Drum, Rope, Buffer & The Theory of Constraint

JWI 550 Operations Management, Week4 Summary, 2/3/13

An extremely valuable TOC (Theory of Constraint) principle was taught to us this week. We learned how to identify key bottlenecks in an operating system and use the drum, rope, buffer concepts to strategically increase throughput while taking down inventory and reducing operating expenses. This strategic planning technique works very well to improve operations in multiple operating systems including major firms, organizations as well as small families. This is the most important take away for me this week.

I also recognize the limitations of this TOC-JIT (Just in Time) principle eg. during war conditions firms with inventory will have a competitive advantage (eg. IBM before world war). Lean works better when times are good. Fat works better under some conditions when survival is at stake. Interestingly, this principle applies to the human body as well.


Dr DP

JWI 550 Operations Management, Week4 Summary, 2/3/13

I. Heizer & Render, Chapter 5: Design of Goods and Services
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(i) Goods and Services Selection
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Product decision: Selection, definition, design of product
Product Life Cycle: Introduction, Growth, Maturity, Decline
Product by Value analysis: Dollar contribution by individual product; Total annual dollar contribution by product
(ii) Generate New Products
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Continually Select, define, design products.
with change in product opportunities, products, product volume, product mix
arising from changes in customer need,PESTEL, demographics, market practice, professional standards, suppliers, distributors
(iii) Product Development
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Quality Function Deployment (QFD) - Using a House of Quality matrix map
determine customer wants and translate them into attributes that each functional area can act on
(iv) Product development teams
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Teams (eg. concurrent) charged with moving from product requirements to product success
Manufacturability and value engineering - activities that help improve a product design, production, maintainability and use
(v) Product Design Issues
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Robustness, Modular, CAD, DFM, CAM, virtual reality, value analysis
(vi) Ethics, Environmentally friendly designs, Sustainability
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Conserve and renew resources
Life Cycle Assessment (LCA) ISO 14000 - assess environmental impact of product from material and energy inputs to disposal and environmental releases
Develop safe and enviornmentally sound products
minimize waste of resources
reduce environmental liabilities
increase cost effectiveness of compliance with environmental regulations
be recognized as a good corporate citizen
(vii) Product Development Strategy
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Organic - Develop internally; create new products, enhance or migrate existing products
Acquire - purchase technology or expertise by acquiring the developer
Joint venture - joint ownership between firms to pursue new product markets
Alliances - cooperate but pursue independent missions
(viii) Defining a Product
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Engineering drawing, Bill of materials, make or buy decision, group technology
(ix) Documents for production
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Assembly drawing & chart, Route sheet, work order, ECN, configuration management, product Life Cyle Management
(x) Service Design
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Techniques to reduce cost and enhance design include
Delaying customization, Modularizing, automating, designing for "moment of truth" eg. Dell PC & Sony LiOn battery
(xi) Decision Tree
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Include All possible alternatives including "do nothing"
Enter payoffs at end of each branch
Determine expected value and prune inferior options


II. THE GOAL, Goldratt & Cox (2012)
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The Theory of Constraints (TOC) along with the drum, rope and buffer framework is explained very nicely at http://www.goldratt.co.uk/resources/drum_buffer_rope/index.html

Clear explanation of concepts including drum, rope and buffer can also be found at
http://www.goalsys.com/books/documents/S-DBRPaper.pdf

The fundamental assumption of TOC is that manufacturing to meet firm orders at defined due dates is preferable to building up inventory stock. To achieve this the following steps need to be taken:

Step 0 – Define the system’s goal or objective
Step 1. Identify the System’s Constraint(s) => what is the bottleneck ?
Step 2. Decide how to Exploit the System’ s Constraint(s).
Bottleneck management techniques include:
(a) release work orders to the system at the pace set by bottleneck's capacity
(b) Drive bottleneck equipment down time to zero eg. ensure coverage; change lunch rules as needed.
lost time at bottleneck represents lost capacity for the whole system
(d) increase capacity of bottleneck as it increases capacity of the whole system
(c) increasing the capacity of a non-bottleneck station is a mirage
(e) Put Quality Control Checks ahead of bottleneck machines - eliminate defective pieces ahead
(f) train all people to give special care to bottleneck parts
(g) activate additional equipment to increase capacity
(h) assign best people to work on bottlenecks
(i) increase or decrease batch sizes as needed
(j) implement plant-wide priority to manage flow towards THE GOAL
Step 3. Subordinate everything else to the above decisions.
Step 4. Elevate the System’s Constraint(s).
Step 5. If in the Previous Steps a Constraint has been Broken, go back to Step 1. (Warning: Do Not Allow Inertia to Cause a System Constraint)

Focus on the Drum's rhythm & tie a Rope to it from the start of work orders
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To optimize the throughput of a system, the author Eliyahu Goldratt recommends using the concepts of Drum and Rope that are explained
first by the children of the protagonist in THE GOAL (2012).

To achieve optimum flow through a system, the entry of work orders into production must be synchronized with the production rate of the least capable part of the process which in essence is a capacity constrained resource (CCR). The production rate of this CCR is likened to the rhythm of a drum, which sets the pace of productions  for the entire system. The rope is a communication device that connects the CCR to the material release point that ensures that raw material is not inserted into the production process at a rate faster than production rate of CCR. The rope is meant to protect the CCR from being swamped with work in process (WIP) resulting in inventory build up.

III. HBR Case Study, "Product Development at Dell Computer Corporation"
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Use decision tree to choose between status quo, risky choice and deferred commitment to design with "moment of truth" data