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Theory of Constraints TOC



According to Theory Of constraints TOC or Management by Constraints MBC & Management By Criticalities MBC II

  • Only a few work centers within the factory control the output of the entire factory for each product line.s

  •  Managing these Capacity Constraining Resources (CCRs) or Bottlenecks optimizes the output of the factory. 

“An hour lost at a bottleneck [BN] is an hour lost for the entire system; an hour saved at a non- bottleneck BN is a mirage”.

  •  Production Bottlenecks or constraints may be the time available on a certain machine or process, the time of one or a few key employees  or the company’s Policy

  •  The identification of CCRs (Bottlenecks) also shows where setup reductions, process improvement efforts and other Lean Initiatives should be focused.

  • TOC reduces Inventory & Work-In-Process WIP by eliminating Non Value added Buffer Stocks at Non-constraining resources.

  • Knowledge of the plant's (Bottleneck) also provides guidance for future plant investment.

  • A TOC advantage is that no large scale equipment movement or computer system changes are needed. The big change with TOC is in focus.

  • The Bottleneck utilization is used to determine which products maximize throughput.  A "good" product is one that has a high contribution and uses little of the Bottleneck (CCR resource).

  • TOC is a complementary to MRP Material Requirement Planning & MPR II Manufacturing Requirement Planning to enhance Management Production Control System (MPC).

  • TOC builds on MRP II data, but does not require extreme data accuracy except at points feeding the CCR resource.

  • The Pareto rule used to determine CCRs, and consequently which data needs to be accurate for decision making

  • TOC approaches planning like PERT, trying to find the critical path in the factory routing and manage the critical resources.

Step 0: Mapping Actual Situation “As IS “and Gathering Data

  • Site Layout and M/Cs Locations

  • Routing & Process Mapping

  • Material & Information Flow

  • Data Gathering & Processing

Step 1 Identify the System Constraint (and Criticality):

  • Use PERT to find the Critical Path in the factory routing

  • Identify the most limiting resource on this routing that determine the plant throughput  (Bottleneck)

  • To locate this constraint, we scan the plant to see where large amounts of work in process WIP inventory are building up, since work in process builds up in front of a constraint.

  • Another way to identify the constraint is to compare resource availability with resource requirements.

  • Check that this Bottleneck has high variability (Coefficient of Variance CV 1.3)

  • Measure its level of criticality (frequency at which the resource limits the system) for all resources

  • The system is considered imbalanced (with a permanent Bottleneck) if the difference between the highest criticality and the lowest criticality in the system is 100%

Step 2 Decide how to exploit the System Constraint

  • Reducing the Variability of the bottleneck

  • Find out the Optimum Product Mix that maximizes throughput:

  • Determine the throughput per unit of the constraining factor.

  • To maximizing profit concentrate on producing products that provide the highest throughput per unit of constraining factor.

Step 3 Subordinate everything Else to the Bottleneck of the System

  • By protecting the constraint with a Buffer of Material (the firm can realize an almost instantaneous increase in profitability by achieving an increase in output by buffering the constraint properly)

  • By selective Expediting the Preceding Work Centers whenever Bottleneck’s queue drops below a certain limit

Step 4 Elevate the Constraint of the System

  • Find core causes of undesirable effects in the shop floor and,

  • By removing them, undertake to solve the problems completely to eliminate undesired effects observed in the shop floor.

Step 5 If in Step 4 the constraint is Broken, Go to Step 1

Constraint Simulator on Ms Excel