Manufacturing

Operations Management

The typical problems faced in the manufacturing environment are as below:

Poor due-date performance
Long Lead Time
High Inventories
Fire-fighting on the shop floor
Frequent changes in the production plan
Poor Cash Flow
Too many customer complaints

Five Focusing Steps – POOGI

Dr. Eliyahu Goldratt gave a very simple yet powerful method of continuous improvement, also known as the Process of On-Going Improvement (POOGI).

STEP 1

IDENTIFY the system’s constraint

A constraint or bottleneck is anything that prevents the system from achieving its goal and decides the output, the system can deliver.

STEP 2

DECIDE how to exploit the system’s constraint

Identify and remove all the reasons which prevent the bottleneck from producing output.

STEP 3

SUBORDINATE everything else to the above decision

This is a very crucial step. It involves the alignment of all the non-bottleneck resources to the decision taken at the bottleneck.

STEP 4

ELEVATE the system’s constraint

Once the bottleneck is fully exploited, then only expands and increases the capacity of the bottleneck.

STEP %

Go back to Step 1 and prepare the process

As a result of the elevation, the bottleneck may shift. So go back to Step 1. This is an ongoing process.

THE 3V CATALYST

Yagna follows the principles of the Theory of Constraints. It delivers fast and sustainable results using the same existing resources.

The 3V ingredients:
(Tame indiscriminate) Variety +
(Protect against inherent) Variability +
(Alleviate lack of) Visibility

The 3 Vs impact the flow in every system. The result is high inventory in the system which impedes smooth flow.

Variety

In companies’ quest to attain double-digit growth in single-digit markets, companies have frantically created more products, customers, markets, suppliers, services, and locations. Yet all this complexity adds cost causing top-line revenue to go up, and bottom-line profits to go down.

Variability

Every system is subjected to variability in the form of demand variability, supply variability, and process variability. Of the total variability, some of it is predictable within certain limits and can be controlled, whereas special cause variations are caused by unique events, over which there is little or no control. Buffers are introduced in the system as a means of protecting against the impact of variability.

Visibility

Every business is driven by decisions taken at all levels. Effective decisions can only be taken if there is access to relevant information. Lack of Visibility often impedes decision-making, which results in decisions being taken to achieve local optima, as opposed to global optima.

The 3M ingredients

Yagna follows an Implementation Discipline through The 3Ms:

The 3M ingredients:
Methods +
Measures +
Monitoring

Method

The Method focuses on dampening the variability by decoupling the supply chain through scientifically calculated inventory buffers and aligning the entire supply chain to the beat of the constraint. The method will be based on the Theory of Constraints (TOC), Demand Driven Materials Requirement Planning (DDMRP), and related Body of Knowledge.

Method results in taking planning decisions, converting them into the working procedure, and automating these decisions via an excel-based planning engine and later transitioned to world-class software.

Measurements

People behave the way they are measured. In order to align the team’s behavior with the proposed method, it is necessary to replace current conflicting measurements (if any) with a combination of Lead and Lag measures aligned with Throughput, On-Time-in-Full, Buffers Health, and Constraint Exploitation.

Monitoring

The implementation is monitored via regular short duration reviews and a scorecard.

request for assessment

Though Yagna strongly believes that every company has the potential to earn much more throughput from the existing investment but still it necessarily insists on conducting assessments before embarking on the TOC Implementation journey.

It not only creates a buy-in on the problems and the direction of the solution but also confirms that there is a good enough business case for both the parties to move to the next step of Adoption.