Wednesday, January 15, 2014

Focus and Leverage Part 292

Recently I have received numerous requests from readers to write something on the basics of constraints management.  Many people think that constraints management is all about managing bottlenecks, and while this aspect of constraints management is clearly important, there are other pieces of this pie that are also critical to the successful application of constraints management.  But having said this, let’s start with the basics of constraints management.

In any process there are a series of steps which must be completed if a product is to be produced or a service is to be delivered.  What we normally do in most improvement initiatives, is to create a process map or value stream map and insert the cycle times for each step.  In many initiatives I have seen, there is an immediate attempt to remove waste throughout the process, but is this the most effective approach?  Let’s look at an example.

In the figure above we see a 4-step process for producing some kind of product.  The cycle times for each step are listed for each and as we can see, none of them are the same.  Suppose someone has an idea to reduce the time for Step 1 from 40 minutes to 20 minutes, but someone else has an idea that will reduce the time in Step 3 from 70 minutes to 50 minutes.  Assuming you had to choose between both ideas, which one do you believe would be the logical choice to implement in this process?  Let’s think about this for a minute.  Taking Step 1 from 40 minutes to 20 minutes is a 50% reduction while decrease Step 3 from 70 minutes down to 50 minutes is only a 29% reduction.  Many people would opt for the Step 1 improvement, but would that be the best move?

If we consider the time it takes to complete one rotation of this process, we know that the limiting factor is the constraint which in this process is Step 3 at 70 minutes.  In fact, the throughput rate for this process is one part every 70 minutes.  What happens to this rate if we reduce Step 1 from 40 minutes to 20 minutes?  The answer is, absolutely no change in the rate that products are produced.  What happens to the rate if we reduce Step 3’s cycle time from 70 minutes to 50 minutes?  The new rate becomes 1 part every 50 minutes!  With the old cycle time of 70 minutes, we could produce 6.85 parts in 8 hours, but with the new rate of 50 minutes are new 8 hour capacity is 9.6 parts or 2.75 additional parts in 8 hours.  So when considering which part of the process to improve, consider where the constraint or bottleneck operation is.  If the constraint is internal to your company, focusing on the constraint is always the best option.

In the next few postings I will be discussing other aspects of Constraints Management.

Bob Sproull

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