This year marks the 25th anniversary of the publication of “The Goal.” Many people in manufacturing have read Eliyahu Goldratt’s fictional case study about his Theory of Constraints (TOC). No doubt, a healthy number of the book’s readers considered how they might apply TOC to their own situations to instill a continuous-improvement mindset and address profit-draining bottlenecks.
The novel tells how plant manager Alex Rogo saved his failing division by not focusing on maximizing the efficiencies of all individual production processes. Instead, he examined the entire manufacturing system to find the most damaging production bottlenecks. He applied fundamental TOC steps to answer questions such as “What should we change?” and “What should we change to?” as he analyzed those bottlenecks.
By adjusting the flow of all related processes to match the rate of the prime bottleneck, he was able to significantly reduce inventory and improve throughput. Balancing dependant processes in such a way boosted the company’s bottom line and prevented his plant from inevitably closing.
These days, external constraints such as frozen credit and low market demand tend to be strong drivers of business performance. However, those circumstances shouldn’t prevent managers from continuing to address their internal resource bottlenecks, which TOC spurs them to do.
During a past shop visit, I encountered a rather simplistic example of constraint analysis that mirrors those found in the book. The shop created a two-machine cell to produce a part that required turning and milling. The VMC was unable to keep up with the rate at which the lathe turned its parts, causing WIP to build in front of the VMC. TOC suggests the lathe production should be reduced to strike a balance between what the lathe creates and what the VMC can process (the VMC was obviously the bottleneck). Reducing lathe production lowered the machine’s overall efficiency, but it saved the company money by eliminating inventory buildup.
Next, the shop focused its attention to boosting the performance of the identified constraint. It eventually opened the bottleneck by replacing the existing VMC with a faster machine. That action unveiled another constraint in a subsequent process, which the company next addressed per its continuous improvement efforts.
Although “The Goal” describes TOC applied in fictional way, there are a number of real-world examples of how businesses have benefitted from the concept (visit www.goldratt.com). As you reread the book, consider how you might apply constraint analysis not only to achieve your goals at work, but your goals at home as well.