1、Do. Dr. Blent Sezen,1,Fundamentals of the Theoryof Constraints,Do. Dr. Blent Sezen,Do. Dr. Blent Sezen,2,Introduction,In recent years a rather unique and interesting approach to visualizing and managing an operation has emerged. Originally developed by Eliyahu M. Goldratt in his book The Goal, this

2、Theory of Constraints has allowed many people to successfully rethink their approaches to improving and managing their production processes.,Do. Dr. Blent Sezen,3,Introduction,Opinions about the Theory of Constraints differ. Some think that the Theory of Constraints (TOC) is a good way to improve pr

3、ocess capability while using other control systems such as JlT or MRP, while others believe that TOC is a stand-alone approach completely unique and separate from other techniques. In this context, it is suggested that TOC can provide approaches to design, manage, schedule, and improve virtually any

4、 production system.,Do. Dr. Blent Sezen,4,Introduction,Still others believe it can be either just a process improvement approach or a complete system approach, depending on the extent of the implementation taken. It may not, in the opinion of this third group, be the most appropriate approach for ce

5、rtain business environments, while it may prove highly effective for other business environments.,Do. Dr. Blent Sezen,5,Fundamental Principlesof the Theory Of Constraints,The fundamental concept behind the TOC is that every operation producing a product or service is primarily a series of linked pro

6、cesses. Each process has a specific capacity to produce the given defined output for the operation, and that in virtually every case there is one process that limits or constrains the throughput from the entire operation.,Do. Dr. Blent Sezen,6,The Linked Process Pipe Analogy,Do. Dr. Blent Sezen,7,Fu

7、ndamental Principlesof the Theory Of Constraints,The analogy often used is that production flowing through operational processes is like liquid flowing through a pipeline. Each process has a certain defined capacity, illustrated in the analogy by the diameter of the associated pipe. In the diagram s

8、hown, process E has the largest capacity to process production, while operation C has the least amount of capacity.,Do. Dr. Blent Sezen,8,Fundamental Principlesof the Theory Of Constraints,Since operation C is the constraint on the entire process, it will limit the amount of output from the process,

9、 regardless of the capacity of the remaining processes. Improving any of the other operations (increasing the size of the pipe in that section) will not improve the total amount of liquid coming out of the system of pipes.,Do. Dr. Blent Sezen,9,Fundamental Principlesof the Theory Of Constraints,A co

10、nstraint, in its most general form, is anything that limits the firm from meeting its goal. For most firms, that goal is to make money, which manifests itself by increasing throughput-as measured by sales, not just production.,Do. Dr. Blent Sezen,10,Fundamental Principlesof the Theory Of Constraints

11、,As a numerical example, consider the operation producing product A in Figure.,Do. Dr. Blent Sezen,11,Fundamental Principlesof the Theory Of Constraints,It should be clear from this simple example that the total operation is constrained by process 3 at 4 per hour. No matter how much efficiency you h

12、ave in the other processes and how many process improvements are made in processes 1,2, and 4, you will never be able to exceed the overall operational output of 4 per hour unless you address the constraints of process 3.,Do. Dr. Blent Sezen,12,Fundamental Principlesof the Theory Of Constraints,Incr

13、eased efficiency and utilization in processes 1 and 2 will, in fact, only increase inventory-not sales. That issue is one of the key points of TOC-the major measure for any operation should be on the throughput of the organization, or, in other words, the contribution to sales. Any other measures of

14、 process efficiency, utilization, or other commonly used operational measures have little relevance to the overall effectiveness of the entire system.,Do. Dr. Blent Sezen,13,Fundamental Principlesof the Theory Of Constraints,This approach has implications far beyond how the process is viewed. Even a

15、ccounting systems are impacted. For example, many accounting systems allocate overhead costs to products based on direct labor hours of production. Such systems may give the impression that producing more product will help to pay for the overhead costs. Unfortunately, if the extra product produced i

16、s not linked to actual sales, the result is only more costly inventory and an overall negative impact on the business.,Do. Dr. Blent Sezen,14,Fundamental Principlesof the Theory Of Constraints,TOC principles make the point that only sales should be counted as operational throughput. Another accounti

17、ng implication is the labor cost itself. Most traditional accounting systems view direct Iabor as a variable cost. TOC principles, on the other hand, contend that in the short run all operational costs except direct material are largely fixed and should, therefore, be lumped together into an overall

18、 operational expense.,Do. Dr. Blent Sezen,15,Fundamental Principlesof the Theory Of Constraints,One of the key points made by this example is that products do not really have a profit-companies do. This point helps to view the operation more as a system rather than as a set of largely independent fu

19、nctions. Such a view is a critical part of managing by TOC principles.,Do. Dr. Blent Sezen,16,Understanding and ManagingThe Constraints,There are several fundamental guidelines developed for understanding the TOC principles and how to manage a constraining process. Some of the more noteworthy guidel

20、ines include the following:,Do. Dr. Blent Sezen,17,Understanding and ManagingThe Constraints,A system optimal performance is NOT the sum of local optima. Any system that is performing as well as possible usually implies that not more than one part of the system is performing at an optimal level.,Do.

21、 Dr. Blent Sezen,18,A system optimal performance is NOT the sum of local optima.,If all parts of the system are performing optimally, the system as a whole will probably not be performing optimally. In other word s, it is virtually impossible to obtain a perfect system balance. Even if the system wa

22、s designed to be perfectly balanced, normal variations in performance will inevitably cause some degree of imbalance.,Do. Dr. Blent Sezen,19,Understanding and ManagingThe Constraints,Systems are like chains. Each system will have a weakest link (a constraint) that will limit the performance of the w

23、hole system.,Do. Dr. Blent Sezen,20,Understanding and ManagingThe Constraints,Knowing what to change requires a complete understanding of the system and the system goal. Often in TOC, the system goal is to make money through sales, not production. Production completed without a sale (making and stor

24、ing inventory) does not contribute to the goal of the company until it does become a sale.,Do. Dr. Blent Sezen,21,Understanding and ManagingThe Constraints,Most undesirable system effects are caused by a few core problems. Solving a symptom of a problem will often do little good. If the core problem

25、 remains, the symptom (or another one associated with it) will likely reappear very soon. True long-term relief from the undesirable effect will occur only if the core problem is identified and corrected.,Do. Dr. Blent Sezen,22,Understanding and ManagingThe Constraints,Core problems are almost never

26、 obvious. They tend to show themselves as a series of undesirable effects, most of which are really symptoms of the underlying problems.,Do. Dr. Blent Sezen,23,Understanding and ManagingThe Constraints,Eliminating the undesirable effects provides a false sense of security. Working on problems (often

27、 really symptoms) without finding the root cause tends to provide short-lived improvements. On the other hand, eliminating a core problem generally eliminates all of the undesirable effects associated with it.,Do. Dr. Blent Sezen,24,Understanding and ManagingThe Constraints,System constraints can be

28、 either physical constraints or policy constraints. Policy constraints are generally more difficult to find and eliminate, but the elimination of a policy constraint generally provides a more pronounced system improvement.,Do. Dr. Blent Sezen,25,Understanding and ManagingThe Constraints,Ideas are no

29、t solutions. Generating ideas can be beneficial, but only if there is follow-through to develop the idea into a solution and then implement it completely.,Do. Dr. Blent Sezen,26,Understanding and ManagingThe Constraints,The focus should be on balancing flow through the shop. The key is throughput th

30、at end up as sales, not on throughput that may end up as inventory. Some accounting systems promote high production rates even if the sales are lower.,Do. Dr. Blent Sezen,27,Understanding and ManagingThe Constraints,Utilization of a non-bottleneck is determined by constraints in the system. Non-bott

31、leneck operations do not restrict system output. Those resources should, therefore, be managed in such a way as to provide maximum support for constraint resources.,Do. Dr. Blent Sezen,28,Understanding and ManagingThe Constraints,Utilization of an operation is not the same as activation. In the TOC

32、concept, an operation is considered activated only when it is providing benefit for the entire system to give more output. The operation may be utilized, or producing material not needed until some time in the future, but that does not necessarily help the entire system.,Do. Dr. Blent Sezen,29,Under

33、standing and ManagingThe Constraints,An hour lost at a constraint operation is an hour lost to throughput for the entire process. It is for this reason that the major focus of managing and scheduling an operation is on the constraint.,Do. Dr. Blent Sezen,30,Understanding and ManagingThe Constraints,

34、An hour lost at a non-constraint will not impact total throughput. It represents instead excess capacity.,Do. Dr. Blent Sezen,31,Understanding and ManagingThe Constraints,Transfer batches do not have to be the same size as process batches, and often should not be. Process batches for constraints sho

35、uld be of a size that maximize the effective utilization of the process (minimize downtime). Process batches at non-constraints are not so critical. Transfer batches (the amount of material moved), may often be smaller to maximize throughput and minimize process inventories.,Do. Dr. Blent Sezen,32,U

36、nderstanding and ManagingThe Constraints,A schedule should be determined by using all the operational constraints. In many operations schedules are set sequentially. TOC argues that all constraint areas should be considered at the same time when making a schedule. The theory also argues that lead ti

37、mes are a result of the schedule and should not be determined before the scheduling process.,Do. Dr. Blent Sezen,33,Improving the Process using TOC Principles,If a TOC approach is deemed appropriate to help improve a business system, there is a five-step process that is recommended to help improve t

38、he performance of the business.,Do. Dr. Blent Sezen,34,Improving the Process using TOC Principles,1.Identify the constraint. This implies the need to examine the entire process to determine which process limits the throughput. For example, in the example on Slide 10, suppose the sales department was

39、 only selling the product output at the rate of 3 per hour.,Do. Dr. Blent Sezen,35,1.Identify the constraint. ,In that case, the sales department would be considered the constraint and not process 3. it must be kept in mind that a constraint limits throughput with respect to overall business sales,

40、not merely inventory production.,Do. Dr. Blent Sezen,36,Improving the Process using TOC Principles,2. Exploit the constraint. Find methods to maximize the utilization of the constraint toward productive throughput. For example, in many operations all processes are shut down during lunchtime or durin

41、g breaks. If a process is a constraint, the operation should consider rotating lunch periods so that the constraint is never allowed to be idle.,Do. Dr. Blent Sezen,37,2. Exploit the constraint. ,Suppose, for example, an operation has a certain process that represents a clear and large constraint. S

42、uppose also that they currently have 7 productive hours for an 8-hour shift (30 minutes for lunch and two 15-minute breaks). Assuming they have multiple workers that can operate the process (or can train more), they could stagger lunch times and break times for just that one process, allowing it to

43、operate the full 8 hours.,Do. Dr. Blent Sezen,38,Improving the Process using TOC Principles,3. Subordinate everything to the constraint. Effective utilization of the constraint is the most important issue. Everything else is secondary. 4.Elevate the constraint. Essentially this means to find ways to

44、 increase the available hours of the constraint, including adding more of it.,Do. Dr. Blent Sezen,39,Improving the Process using TOC Principles,5. Once the constraint is a constraint no longer, find the new one and repeat the steps. As the constraint effective utilization increases, it may cease to

45、be a constraint as another process becomes one. In that case the emphasis shifts to the new process constraint. It is also possible that a sales-related change in the product mix will cause a different process to become the constraint.,Do. Dr. Blent Sezen,40,Notes on the five steps:,The third step i

46、s accomplished by Releasing material at the gateway (first processing) center at a rate that will keep the constraint busy. Prioritization of non-constraint tasks based almost exclusively on constraint needs.,Do. Dr. Blent Sezen,41,Notes on the five steps:,The concept of exploit really implies getti

47、ng the most from existing constraint resources. TOC suggests that exploiting should be maximized prior to spending additional money to acquire more of the constraint resource.,Do. Dr. Blent Sezen,42,Notes on the five steps:,The fifth step is really a warning to continually check to ensure the constr

48、aint has not shifted. Effective exploitation of existing constraints and a shift in product mix are examples of events that can cause the constraint to shift.,Do. Dr. Blent Sezen,43,Notes on the five steps:,After understanding these five steps, it may be helpful to consider that not all facilities o

49、perating in all types of business environments may find the approach to TOC easy to implement. For example, if an operation has a highly volatile product mix due to constantly shifting customer orders for a large variety of products, they may discover that the constraint will also be volatile.,Do. D

50、r. Blent Sezen,44,Notes on the five steps:,At one time the mix of process requirements may point to one constraint, while at another time the mix may create an entirely different constraint. If the constraint shifting occurs frequently, then there could be far too little opportunity to apply the TOC

51、 approaches on one constraint before it shifts to another point in the process.,Do. Dr. Blent Sezen,45,Impact On Operation Strategy,For a given type and mix of products, management can elect to consciously decide where the constraint should be located and then proceed to develop the operational stra

52、tegy around that selected constraint. Marketing and Sales can be tightly tied to the constraint. Specifically, an analysis can be made to determine the mix of products to sell to maximize profits, and also it is possible to sell more of products that do not use the constraint (implying that excess c

53、apacity is available to make more of those products).,Do. Dr. Blent Sezen,46,Impact On Operation Strategy,Engineering and other process improvement activities can and should be focused on making the constraint process more efficient and effective. The company should consider if and how the non-const

54、raint processes may be used to supplement or be used to make the constraint resources more effective.,Do. Dr. Blent Sezen,47,Impact On Operation Strategy,If the company has a choice as to where the constraint is located in the process, they may elect to have the constraint early in the process. In t

55、hat way the size of the required buffer needed to guard the constraint against starvation of material will be minimized.,Do. Dr. Blent Sezen,48,Impact On Operation Strategy,If, on the other hand, there are processes early in the overall process that have poor quality yield, the constraint should be

56、placed later in the overall process. Some processes, especially certain chemical processes, have poor yield by their very nature. The idea is to have those processes placed prior to the constraint.,Do. Dr. Blent Sezen,49,Impact On Operation Strategy,If they were placed after the constraint, then the

57、 implication is that some product that has already been through the constraint will not be scrapped or need rework using the constraint. Since the idea behind TOC is to have all items going through the constraint be turned into sales, clearly it is not a good idea to have constraint time being waste

58、d by being used for a product that will later be rejected.,Do. Dr. Blent Sezen,50,Logistics and the Theory of Constraints,Logistics deals with the physical movement of material through the production process. The Theory of Constraints has specific issues dealing with logistics, as well as some metho

59、ds to deal with making logistical movement effective.,Do. Dr. Blent Sezen,51,Logistics and the Theory of Constraints,Most systems are made up of a series of dependent events, or a series of specific steps that must be followed in a correct order to complete a job. This implies that any lateness at a

60、n early station in the process will potentially impact negatively later stations in the process.,Do. Dr. Blent Sezen,52,Logistics and the Theory of Constraints,Most activities have statistical fluctuations inherent in their operation. This implies that activity times are not deterministic and deviat