Theory of Constraints Emgt 401 Lean Manufacturing Systems

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Theory of ConstraintsEmgt 401 - Lean
Manufacturing Systems

• Vamsi Penmecha

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Contents

• Introduction The Philosophy
• Theory of Constraints
• The TOC Paradigm
• System Dimensions
• Categories of Legitimate Reservation
• Logic Trees
• Applications of TOC
• TOC and Lean
• Conclusion

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Introduction

• What is Theory of Constraints?
• Thinking Process
• Concepts
• Goal
• Necessary Condition
• System Constraints
• Systems as Chains
• Weakest link
• Nonconstraints

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Introduction

• Thinking Process
• The process of how an entity learns to gain
  understanding of the environment.
• Can also be called Logical thinking process
• Example A Childs Learning Process.
• Basic elements of a Thinking Process
• Causality ifthen
• Necessity In order to get (whatever)I must
  do

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Introduction

• Goal
• A result or achievement toward which effort is
  directed.
• Three important questions for a manager
• What is the Ultimate goal?
• Where does he or she stand in relation to the
  goal?
• The magnitude and direction of the change needed
  to move from the status quo to where he or she
  wants to be (the goal).

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Introduction

• Necessary Condition
• A circumstance indispensable to some result, or
  that upon which everything else is contingent.

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Introduction

• Systems as Chains
• Assume the system to be a chain with n links
  and with a goal of transmitting force from one
  end to other.
• Weakest link
• The link at which the system fails to achieve the
  goal is the weakest link.
• Constraints and Nonconstraints
• Only one constraint weakest Link
• Nonconstraints are all the other links n-1

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Theory of Constraints

• Three Questions The backbone of TOC
• What to Change?
• What to Change to?
• How to cause the Change?
• Principles of TOC
• Systems as Chains
• Local vs. System Optima
• Cause and Effect
• Undesirable effects and Core Problems
• Solution Deterioration
• Physical vs. Policy Constraints
• Ideas are not Solutions

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Theory of Constraints

• The Five Focusing steps of TOC
• Identify the System Constraint
• Decide How to exploit the constraint
• Subordinate everything else
• Elevate the Constraint
• Go back to step 1, but beware of the Inertia

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Theory of Constraints

• Five Focusing steps - A Production Example
• Identify the System Constraint
• Exploit the constraint
• Subordinate everything else
• Elevate the Constraint
• Go back to step 1, but beware of the Inertia

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Theory of Constraints
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TOC Paradigm

• Logical Tools
• The Current Reality Tree
• The Conflict Resolution Diagram - The
  Evaporating Cloud
• The Future Reality Tree
• The Prerequisite Tree
• The Transition Tree
• Tests for Logical Tools
• Categories of Legitimate Reservation

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System Dimensions

• Throughput
• The rate at which the entire system generates
  money through sales (product or service)
• Inventory
• All the money the system invests in things it
  intends to sell, or all the money tied up within
  the system.
• Operating Expense
• All the money the system spends turning Inventory
  into Throughput It is the money going out of the
  system.

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Categories of Legitimate Reservation

• Clarity
• First reservation one should answer
• Eliminate misunderstandings before the logic is
  examined
• Most conflict involves communication breakdown to
  some extent
• Defuses potential conflict early in the scrutiny
  process
• Questions Answered
• Would I add any verbal explanation if reading the
  tree to someone else?
• Is the meaning/context of words unambiguous?
• Is the connection between cause and effect
  convincing at face value?
• Are intermediate steps missing?

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Categories of Legitimate Reservation

• Entity Existence
• An Entity is a complete idea expressed as a
  statement
• The idea is a cause or an effect represented in a
  logic tree
• Questions Answered
• Is it a complete sentence?
• Does it make sense?
• Is it free of if-then statements? (Look for
  because, in order to)
• Does it convey only one idea?
• Does it exist in Reality?

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Categories of Legitimate Reservation

• Causality Existence
• Whether the stated cause leads to the stated
  effect.
• Causality Existence challenges the validity of
  the arrows, or connections, between the entities.
• Questions Answered
• Does and if-then connection really exist, as
  written?
• Does the cause, in fact, result in the effect?
• Does it make sense when read aloud exactly as it
  is written?
• Is the cause intangible? (If so, look for an
  additional predicted effect.)

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Categories of Legitimate Reservation

• Cause Insufficiency
• A presenters stated cause is not enough, by
  itself, to produce the stated effect.
• Is the stated cause sufficient to create the
  stated effect without including some other factor
  that was not stated.
• Questions Answered
• Can the cause, as written, result in the effect
  on its own?
• Are any significant cause factors are missing?
• Is/are the written cause(s) sufficient to justify
  all parts of the effect(s)?

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Categories of Legitimate Reservation

• Additional Cause
• More than one completely independent cause can
  produce a similar effect
• Stating that there is another cause that might
  individually generate the same effect.
• Questions Answered
• Is there any thing else that might cause the
  effect on its own?
• If the stated cause is eliminated, will the
  effect be almost completely eliminated?

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Categories of Legitimate Reservation

• Cause-Effect Reversal
• Why an effect exists versus how we know it
  exists?
• This distinction is lost when cause-effect
  relationships are written down or graphically
  depicted.
• Questions Answered
• Is the stated effect really the cause, and vice
  versa?
• Is the stated cause the reason why, or just how
  we know the effect exists?

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Categories of Legitimate Reservation

• Predicted Effect Existence
• If the proposed cause-effect relationship is
  valid, another unstated effect would also be
  expected.
• Proof that one of the other causality reservation
  is or not valid.
• Can be used to support causality, or to refute
  causality.
• Questions Answered
• Is the cause intangible?
• Do other unavoidable outcomes exist besides the
  stated effect?

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Categories of Legitimate Reservation

• Tautology
• Circular logic-The effect is offered as a
  rationale for the existence of the cause.
• Most likely to surface when causality existence
  is questioned and the cause is intangible.
• Questions Answered
• Is the cause intangible?
• Is the effect offered as a rationale for the
  existence of the cause?
• Do other unavoidable outcomes exist besides the
  stated effect?

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Logical Trees Current Reality Tree

• Current Reality Tree (CRT)
• A logical structure designed to depict the state
  of reality as it currently exists in a given
  system.
• Reflects the most probable chain of cause and
  effect, given a specific, fixed set of
  circumstances.
• Answers - What to change?
• Undesirable Effect (UDE)
• Effect that really exists and is negative in its
  own merits.
• Example Excessive Inventory, Longer Lead Times,
  etc

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Logical Trees Current Reality Tree

• Purpose
• Provide the basis for understanding complex
  systems.
• Identify Undesirable effects (UDEs) in the
  system.
• Identify a core problem that eventually produces
  70 percent or more of the systems UDEs.
• Identify the one simplest change to make that
  will cause the greatest positive impact on the
  system.

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Logical Trees CRD

• Conflict Resolution Diagram (CRD)
• A necessary condition structure designed to
  identify and display all elements of a conflict
  situation and suggest ways to resolve it.
• The diagram includes the system objective,
  necessary but not sufficient requirements that
  lead to it, and the conflicting prerequisites
  that satisfy them.
• Surfaces hidden underlying assumptions that,
  though accepted as valid, are actually
  questionable and subject to invalidation,
  rendering the conflict debatable.
• Answers the first part of the question What to
  change to?

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Logical Trees - CRD

• Purpose
• Confirm that the conflict really exists.
• Identify the conflict perpetuating a major
  problem.
• Resolve conflict.
• Avoid compromise.
• Create solutions in which both sides win.
• Create new, breakthrough solutions to problems.
• Explain in depth why a problem exists.
• Identify all assumptions underlying problems and
  conflicting relationships.

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Logical Trees Future Reality Tree

• Future Reality Tree (FRT)
• A sufficiency based logic structure designed to
  reveal how changes to the status quo would affect
  reality-specifically to produce desired effects
  (DE).
• An expression of reality that does not yet exist.
  
• Constructed from the bottom up, from the starting
  point which is the present.
• Answers the second part of the question What to
  change to?
• Injection
• The Breakthrough Idea that has been generated by
  the CRD.

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Logical Trees Future Reality Tree

• Purpose
• Enables effectiveness testing of new ideas before
  committing resources (time, money, and people) to
  implementation.
• Determines whether proposed system changes will,
  in fact, produce the desired effects without
  creating devastating new side effects.
• Reveals through negative branches whether
  proposed changes will create new collateral
  problems as they solve old problems.
• Provides a means of assessing the impacts of
  localized decisions on the entire system.
• Serves as an initial planning tool for changing
  the course of the future.

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Logical Trees Prerequisite Tree

• Prerequisite Tree (PRT)
• A logical structure designed to identify all
  obstacles and the responses needed to overcome
  them in realizing an objective.
• Identifies minimum necessary conditions without
  which the objective cannot be achieved.

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Logical Trees Prerequisite Tree

• Purpose
• Identify Obstacles preventing achievement of
  desired course of action, objective, or
  injection.
• Identify the remedies or conditions necessary to
  overcome or otherwise neutralize obstacles to a
  desired course of action, objective, or
  injection.
• Identify the required sequence of actions needed
  to realize a desired course of action.
• Identify and depict unknown steps to a desired
  end when one does not know precisely how to
  achieve it.

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Logical Trees Transition Tree

• Transition Tree (PRT)
• A cause and effect logic tree designed to provide
  step-by-step progress from initiation through
  completion of a course of action or change.
• Its an implementation tool, combining specific
  actions with existing reality to produce new
  expected effects.
• An additive process, combining each successive
  expected effect with subsequent specific actions
  to produce new effects.

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Logical Trees Transition Tree

• Purpose
• Provide a step-by-step method for implementation
• Enable effective navigation through a change
  process.
• Detect deviation in progress toward a limited
  objective.
• Adapt or redirect effort, should plans change.
• Communicate the reasons for action to others.
• Execute the injections developed in a conflict
  resolution diagram or Future Reality Tree.
• Attain the intermediate objectives in a
  Prerequisite Tree.
• Develop tactical action plans from conceptual or
  strategic plans.

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Application of TOC

• Drum Buffer Rope - A manufacturing application of
  TOC
• Drum
• Constraint and the pace setter for the Plant
• Buffer
• The buffer next the drum
• Rope
• Pull type scheduling system for material release

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Lean and TOC

• Areas of Mutual Agreement
• Value
• Value Stream
• Flow
• Pull
• Perfection

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Lean and TOC

• Areas of Mutual Disagreement
• Approach to Implementation
• Inventory
• Capacity
• Cost

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References

• Goldratts Theory of Constraints H. William
  Dettmer.
• www.Goldratt.com
• Theory of Constraints Eliyahu M. Goldratt.
• Theory of Constraints and Lean Manufacturing
  Friends or Foes? Richard Moore, Lisa Scheinkopf
  
• http//www.thoughtwarepeople.com/
• http//www.rbvollum.com/perform.htm

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Questions ?