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This article: Why increasing flow works everywhere
Source: Business-improvement.eu
TOC: The unlimited organization
Cover of "Philosophiae Naturalis Principia Mathematica" (Newton) Why increasing flow, and exposing rate-limiting steps, will work in every supply chain
By Dr Jaap van Ede, editor-in-chief business-improvement.eu


What are the generic principles of different logistic improvement methods, like Lean manufacturing, the Theory of Constraints and Quick Response Manufacturing?

In “Standing on the shoulders of giants” Eliyahu Goldratt, founding father of the TOC, shows that all these methods are based on the same ideas. According to Goldratt, increasing flow and exposing rate-limiting steps will work in every supply chain, even if demand is unstable and/or product life cycles are short!

What are the generic principles of different logistic improvement methods, like Lean manufacturing, the Theory of Constraints (TOC) and Quick Response Manufacturing (QRM)?

Same ideas
In Standing on the shoulders of giants1 Eliyahu Goldratt, founding father of the TOC, shows that all these methods are based on the same ideas. These principles were originally developed by Henry Ford2 (he is the first ‘giant’ in Goldratt's article):

  1. Improving flow* should be the primary objective to improve production chains (it is hereby assumed that there are several consecutive production steps)
    *or equivalently: reducing the lead time
  2. A control system should be in place to balance the flow, to reduce work-in-progress and to expose rate-limiting steps.
Ford, moving assembly line (1913)
^ One of the earliest exampes of 'streaming' production, with just-in-time supply:
   The moving assembly line of Ford at the Highland Park Plant in 1913. Thanks to this and
   other innovations, the time it took to build a Model T dropped from 14 hours to 1.5 hours.
   (source: Ford, published with permission)


Ford
According to Goldratt, applying these principles will not only lead to improvement in the high volume / no variety environment of Ford, remember his motto “we make T-fords in all colors as long as it’s black”. It will also work in another production environment, but then the control system should be adapted !

In the table below, I freely summarized the ideas of Goldratt about how this should be done. I also added some new aspects. For example, Quick Response Manufacturing and CONWIP are not mentioned by Goldratt.

Flow-enhancing and work load controlling concepts1

Inventor&
period of
inventions

Production type

Focused improvement

Control concept

Trivial Name

Henry Ford
1903-1927

High volume,
no variety

1. Limit space between the workcenters

2. When space is full, (temporarily) stop production!

3. Improve workcenter directly after this position (because this is the current bottleneck)

Space reduction

In-line production

Taiichi Ohno
1943-1978*

*) working during this period at Toyota

High volume,
medium variety and
stable* environment

*regarding producttype and demand and workload per workcenter

1. Limit inventory between the workcenters, and within material supply chain

2. When maximum allowed inventory accumulates somewhere, stop production!

3.Improve workcenter directly after this position (because this is the current bottleneck)

Space
Kanban
SMED

Just-in-Time

Lean

Toyota
Production
System

Eli Goldratt
(1984-)

Rajan Suri 
(1998-)

and many others

Low volume,
high variety and/or
unstable* environment

*regarding producttype and/or demand and/or workload per workcenter

1. Limit time buffer for material and/or order release

2. Improve workcenters that have a queue of material waiting in front of them (these are the current bottleneck(s))

MRP
fin.cap.scheduling
drum-buffer-rope
buffer management
CONWIP
POLCA

MRP

TOC

QRM

1 Freely based on: "Standing on the Shoulders of Giants", E.M. Goldratt 
©  C.J. van Ede  &  procesverbeteren.nl & business-improvement.eu  (2008-2014)


Toyota
Taiichi Ohno (he is the second giant in Goldratt's article) adapted Ford’s production system for Toyota. In the environment Ohno faced, quite a lot of different car types had to be produced. To cope with that, Ohno first developed Kanban, to control the supply of the materials. Later, he added SMED to reduce set-up times. That made production in small batch quantities possible.

The production environment of Toyota is fairly stable. Car models change only once a year (or even less often), and the workload per work centre (the takt time) can be balanced. Even the demand is rather stable, at least until the recent economic crisis begun!


^ Jaap van Ede and Eliyahu Goldratt (on the right)


Not stable
What if your production environment is not stable, such as in low volume/high mix production, or when you have to deal with short product life cycles or a fluctuating demand? Then you should not reject the flow principle, but adapt Ohno’s system further, stresses Goldratt.

To do that he proposes a new control concept, based on lead time reduction.

In this approach, as a first step, materials are released with a time buffer which equals half the current lead time. This way, work-in-progress is dramatically reduced. Like with the control systems of Ford and Ohno, based on limited space and/or inventory, the "water level" on the shop floor drops so that the rocks (rate-limiting production steps) become visible and can be improved.

In addition a simple priority system is installed, which measures the time that passed since a production order was released. When true bottlenecks emerge, the theory of constraints (drum-buffer-rope) can be applied.

Alternatives
There are several alternatives for Goldratt’s approach above, for example CONWIP or POLCA. If Goldratt’s article was ment to be a scientific review on logistic improvement methods, in my opinion he should have mentioned those alternatives.

However, the idea that it is always worthwhile to concentrate on increasing flow and exposing bottlenecks remains very useful.

Historical roadmap  
Finally, one last remark about Goldratt’s article. He connects all major logistic improvement methods: Lean, TOC and QRM, be it without explicitly mentioning the last one.

There are however also methods which depart from improving productivity, like Total Productive Management, or quality, like Six Sigma. How do these methods fit in the historical roadmap of improvement methods? That question remains to be answered

If you succeed in extending our current roadmap (the table on this webpage), with the methods above, please let us know. Valuable contributions wil be published!

1) On the shoulders of Giants of Eliyahu Goldratt (published on this site as full article with his personal permission)
2) Ford's flow production is not the only example demonstrating American roots of Lean! The Training Within Industry programme, active in American factories during WOII  to train unexperienced operators, and adopted by Japanese manufacturers like Toyota later, already contained basical Lean-aspects like Standardization, 5S and Continuous Improvement (which evolved to Kaizen later).


Do you need help with the implementation of TOC?

Referral to this article on internet?
Use this link: http://www.business-improvement.eu/toc/shoulders_of_giants_goldratt_eng.php