Wendell August Forge

This article was originally published in the July/August 1998 issue of Midrange ERP magazine. It appears on the AGI Website with the permission of Midrange ERP.

TOC Case Study: Wendell August Forge

When Tom Cameron started his new job on the first workday in January 1997, his new employer, Wendell August Forge in Grove City, Pennsylvania was facing some severe challenges. The only remaining survivor of what was once a flourishing industry (more than 100 companies made hand-hammered aluminum commemorative items in 1955), Wendell August had been lurching from one management fad to another in search of a "miracle cure". As the new head of production, it was Tom's job to figure our what was wrong and fix it.

Barely a month after starting his new job, Tom was sent to a Theory of Constraints (TOC) workshop at the Avraham Y. Goldratt Institute in Connecticut and, on his return, he was asked to implement TOC as soon as he thought was practical. After about a month of preparation, Tom conducted a TOC presentation for the company leaders followed immediately by a similar session for production. Implementation began on March 24th.

By the end of the second quarter of 1997, the results were already apparent. The company was undergoing a remarkable transformation. Prior to TOC, huge work-in-process inventories, long lead times, late deliveries, and frequent management changes were the order of the day. Within three months, throughput was up and the entire atmosphere was changed to one with predictability instead of chaos, less stress, and a company poised for expansion.

The Theory of Constraints is based on the idea that overall throughput of a manufacturing plant can be directly related to that of a bottleneck or constraining resource. Manage that resource effectively and throughput can be maximized. Drum-Buffer-Rope is the management method that coordinates other resources to the constraint and manages workflow and in-process inventories.

Identify the Constraint
The TOC methodology starts with identifying the constraint. Traditionally, Wendell August had used continuous assembly lines with batch transfer. In 1994 they had switched to 6 production cells, with little improvement in throughput. Fortunately, however, the cell arrangement made it easy to identify the bottlenecks, but not as easy as might be expected. Intuition said that hammering was the constraint for all cells but, in reality, buffing was the limiting resource in some areas. "It became obvious real quick," said Cameron, "we just looked for the piles of WIP. You could see it within hours."

The next step is to exploit the constraint. This means getting the most out of it, or, in Cameron's words, "The constraint never stops." Because of union rules, there was lost time at the constraining operations for lunch and coffee breaks. This was resolved by staggering the breaks so that the constraint work centers were kept in continuous operation. This resulted in an immediate 12% increase in capacity.

And so it went. By applying TOC and sound judgement, Wendell August Forge was able to increase throughput, improve predictability, and reduce stress. By year's end, capacity was up by 27% and, for the first time ever, Wendell August made it through the busy Thanksgiving-to-Christmas season without running out of product. There have been some stumbles along the way, to be sure. A forecasting problem, for example, resulted in some excess inventory. But they are addressing these issues as they come up.

One of the biggest challenges has been adjusting attitudes to match the new methods. In the past, when someone was not visibly working on product, a manager would get after them - efficiency being a prime measurement. In the world of TOC, traditional efficiency doesn't apply. A re-education process is needed to insure that both management and the workers understand how TOC works, and how to make it successful.

One key ingredient has been the full backing of the company president throughout the process. His belief in the ultimate outcome gave him the courage to stick with the program, allowing it time to succeed.

What's next? Continued improvement, of course, and the application of TOC to the distribution portion of the business. Wendell August Forge is now shopping for software, and they will be using TOC in the management of this systems-improvement project as described in Eli Goldratt's newest business novel, Critical Chain. You can be sure that compatibility with TOC will be a prime requirement in the selection of their new ERP system.

© 1998 Midrange ERP

A representative of Wendell August Forge presented the company's story at the Jonah^SM Upgrade Workshop in November 1997. That presentation is available on video (JFL-9).