Operations Management

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

  1. Poor due-date performance
  2. Long Lead Time
  3. High Inventories
  4. Fire-fighting on the shop floor
  5. Frequent changes in the production plan
  6. Poor Cash Flow
  7.  Too many customer complaints

Five Focusing Steps – POOGI

Dr. Eliyahu Goldratt gave a very simple yet powerful method of continuous improvement, also known as 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, system can deliver.

Step 2: DECIDE how to exploit the system’s contraint

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

Step 3: SUBORDINATE everything else to the above decision

This is a very crucial step. It involves 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 expand and increase the capacity of bottleneck. 

Step 5: Go back to Step 1

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

THE 3V CATALYST

Yagna follows the principles of 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.

Yagna follows an Implementation Discipline
through The 3Ms:

The 3M ingredients:
Methods +
Measures +
Monitoring

 

Method – The Method focuses on dampening the variability by decoupling supply chain through scientifically calculated inventory buffers and aligning the entire supply chain to the beat of the constraint. Method will be based on Theory of Constraints (TOC), Demand Driven Materials Requirement Planning (DDMRP) and related Body of Knowledge.
Method results in taking planning decisions, converting into working procedure and automating these decisions via excel based planning engine and later transitioned to world-class software.

Measurements – People behave the way they are measured. In order to align team’s behaviour with 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 assessment before embarking on TOC Implementation journey.

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