New roles for IT in Lean and Theory of Constraints

OK manufacturers are achieving breathtaking improvements, particularly in those areas of performance that are now so crucial to maintaining an edge over cheaper competition from abroad. And they're doing so either by applying Theory of Constraints (TOC) or lean manufacturing principles - and increasingly both. At automotive pipes, hoses and assemblies manufacturer Toyoda Gesei Fluid Systems, for example, on-time deliveries improved from 70% worst-case to 100%. Then at specialist fixings and fastenings maker Richco, customer demand - no matter how outrageous - is now satisfied 95% on-time instead of 62%. And at machining and assemblies firm Flexible Machining Systems, 'waste' has been slashed. What's interesting about all three is the roles their IT systems did - or in some cases, didn't - play in their lean/TOC successes. The changes at Toyoda Gesei have come about through applying TOC to production planning. This company sees itself as constrained by one thing alone - the customer. "If a customer wants 200 of something next week, they get them," says Tony Lumb, managing director. "So because our constraint is the market, we were able to apply a simplified 'drum-buffer-rope' TOC model." Sound simple? Not quite: "We were using XKO Fourman as the ERP system, and had to modify it to implement even this simplified model." "Since implementing the 'drum-buffer-rope' model we've been 100% on-time," claims Lumb. "We have missed four deliveries, but they weren't due to problems with our internal operations." And there have been other benefits: "We have vast flexibility - we can flex our production up or down by 100% with just 24 hours' notice. But above all, with effective planning based on TOC, everyone knows just what they need to do. We don't need daily planning meetings, and our factory is a model of serenity. Management are released from running around fighting fires, to identify and deal with any real underlying problems that crop up." Of course, not every company has it that easy. Usually, there's a bottleneck somewhere within the factory itself - one operation that has a lower throughput than everything else - although finding out what it is isn't always straightforward. Once identified, it can be removed, but as soon as you do, something else becomes the next constraining process so, ultimately, you have to schedule your manufacturing around some form of constraint - and that's where IT comes in. When it comes to production planning, where TOC differs from some conventional finite capacity scheduling is in its simplicity and the resulting robustness of the plans produced. Only the constraint is scheduled since, by definition, everything else has no trouble keeping up. The other non-constraining processes just need a work-to schedule. What's more, even if something goes wrong, rescheduling isn't necessary. Different approach "For 'drum-buffer-rope' scheduling around a constraint, you need a completely alternative scheduling engine," explains Lumb. "In a very simple plant you could probably use a whiteboard, but it's not easy. Spreadsheets are possible, but you need a lot more knowledge and they're a challenge to maintain. That leaves very few tools to choose from, although one is Visual Manufacturing from Infor." At Richco, TOC was used not to schedule around a constraint, but to identify and remove constraints. As a result, the company, which serves the electronics industry and also the white goods and automotive markets, has transformed itself. "Our business philosophy is that anything in our catalogue is available ex stock," says Patrick McManus, operations manager for manufacturing and supply chain. "So our customers don't have to hold weeks' worth of stock or wait for a boat from Asia." However, achieving lowest stock levels consistent with satisfying demand on-time wasn't easy - so Richco applied TOC to discover what was holding it back. "At first, the biggest constraint was the signal from customers, and how it flowed through our organisation," explains McManus. "An order placed with one of our companies in Europe on a Friday might not reach us until the next week's manufacturing schedule was already well under way." As a result, even four-week delivery times could be missed by a week. Its solution was combining TOC analysis with lean manufacturing techniques - with Richco ultimately implementing kanban systems to transmit 'pull' signals detailing precise customer requirements quickly. "Now, if they want 1,000 parts within two days, that's what they'll get," says McManus. But his experience confirms that by removing one constraint, you highlight another. "We then used TOC again to find what the next constraint was," says McManus, "and found we needed a quick-change tooling system. We had a flexible injection moulding system that allowed us to make different products on the same mould tool, but the tool change time was slowing us down." Over time, these and other changes have resulted in machine utilisation going from 60% to 92%, a significant reduction in cycle time, and on-time deliveries increasing from 62% to 95%, no matter how ambitious the customer demand. Achieving that wasn't easy - and neither was finding the right IT. "From a manufacturing perspective we did everything in Excel spreadsheets because the IT system did nothing we wanted it to," explains McManus. But, this could only ever be a stop-gap solution, so when the company decided to implement a new IT system globally, support for lean manufacturing was a priority. "It was a very big challenge to find an IT system that didn't constrain our business," says McManus. In fact, Richco opted for the IFS Applications suite. "It didn't have a lean manufacturing module," says McManus. "Instead, the entire system has been built up to be lean. It was flexible and agile enough to support our current processes. And what wasn't exactly right for us 'out of the box' could be adapted without costly modification." Meanwhile, lean manufacturing principles have also been applied at Flexible Machining Systems, which specialises in the medical, aerospace and semiconductor sectors. But in its case, often there hasn't been any need for IT involvement. Systems manager James Doran provides examples: "We've done a variety of things, such as relocate equipment cabinets, and make sure everything's always put back to avoid wasting time either looking for things or having to walk long distances." Also, jobs have been mapped to see what exactly they involve and whether there's any scope for cutting out waste. "In one job we were able to reduce the distance walked from 3,000 paces to 1,000 paces, simply by being better organised," says Doran. But when it came to tackling downtime on machines, the company's ERP system - Efacs E/8 from Exel Computer Systems - came into its own. "We use Exel to gather information on downtime and efficiency," he explains. "We can now identify those machines that break down a lot, and help decide which one has to go." Similarly, utilisation data from the ERP system can help identify what is and isn't a constraint. "When it seems like we're busy and someone presses for a new machine, we can show that the three existing machines are perhaps only running at 55% utilisation, and so aren't constraining us at all," explains Doran.