Levels), TOC isn’t inherently an IIoT project. You can implement TOC manually, but when IIoT data-sharing technologies are leveraged, your TOC efforts are turbocharged for even greater benefit to your bottom line.

Many of you are, no doubt, familiar with TOC, but let’s quickly cover what it is so we’re all on the same page. TOC says that, in any given manufacturing environment, there are a small number of constraints that limit the throughput of the factory. Increasing productivity at any other point in the system will not increase overall productivity because the constraint cannot keep up.

For more details on the four types of constraints, refer to my recent post: It’s Time to Revisit Your Constraints.

In the Demand-Driven Manufacturing environments we work in, we apply constraints management technology (based on TOC) to constraints in the system. By understanding the constraints – and their capacity – we can set the optimal rate of flow to that constraint (see CONLOAD™ Scheduling Methodology: Set the Right Pace for Production). This reduces congestion and keeps work flowing throughout production. Real-time, IIoT data allows for automated adjustments based on changes in demand, priorities, etc.

So how does synchronizing the pace of production to the constraint in real time lower both lead times and inventory levels? In a traditional make-to-stock manufacturing environment, as much as 90% of cycle time is queue time, that is, a part waiting for its turn on the machine or in the work center. By synchronizing the flow of material to the constraint in the system, material spends less time in queue and cycle times are shorter. And, because less material is in queue, WIP drops as well.

Related Post: It’s Time to Revisit Vendor Managed Inventory

Some of you may be thinking, “Ok, that explains how cycle times and WIP inventory drop, but how does constraints management affect lead times? We measure lead time from the time an order is taken until it is shipped. I still can’t manufacture anything faster than my constraint, and it doesn’t lower lead times if I can’t start the order any faster.”

Good point. But, what we’ve found is that lead time typically drops as well for a variety of reasons such as better prioritization of projects at the constraint and increased capacity. When all work throughout the facility is synchronized to the pace of the constraint, everyone knows what they need to do next, and no time is wasted running orders through the system that aren’t a priority. This is especially impactful in facilities where changeovers take time either because of retooling or a paradigm constraint, such as a focus on productivity at every workstation that slows the overall factory down.

In my last post, I shared the example of Dynisco, a leading manufacturer of materials-testing and extrusion-control instruments that reduced inventory levels by 55% in one of its facilities while at the same time reducing lead time from 12 weeks to 2. Today, I want to tell you about another Synchrono customer that addressed a lead time issue with Demand-Driven Manufacturing.

Rex Materials Group (RMG) manufactures custom vacuum-formed ceramic-fiber products. In the late 1990s, the company implemented TOC and modified its home-grown systems to apply drum-buffer-rope principles. That system worked for a while, but eventually, the company decided they needed something better to feed their continuous improvement efforts.

RMG implemented SyncManufacturing™ synchronized planning, scheduling and execution software from Synchrono® across three separate facilities. The first facility went live in 90 days and the second and third in 45 days each. By accelerating their TOC efforts, RMG went from lead times of three to four weeks, on average, to delivering 30-40% of products within five days of receiving the order. They can even ship some overnight. Read the full case study.

Want to learn more? Here are some related resources that can help you get started on your next IIoT project in 2018:

Video: What is Demand-Driven Manufacturing?

White Paper: Three Key Strategies of Modern Demand-Driven Manufacturing (Watch the video here.)

Video: Manage Manufacturing Constraints and Optimize Production Flow with CONLOAD

February 12, 2018
Time to Revisit Your Constraints

We talk a lot about constraints management in our work with customers who are implementing Demand-Driven Manufacturing (DDM) in their facilities. That’s because constraints management is fundamental for synchronizing the pace of production and keeping the demand (orders) flowing throughout the shop floor. But, our focus is naturally on physical constraints, e.g., that piece of equipment or workstation that is preventing you from delivering on time or offering shorter, more competitive lead times to your customers.

Not Everything is About Production

Those of you who have spent time studying the Theory of Constraints (TOC) in-depth understand that it’s not always all about the production process. Constraints can fall into one of four categories:

Physical – These are the constraints we focus on with technologies like CONLOAD™ that set the pace for production based on the capacity of the physical constraint.

Policy – These constraints dictate how work is performed. Sometimes you can do something about them (e.g., an old company policy that no longer makes sense), and sometimes you can’t (e.g., a regulation that still might not make sense but needs to be followed anyway).

Paradigm – This is a way of thinking that gets in the way of meeting commitments, such as the COO’s resistance to outsourcing processes to other companies even if they can do it faster, better or cheaper than you can.

Market – Put simply, capacity exceeds demand. Remember, TOC emphasizes throughput (The rate at which the system generates “goal units,” Goldratt) and not productivity.

For some manufacturers, the real constraint over the last decade has been their market. Manufacturing production has seen its share of ups and downs in the last ten years. It wasn’t that our facilities couldn’t produce more, many manufacturers just didn’t have the orders to warrant increased production.

Shifting Your Paradigms

Early indications are that many of the market constraints on US manufacturers may be melting away in 2018 through 2020. (Along with a few policy constraints.) Manufacturing GDP is expected to slightly outpace GDP for all industries (2.5%) and grow by 2.8%. (Some analysts are predicting even higher numbers, but like our customers, we prefer to focus on more conservative estimates when doing mid-term forecasting.) The stock market is also at an all-time high, indicating strong investor confidence and more money for investment. Oil prices are expected to remain low, keeping the cost of manufacturing and transportation of goods to market in check.

In other words, it’s time to take your focus off the market constraints you can’t do much about and place it on the constraints that are within your control. If you have outdated policy or paradigm constraints, it’s time to rethink your thinking. If you have physical constraints – leverage them to set the optimal pace for uninterrupted production flow.

Time flies and so do great economies. Don’t let the best market in a decade pass you by without taking advantage of it. If your constraints are physical, here are a few resources that may help:

Video: Manage Manufacturing Constraints and Optimize Production Flow with CONLOAD

White Paper: Metrics That Drive Action

Case Study: GIW Industries

February 5, 2018
FAQ: Can I Use Demand-Driven Manufacturing in a Make-to-Stock Environment?

Demand-Driven Manufacturing seems like it was made for Make/Assemble-to-Order and Engineer-to-Order environments. It’s true that Demand-Driven Manufacturing can be beneficial for manufacturers who already produce goods based on customer demand because it improves their responsiveness to customers and lowers lead and cycle times.

Demand-Driven Manufacturing is a method of manufacturing where production is based on actual customer orders (demand) rather than a forecast.

But what about Make-to-Stock environments? These manufacturers also produce goods based on customer demand, but instead of actual demand, production is typically based on forecasted demand. Considering our definition of Demand-Driven Manufacturing – a method of manufacturing where production is based on actual customer orders rather than a forecast – it seems like that would preclude the Make-to-Stock manufacturer from taking advantage of Demand-Driven Manufacturing principles, right?

Not at all.

The challenge in MTS environments is replenishment lead time.

That is, the lead time provided by the customer is less than the lead time needed to complete the finished good. Given this, MTS Demand-Driven Manufacturers use their forecast to establish a stock buffer. Production execution, however, is based on actual demand. The stock buffer provides just-in-time materials to complete the order, ensuring there are no delays in responding to the demand signal. Here’s how it looks:

MTS manufacturers apply Lean/Demand-Driven strategies to make the stock buffer as small as possible. This reduces carrying costs and the potential for waste. As we’ve covered other posts, eKanban software is a great way to not only reduce lead times, but inventory costs. If considering eKanban, you will want to check out Real-world Advice for Getting Started on eKanban.

Lower lead times are one of the primary benefits we see in manufacturers who implement components of the Synchrono Demand-Driven Manufacturing Platform (see the sidebar for other benefits). For example, Dynisco, an instrumentation manufacturer, reduced their lead times from 12 weeks to 2. Rex Materials Group reduced their lead times from 3-4 weeks to less than five days in some cases. You can read their case studies and those from several more customers on our website.

Other ways MTS manufacturers benefit

As noted in the graphic here, Demand-Driven Manufacturing adds tremendous value to MTS environments in a variety of ways.

For example, one of the strategies of Demand-Driven Manufacturing is constraints management – adapted from the Theory of Constraints (TOC). According to the TOC, there are a limited number of resources in any manufacturing environment that limits the manufacturer’s ability to meet demand (e.g., the constraint(s)). Scheduling production flow to the capacity of the constraint resource(s) improves overall production flow and on-time delivery rates.

To show how we work to manage constraints, we’ve posted a short video on YouTube – Manage Manufacturing Constraints and Optimize Production Flow with CONLOAD.

Here are some additional resources that can help you explore Demand-Driven Manufacturing and what it might mean for your organization. And, as always, reach out to us with any questions you have, or if you’d like to discuss a pilot project.

Website: Why Demand-Driven Manufacturing?

White paper: Demand-Driven Manufacturing—Metrics that Drive Action

Video: What is Demand-Driven Manufacturing?

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January 22, 2018

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