LucasVarity

At the LucasVarity plant in Detroit, TOC was used to focus improvement efforts on the CT 120 Drum machining line that:

• Improved machine uptime at the constraint by over 15%
• Increased line output 76% (from 105 to 185 drums per hour)
• Reduced cycle time at the constraint by 24%
• Increased first run yield more than 4%

With the increase in output rate and reduction in defects and scrap, the line was able to improve delivery performance to 100% while at the same time, reduce the number of hours worked (from seven days a week to five days a week).

The focusing power of TOC was instrumental in guiding the continuous improvement activities at LucasVarity Fowlerville Anti-Lock Brake System plant also. Improvements included:

• Increased line output 135% (from 70 to 165 valves per hour)
• Reduced scrap cost per unit 68%

These improvements in line output allowed the corporation to delay a major (6 million dollar) investment one year with no negative impact to customer.

No matter what industry you are in or what customer you are supplying. Regardless of what product you are producing or what service you are providing. We all have one thing in common. We all must improve! Our customers are demanding new, higher quality products that provide more value and deliver superior performance. Suppliers must therefore continually improve the product and service they are providing. While competitive pressure is driving the need to improve products and services, there is also internal pressure to improve profitability and operational performance. Passing the costs of product enhancements on to the final customer is not an option. Stockholders, owners and management provide continuous pressure to control costs, reduce inventory, improve quality and increase profits. With pressure on all fronts, the need for continuous improvement has never been greater than it is today.

There are many continuous improvement tools and techniques available. These tools can help us reduce variation, eliminate defects, reduce waste and increase flexibility. With such a wide range of choices, choosing the proper continuous improvement tool is extremely important.

Of equal importance is knowing where to start the continuous improvement activity. It is generally agreed that any process can be improved upon given enough time, effort, and resources.

Do we need to improve everything at the same time?

What should we improve first?

By using the "Theory of Constraints," we can follow a logical five step process that will focus our attention on identifying and improving the system constraint, resulting in overall system improvement.

SYSTEM CONSTRAINT

The dictionary describes a process as a series of continuous actions that brings about a particular result (Funk & Wagnalls 1996). In other words, every system or process is a series of linked activities or process steps. These process steps can be illustrated by looking at a piece of chain. When visualizing a chain, we can see a number of individual links (process steps), interconnected to form a length of chain (process). "You're only as strong as the weakest link" is a common adage that rings true for any system. When examining a chain in everyday life, the links appear identical in size. Experience indicates that when the chain is stretched, it will fail at only one link, the weakest link. The weakest link determines the strength of the entire chain.

Theory of Constraints (TOC) is a thinking process popularized by Eliyahu Goldratt and Jeff Cox in The Goal. One basic assumption of TOC is, that any process (like a chain), is controlled by the weakest link in the process. This weakest link is the constraint of the system. The constraint is the element of the process that limits the organization from moving closer to the goal.

There is little argument that upon review of any system, there are many things that could be changed or improved upon. No matter how much effort is expended during process development, there will always be some additional opportunities for continuous improvement. The question is not "Can everything be improved?', but "Should everything be improved?".

Thinking back to the chain model, what is the benefit of strengthening any link, other than the weakest link. The chain will fail at the weakest link regardless of the strength of the stronger links. Improving the other links by 20%, 40%, or even 100% will not increase the strength of the chain. In the chain model it is evident that improvement to any link other than the weakest link does not improve the chain whatsoever.

In The Goal Goldratt reveals the five focusing steps of TOC (Goldratt, p.307). They are:

IDENTIFY the system's constraint(s).
Decide how to EXPLOIT the system's constraint(s).
SUBORDINATE everything else to the above decision.
ELEVATE the system's constraint(s).
Warning!! If in the previous steps a constraint has been broken, go back to step 1, but do not allow INERTIA to cause a system's constraint.

These five steps are the guiding logic for using TOC as a tool for continuous improvement.

IDENTIFY THE CONSTRAINT

As noted above, the first of the five focusing steps is to identify the constraint of bottleneck of the process. A bottleneck is "any resource whose capacity is equal to or less than the demand placed upon it" (The Goal, p.139). Constraint identification can be achieved in a number of different ways such as looking for the pile of inventory or measuring machine cycle times.

EXPLOIT THE CONSTRAINT

Once the constraint is identified, we must develop plans to squeeze (exploit) the existing constraint capacity as much a s possible to insure that it is not wasted. Let us look at a sample line that is working three shifts (24 hours/day) seven days per week. How can this capacity be exploited any further? A closer look at the constraint is required. As the constraint is observed, it may be noted that the machine is running some of the time but on occasion, it is sitting idle. It may sit idle during breaks, lunch periods and or shift changes. Looking at the causes of this idle time leads to actions that will help exploit the constraint.

We may also find that the constraint station is idle because of a breakdown at another station. A breakdown at a station upstream to the constraint may cause the constraint to sit idle due to lack of material to process, while a downstream station breakdown may block the constraint from producing. Either occurrence causes the constraint to sit idle until the other operation is repaired.

Strategic placement of an inventory buffer directly before or after the constraining operation (starved and space buffer) can insulate the constraint from interruptions that occur at other non-constraint operations.

Implementation of process controls prior to the constraint will protect system throughput while root causes of the most pressing issues are identified and eliminated. Actions that eliminate defects that occur after the constraining operation are also implemented. These are the worst type of defect as they not only result in the cost of scrap and excess processing but also result in lost throughput for the system.

How does this differ from any actions that would occur without TOC? By focusing on the impact at the constraining operation, the continuous improvement actions requiring immediate attention can be prioritized as to their impact on the constraint. Action used to exploit the constraint would include:

1. Implement a starved buffer;
2. Implement a space buffer;
3. Implement QC prior to constraint;
4. Identify defects occurring after the constraint;
5. Identify and eliminate the root cause of defects occurring after the constraint;
6. Investigate repair or rework methods (temporary action until root cause is determined).

SUBORDINATE EVERYTHING TO THE SYSTEM CONSTRAINT

One example of subordination is to communicate decision rules for addressing machine breakdowns and staffing issues to the entire operating staff (not just the supervisor). It also includes releasing material to match a customer "pull" instead of a "push" system.

ELEVATE THE CONSTRAINT

Once the previous steps have been completed, we may still need additional constraint capacity. At the LucasVarity plant in Detroit, constraint capacity was increased two different ways. One way was through cycle time reduction. A thorough review of the various process steps that occurred within the constraint (Drill and Tap Dial) uncovered sequence changes that eventually lead to a 9 second reduction in cycle time (from 37 to 28 seconds). This process analysis was performed not only to uncover cycle time reductions but also to reveal the root causes of an number of the machine faults. Secondly, usable capacity was created by reducing the amount of machine downtime. Reducing unplanned machine downtime results in an increase in net capacity. This increase is classified as elevating the constraint.

GOING BACK TO STEP 1

Once the constraint has been broken, the final step in the TOC process is to go back to step 1 and start the process over again. Breaking the constraint is equivalent to strengthening the weakest link in the chain. Once the weakest link is strengthened, the next weakest link becomes the system constraint. At this point, the five focusing steps must be repeated beginning with the identification of the new system constraint. At the same time, policies and practices implemented to manage the previous constraint must be reviewed and often revised.

Theory of Constraints is effective when used as a focusing tool. It can be used effectively by itself or with other improvement tools. It can be used in conjunction with Total Quality Management and/or Lean Manufacturing. In the example presented in this article, cause-effect diagrams, regression analysis, statistical problem solving, waste reduction, SPC, preventive maintenance as well as many other continuous improvement tools were used in conjunction with TOC. TOC helped focus the actions of the teams on improving the weakest link of the system.

There are many more examples of tremendous improvements being made within LucasVarity using TOC. TOC techniques can be used by itself, or in conjunction with Lean Manufacturing and/or Total Quality Management tools to provide impressive results.

For questions regarding this article, please contact its author, Kevin Hein, at kevin_hein@kh.com.