Systems Improvement Part 4

In my last post we determined how fast the non-constraint steps should be running to avoid and explosion of work-in-process inventory.  We also identified potential sources of waste that are typically found in manufacturing systems.  In today's post we will explore sources of variation which must be identified and significantly reduced to further improve our manufacturing system.

There are two types of variability, that you are interested in.  No, we’re not talking about special cause and common cause. We’re talking about processing time variability (PTV) and process and product variability (PPV), which are very different from each other. Sources of PTV are those things that prolong the time required for parts to progress through each of the individual process steps, while PPV are those variables that cause part’s quality characteristics to vary. PPV has a profound impact on PTV, simply because PPV negatively interrupts the process flow. There are many examples of situations that disrupt processes and therefore, create variation. Some of the more common examples include unreliable equipment (PTV and PPV), lack of standardized work procedures (PTV and PPV), defective product (PPV and PTV), late deliveries from external and internal supplier (PTV) and many others.

Variability burdens a manufacturing system because it simply leads to congestion, excessive inventory, extended lead times, quality problems and a host of other operational problems. There are two prominent theories on variation and how to treat it.  Walter Shewart’s idea was to “minimize variation so that it will be so insignificant, that it does not in any way, affect the performance of your product.”  Taguchi, on the other hand, tells us to “construct (design) the product in such a way, that it will be robust to any type of variation.” They’re both right, of course. So, what are your options when dealing with the negative effects of variation? There are three ways to handle variation, namely, eliminate it, reduce it or adapt to it. Because it’s impossible to totally eliminate variability, you must reduce it as much as possible, and then adapt to the remaining variation.

Performance Metrics

In describing the characteristics of a manufacturing system, I stated that, in order for manufacturing systems to maintain stability, there must be a feedback mechanism in place to transmit information.  Without a mechanism to provide feedback, systems will not function to achieve its intended purpose.  Selecting the right performance metrics, for example, is critical for systems to operate effectively.  So, just what are the key performance metrics we should be using?

In order to better understand which performance metrics we should be using, let’s first take a look at what the creator of the Theory of Constraints, Dr. Eliyahu Goldratt told us about the Theory of Constraints (TOC).  Dr. Goldratt presented what he referred to as “The Five Focusing Step” which were:

Step 1: Identify the system constraint

Step 2: Decide how to exploit the system constraint

Step 3: Subordinate everything else to the system constraint

      Step 4: If necessary, elevate the system constraint

Step 5: When the current system constraint has been broken, return to Step 1, but don’t let inertia create a new system constraint.

Throughout my career I’ve been asked many times, which of Goldratt’s Five focusing steps is the most difficult for companies to embrace.  From my perspective and experience, it’s Step 3 which deals with subordinating everything to the constraint.  One of the major reasons for this is based in Cost Accounting (CA), or even more specifically, the performance metrics that CA embraces and mandates.  In particular, the performance metrics Operator Efficiency and Equipment Utilization, in places other than the constraint is in my mind, the most difficult mindset to overcome for many companies.

In my next post I will discuss step 3,subordination, in more detail to demonstrate just why executing this step is so important.