32nd International Conference of the TOC Practitioners Alliance - TOCPA www.tocpractice.com
23 March, 2017 – Milan, Italy
How to exploit the system's constraint TOC - Lean - Six Sigma Business case experience
Emanuele Strada THINKING-SOLUTIONS SAGL Switzerland
Emanuele Strada Emanuele Strada is a thought leader on business process transformation at Thinking Solutions. He is an expert in supply chain re-engineering and dynamic process modelling with over 25 years’ experience. He has worked for some of the top manufacturing companies in the world - setting corporate strategy, holding various senior positions with a focus on reengineering and creating systems and structures to deliver substantial improvements in companies. Emanuele is a well-respected expert in leading business change. He has proven capabilities in managing complex turnaround projects at an international level and has earned many awards for them.
www.tocpractice.com
Your logo
Place for the photo of the presenter
[email protected]
32nd International Conference of the TOC Practitioners Alliance - TOCPA
Your logo
Agenda
• TOC - Lean - Six Sigma • Real business case • The challenge • Customer expectations • Gap analysis • Dynamic Process Modelling • Key learning • Open questions
www.tocpractice.com
32nd International Conference of the TOC Practitioners Alliance - TOCPA
5 as a “magic” number…
Your logo
LEAN
Six Sigma
TOC
The 5 principles of lean Manufacturing*
The 5 Phases
The 5 Focusing steps
1. Identify value
1. Define
1. IDENTIFY the system's constraint(s)
2. Map the value stream
2. Measure
2. Decide how EXPLOIT the system's constraint(s)
3. Create flow
3. Analyse
3. SUBORDINATE everything else to the above decision
4. Establish pull
4. Improve
4. ELEVATE the system's constraint(s)
5. Seek perfection
5. Control
5. If in the previous steps a constraint has been broken, go back to step 1, but do not allow INERTIA to cause a system's constraint
* by Womack
www.tocpractice.com
32nd International Conference of the TOC Practitioners Alliance - TOCPA
Question: do you agree…?
Your logo
FOCUS Every improvement is a change But… is every change an improvement? Doing things right vs Doing right things Improve things that can be improved vs Improve things that must be improved
www.tocpractice.com
32nd International Conference of the TOC Practitioners Alliance - TOCPA
TOC vs Lean & Six Sigma
Your logo
FOCUS Why “FOCUS” it’s an important word… • • • • • • • •
do we have infinitive market share? do we have infinitive capacity? do we have infinitive people? do we have infinitive assets? do we have infinitive processes? do we have infinitive budget? do we have infinitive material availability? …
www.tocpractice.com
32nd International Conference of the TOC Practitioners Alliance - TOCPA
TOC vs Lean & Six Sigma
Your logo
FOCUS In other words, we do not have… “INFINITIVE LEVERS” “LIMITED LEVERS” • • • • • • • •
www.tocpractice.com
Limited market share Limited capacity Limited people Limited assets Limited process Limited budget Limited material availability …
32nd International Conference of the TOC Practitioners Alliance - TOCPA
TOC vs Lean & Six Sigma
Your logo
FOCUS • In addition, those factors are not independent. • In order to deliver a product/service we need to consider that we have to “play” with those factors and with the interaction between and within those factors
Is it correct ?
www.tocpractice.com
32nd International Conference of the TOC Practitioners Alliance - TOCPA
TOC vs Lean & Six Sigma
Your logo
FOCUS Can you imagine and environment by which: • We have a product/service, but not a market?
• We have a market (market opportunity) but not product/service to deliver? • We have a great process, but no budget to buy RMs? …etc
www.tocpractice.com
32nd International Conference of the TOC Practitioners Alliance - TOCPA
TOC vs Lean & Six Sigma
Your logo
What is the VA that TOC?
The capability to be FOCUS on the governing elements • Physical aspect of the system: the weakest link • Logical aspect of the system: the core problem
www.tocpractice.com
32nd International Conference of the TOC Practitioners Alliance - TOCPA
The challenge in Operations…
Your logo
(a real business case)
www.tocpractice.com
32nd International Conference of the TOC Practitioners Alliance - TOCPA
The challenge in Operations
Your logo
…“If we don’t improve the process performance, our production line* will become very soon “the constraint” due to the agreed growing sales contract” Supply Chain Director
* one of the biggest project in the world in automotive industries for this material type
www.tocpractice.com
32nd International Conference of the TOC Practitioners Alliance - TOCPA
The customer expectations
• • • • • • • • • • • •
Your logo
100% up-to-schedule shipping performance Zero off-lines or production losses due to supplier failure 100% quality parts; zero shipping discrepancies Manufacturing flexibility for unexpected plant shortages/requirements Error-proof processes Daily shipments Accurate packaging and execution Electronic communication capability and execution Advance problem notification and quick resolution Internal training procedure/process No supplier constraints …
www.tocpractice.com
32nd International Conference of the TOC Practitioners Alliance - TOCPA
At least the “what” is clear…
Your logo
…today, the process performance is far below the expectations
www.tocpractice.com
32nd International Conference of the TOC Practitioners Alliance - TOCPA
…a step back: gap analysis
Casting Ops
Milling Ops
CONSTRAINT cont.line
Downstream Ops & Distribution
Your logo
CUSTOMER Ops
1. IDENTIFY the system's constraint(s).
2. Decide how to EXPLOIT the system's constraint(s). 3. SUBORDINATE everything else to the above decision. 4. ELEVATE the system's constraint(s). 5. WARNING!!!! If in the previous steps a constraint has been broken, go back to step 1, but do not allow INERTIA to cause a system's constraint www.tocpractice.com
32nd International Conference of the TOC Practitioners Alliance - TOCPA
From SKUs to Coils
Your logo
Customer production Plan
BOM SKUs requirement
Coils requirement CONSTRAINT Coil
Demand INPUT
www.tocpractice.com
32nd International Conference of the TOC Practitioners Alliance - TOCPA
Your logo
Yes… BUT
Casting Ops
www.tocpractice.com
Milling Ops
CONSTRAINT cont.line
Downstream Ops & Distribution
CUSTOMER Ops
32nd International Conference of the TOC Practitioners Alliance - TOCPA
From SKUs to Mother Coil
Your logo
Customer production Plan
BOM SKUs requirement SKU 0001
SKU 0002
Marriage logic Coils requirement CONSTRAINT Mother Coil
SKU n
SKU m
1 *First challenge: INPUT UNITS @ the CONSTRAINT
Demand INPUT
www.tocpractice.com
32nd International Conference of the TOC Practitioners Alliance - TOCPA
INPUT UNIT of the CONSTRAINT
Casting Ops
Milling Ops
CONSTRAINT cont.line
Downstream Ops & Distribution
Your logo
CUSTOMER Ops
Coils
www.tocpractice.com
32nd International Conference of the TOC Practitioners Alliance - TOCPA
INPUT UNIT of the CONSTRAINT
Casting Ops
Milling Ops
CONSTRAINT cont.line
Downstream Ops & Distribution
Your logo
CUSTOMER Ops
Mother Coils
www.tocpractice.com
32nd International Conference of the TOC Practitioners Alliance - TOCPA
Your logo
The challenge #2 CONTRAINT input • SKU 1
2
Mother Coil X
• SKU 2 • SKU n
*
• SKU a • SKU b • SKU z
*
• SKU j • SKU K
Mother Coil Y
1
1
*Second challenge: Mother Coils Sequencing @ the CONSTRAINT
Mother Coil Z
1
(technical limitations & real downstream NOT equalized needed quantity)
Marriage logic www.tocpractice.com
32nd International Conference of the TOC Practitioners Alliance - TOCPA
Your logo
The challenge #3
Mother Coil X
*
Mother Coil Y
2
• SKU 1 • SKU 2 • SKU n
1
• SKU a • SKU b • SKU z
1
*Second challenge: Mother Coils Sequencing @ the CONSTRAINT
1
*
Mother Coil Z
(technical limitations & real downstream NOT equalized needed quantity)
>1 Mio of vehicles / year & www.tocpractice.com
• SKU j • SKU K
**
**
** 3
**Third challenge: Potential different FGs quantity and SKUs type Marriage logic due to different customer >100 SKUs per vehicle production plan 32nd International Conference of the TOC Practitioners Alliance - TOCPA
INPUT UNIT of the CONSTRAINT
Casting Ops
Milling Ops
CONSTRAINT cont.line
Downstream Ops & Distribution
Your logo
CUSTOMER Ops
Mother Coils
www.tocpractice.com
32nd International Conference of the TOC Practitioners Alliance - TOCPA
Local optimal and constraint
Output
Input CONSTRAINT D
Your logo
cont.line
D
Dummy Coil ?
NO
YES
D • SCRAP • CAPACITY LOST
Several Coil types: • Alloy • Temper • Thickness • Width • pre-treatment • etc…
www.tocpractice.com
32nd International Conference of the TOC Practitioners Alliance - TOCPA
Local optimal and constraint
Your logo
Output
Input CONSTRAINT cont.line
Dummy Coil ?
YES
NO
Several Coil types: • Alloy • Temper • Thickness • Width • pre-treatment • etc…
Are we really exploiting the constraint ?
Requested Coil ?
YES
NO
• NON PRODUCTIVE CAPACITY
REAL THROUGHPUT www.tocpractice.com
32nd International Conference of the TOC Practitioners Alliance - TOCPA
Easy questions…
Your logo
• How to exploit the constraint ? • How to prove the robustness of the solution… • How to reduce the risk of implementation failure ?
www.tocpractice.com
32nd International Conference of the TOC Practitioners Alliance - TOCPA
Easy questions…
Your logo
• What is the batch size logic? • How many SKUs should we consider in our marriage logic? • What is the “best” SKUs sequence to consider, not for local optimal, but for the entire system ?
www.tocpractice.com
32nd International Conference of the TOC Practitioners Alliance - TOCPA
The best sequence
Your logo
• What is “best” ? • How can we describe it ? – Ideally every single coil that need to be produced should be part of this definition, and every single coil that is not needed for the production plan of the customer in a short term, should not be considered.
www.tocpractice.com
32nd International Conference of the TOC Practitioners Alliance - TOCPA
The best sequence
Your logo
• Is it correct? • ok, but… what about the technical limitations by which the dummy coil is needed? • …and what does it mean “short term”?
www.tocpractice.com
32nd International Conference of the TOC Practitioners Alliance - TOCPA
Your logo
www.tocpractice.com
32nd International Conference of the TOC Practitioners Alliance - TOCPA
Here we are… the FLOW !
“Equalized” flow speed
Your logo
marriage logic & different consumption speed
Looking forward
“Equalized” flow speed
www.tocpractice.com
32nd International Conference of the TOC Practitioners Alliance - TOCPA
Dynamic process model
Resources
Process
www.tocpractice.com
Simulation time
Your logo
Resources schedule
Transactions status
32nd International Conference of the TOC Practitioners Alliance - TOCPA
Your logo
Project Outcome
<4% TARGET 95%
*Dummy Coils
*Dummy Coils
50%
50%
ACHIEVED >96%
Good coils
AS-IS 50%
Good Coils
>96% Good Coils
50%
50%
Before
After
*Dummy Coil: coil needed by the continuous line but not needed by the downstream operations
www.tocpractice.com
32nd International Conference of the TOC Practitioners Alliance - TOCPA
Key learning
Your logo
Dynamic Process Modelling can support you not only to Identify the system constraint, but also to exploit it meanwhile validate your assumptions for a robust solution How ? …you can simulate the material and decision flow considering the resources dependencies coupled with statistical fluctuation www.tocpractice.com
32nd International Conference of the TOC Practitioners Alliance - TOCPA
The real bridge
www.tocpractice.com
Your logo
32nd International Conference of the TOC Practitioners Alliance - TOCPA
Emanuele Strada Emanuele Strada is a thought leader on business process transformation at Thinking Solutions. He is an expert in supply chain re-engineering and dynamic process modelling with over 25 years’ experience. He has worked for some of the top manufacturing companies in the world - setting corporate strategy, holding various senior positions with a focus on reengineering and creating systems and structures to deliver substantial improvements in companies. Emanuele is a well-respected expert in leading business change. He has proven capabilities in managing complex turnaround projects at an international level and has earned many awards for them.
Your logo
Place for the photo of the presenter
[email protected]
Thanks for your time! www.tocpractice.com
32nd International Conference of the TOC Practitioners Alliance - TOCPA
