In my last post we began our discussion of a case study of a ready to assemble (RTA) furniture manufacturer using TOC to turn-around their struggling business. Because their product was so well received by their customers, orders to this company had accelerated to the point that their capacity had been exceeded. I also gave provided a link to the full case study, for those of you interested in reading it:
As I explained in my last post, this small manufacturer was facing the same problems that many small companies face, in that demand for their growing line of RTA furniture was nearly beyond their ability to produce it, even though they had two full shifts in operation. The order backlog at the manufacturing plant was steadily increasing and their lead time stretched to more than three weeks.
As a result of this lead time extension, other orders would become further behind schedule and these constant changes led to mistakes and quality problems. The employees on the shop floor began questioning whether the leadership knew what they were doing as priorities on them were constantly changing. In addition, there were lengthy set-ups on some of the equipment, so wherever possible, components were manufactured in larger batches. As a result of these larger batches, the work-in-process (WIP) ballooned higher and higher which further extended lead times, causing the company to consider an expensive plant expansion.
Through a series of coincidences, the GM was introduced to the Theory of Constraints and read Eli Goldratt and Jeff Cox’s best-selling business novel, The Goal. The GM had explained that reading this book was a real eye-opener for him. Even though his company was in no danger of being shut down, like the fictitious company in The Goal, he recalled that it was almost as if the book had been written about his company. Let’s now begin to explain just what this company did to turn itself around.
After reading The Goal, the GM decided to send his Production Manager and Systems Manager/Specialist to a two-day TOC workshop. The Production Manager explained that both had been required to read Goldratt’s book prior to attending the workshop, but neither one was sure of what they were in for or what to expect. But by the end of the first day’s session, they both knew they were on to something different, but something very valuable. Even before the end of the workshop, they were both recognizing that many of the current methods and procedures being used at their plant had been developed around controlling costs and keeping spending under control and not doing things that made money for their company. In fact, they both believed that their cost-based actions they had been doing before this workshop hadn’t been helping them at all.
The workshop taught them that the first step was to identify which of their several busy resources was the Drum (i.e. the bottleneck or system’s constraint) because this resource controlled their rate of production. After some debate, they had concluded that their Grooving line should be selected as their best candidate. They didn’t waste a lot of time collecting and analyzing lots of data to find their constraint. They had concluded that since the grooving line fed their packaging area, if they decided to tie the packaging flow to the grooving line, then maybe the packaging would suffer and potentially damage the total plant throughput. They made this change, held their breath and tried it. By the second day, all doubts about their change were removed as the packaging department was hitting record output!
Systematically, this company set about applying the methods they had learned in the workshop in order to manage their production facility more effectively. The Production Manager explained that this workshop was never intended to give them all of the “how to’s,” but once the basic concepts were clear, the people in their shop just made it all happen. From my own experience, this is exactly what typically happens. The basic points of TOC are very easy to learn and apply because they are all based on common sense teachings.
The actual implementation involved all of the management and the shop floor workers, making sure that the grooving line was being used effectively and was kept running. They then synchronized all other production activities to their selected constraint just to keep material flowing smoothly to and from the line, to packaging and then onto shipping. Everyone was clearly surprised and very excited at the outcome/results of their changes.
In my next post, we will continue on with more changes this company made and present some results of their changes. As always, if you have any questions or comments about any of my posts, leave me a message and I will respond.
Until next time.
Don't miss out!
Stay on top of the latest business acumen by subscribing to the Manufacturing Breakthrough blog.