32nd International Conference of the

TOC Practitioners Alliance - TOCPA

www.tocpractice.com 23 March, 2017 Milan, Italy

How to exploit the system's constraint

TOC - Lean - Six Sigma
Business case experience

Emanuele Strada
THINKING-SOLUTIONS SAGL
Switzerland
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Emanuele Strada

Emanuele Strada is a thought leader on business

process transformation at Thinking Solutions. He is an
expert in supply chain re-engineering and dynamic
process modelling with over 25 years experience. He
has worked for some of the top manufacturing
companies in the world - setting corporate strategy, Place for the photo of the
holding various senior positions with a focus on re- presenter
engineering and creating systems and structures to
deliver substantial improvements in companies.
Emanuele is a well-respected expert in leading
business change. He has proven capabilities in
managing complex turnaround projects at an
international level and has earned many awards for
them. emanuele.strada@thinking-solutions.com

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Agenda

TOC - Lean - Six Sigma

Real business case
The challenge
Customer expectations
Gap analysis
Dynamic Process Modelling
Key learning
Open questions

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5 as a magic number

LEAN Six Sigma TOC

The 5 principles of lean The 5 Phases The 5 Focusing steps
Manufacturing*
1. Identify value 1. Define 1. IDENTIFY the system's constraint(s)

2. Map the value stream 2. Measure 2. Decide how EXPLOIT the system's constraint(s)

3. Create flow 3. Analyse 3. SUBORDINATE everything else to the above decision

4. Establish pull 4. Improve 4. ELEVATE the system's constraint(s)

5. Seek perfection 5. Control 5. If in the previous steps a constraint has been broken,
go back to step 1, but do not allow INERTIA to cause a
system's constraint

* by Womack

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Question: do you agree?

FOCUS
Every improvement is a change
But is every change an improvement?

Doing things right

vs
Doing right things

Improve things that can be improved

vs
Improve things that must be improved

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TOC vs Lean & Six Sigma

FOCUS
Why FOCUS its an important word

do we have infinitive market share?

do we have infinitive capacity?
do we have infinitive people?
do we have infinitive assets?
do we have infinitive processes?
do we have infinitive budget?
do we have infinitive material availability?

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TOC vs Lean & Six Sigma

FOCUS
In other words, we do not have
INFINITIVE LEVERS LIMITED LEVERS
Limited market share
Limited capacity
Limited people
Limited assets
Limited process
Limited budget
Limited material availability

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TOC vs Lean & Six Sigma

FOCUS
In addition, those factors are not independent.
In order to deliver a product/service we need to consider that
we have to play with those factors and with the interaction
between and within those factors

Is it correct ?

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TOC vs Lean & Six Sigma

FOCUS
Can you imagine and environment by which:

We have a product/service, but not a market?

<OR>
We have a market (market opportunity) but not
product/service to deliver?
<OR>
We have a great process, but no budget to buy RMs? etc

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TOC vs Lean & Six Sigma

What is the VA that TOC?

The capability to be FOCUS on the governing elements

Physical aspect of the system: the weakest link

Logical aspect of the system: the core problem

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The challenge in Operations

(a real business case)

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The challenge in Operations

If we dont improve the process

performance, our production line* will become
very soon the constraint due to the agreed
growing sales contract

Supply Chain Director

* one of the biggest project in the world in automotive industries for this material type

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The customer expectations

100% up-to-schedule shipping performance

Zero off-lines or production losses due to supplier failure
100% quality parts; zero shipping discrepancies
Manufacturing flexibility for unexpected plant
shortages/requirements
Error-proof processes
Daily shipments
Accurate packaging and execution
Electronic communication capability and execution
Advance problem notification and quick resolution
Internal training procedure/process
No supplier constraints

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At least the what is clear

today, the process performance

is far below the expectations

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a step back: gap analysis

CONSTRAINT Downstream CUSTOMER

Casting Milling
Ops &
Ops Ops cont.line Ops
Distribution

1. IDENTIFY the system's constraint(s).

2. Decide how to EXPLOIT the system's constraint(s).
3. SUBORDINATE everything else to the above decision.
4. ELEVATE the system's constraint(s).
5. WARNING!!!! If in the previous steps a constraint has been broken, go back to step 1, but do not
allow INERTIA to cause a system's constraint

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From SKUs to Coils

Customer production Plan

BOM

SKUs requirement

Coils requirement

CONSTRAINT
Demand
Coil
INPUT

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Yes BUT

CONSTRAINT Downstream CUSTOMER

Casting Milling
Ops &
Ops Ops cont.line Ops
Distribution

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From SKUs to Mother Coil

Customer production Plan

BOM

SKUs requirement
SKU 0001 SKU 0002 SKU n SKU m

Marriage logic
Coils requirement 1

CONSTRAINT *First challenge: INPUT UNITS @ the CONSTRAINT

Mother
Demand
Coil
INPUT

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INPUT UNIT of the CONSTRAINT

CONSTRAINT Downstream CUSTOMER

Casting Milling
Ops &
Ops Ops cont.line Ops
Distribution

Coils

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INPUT UNIT of the CONSTRAINT

CONSTRAINT Downstream CUSTOMER

Casting Milling
Ops &
Ops Ops cont.line Ops
Distribution

Mother
Coils

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The challenge #2

CONTRAINT
input SKU 1 1
SKU 2
Mother Coil X
SKU n

SKU a 1
*
Mother Coil Y
SKU b
2 SKU z
*Second challenge:

Mother Coils 1
Sequencing @ the *
Mother Coil Z
SKU j
SKU K
CONSTRAINT

(technical limitations
& real downstream NOT
equalized needed quantity)
Marriage logic

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The challenge #3

SKU 1 1
**
SKU 2
Mother Coil X
SKU n

SKU a 1
**
*
Mother Coil Y
SKU b
SKU z
2
*Second challenge:
1 **
SKU j
Mother Coils
Sequencing @ the
*
Mother Coil Z SKU K 3
CONSTRAINT
**Third challenge:
(technical limitations Potential different FGs
& real downstream NOT quantity and SKUs type
equalized needed quantity) Marriage logic due to different
customer
>1 Mio of vehicles / year & >100 SKUs per vehicle production plan
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INPUT UNIT of the CONSTRAINT

CONSTRAINT Downstream CUSTOMER

Casting Milling
Ops &
Ops Ops cont.line Ops
Distribution

Mother
Coils

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Local optimal and constraint

Input Output

CONSTRAINT Dummy D
Coil ?
YES
D cont.line D
SCRAP
CAPACITY LOST
NO

Several Coil types:

Alloy
Temper
Thickness
Width
pre-treatment
etc

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Local optimal and constraint

Input Output

CONSTRAINT Dummy
Coil ?
YES
cont.line
NO

Several Coil types: Are we really exploiting

Alloy the constraint ?
Temper
Thickness
Width
Requested NO
pre-treatment Coil ?
etc
NON PRODUCTIVE
YES CAPACITY

REAL THROUGHPUT
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Easy questions

How to exploit the constraint ?

How to prove the robustness of the solution

How to reduce the risk of implementation failure ?

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Easy questions

What is the batch size logic?

How many SKUs should we consider in our marriage

logic?

What is the best SKUs sequence to consider, not

for local optimal, but for the entire system ?

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The best sequence

What is best ?
How can we describe it ?
Ideally every single coil that need to be produced
should be part of this definition, and every single
coil that is not needed for the production plan of
the customer in a short term, should not be
considered.

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The best sequence

Is it correct?

ok, but what about the technical limitations by

which the dummy coil is needed?

and what does it mean short term?

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Here we are the FLOW !

Equalized flow speed marriage logic

& different
consumption speed

Looking forward

Equalized flow speed

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Dynamic process model

Resources
Resources schedule

Simulation Transactions
Process time status

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Project Outcome

<4% ACHIEVED >96%

TARGET 95%

*Dummy Coils *Dummy Coils

50% 50%
Good coils
AS-IS 50%
>96%
Good Coils Good Coils
50% 50%

Before After
*Dummy Coil: coil needed by the continuous line but not needed by the downstream operations

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Key learning

Dynamic Process Modelling can support you

not only to Identify the system constraint, but
also to exploit it meanwhile validate your
assumptions for a robust solution
How ?

you can simulate the material and decision flow

considering the resources dependencies coupled
with statistical fluctuation

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The real bridge

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Emanuele Strada

Emanuele Strada is a thought leader on business

process transformation at Thinking Solutions. He is an
expert in supply chain re-engineering and dynamic
process modelling with over 25 years experience. He
has worked for some of the top manufacturing
companies in the world - setting corporate strategy, Place for the photo of the
holding various senior positions with a focus on re- presenter
engineering and creating systems and structures to
deliver substantial improvements in companies.
Emanuele is a well-respected expert in leading
business change. He has proven capabilities in
managing complex turnaround projects at an
international level and has earned many awards for
them. emanuele.strada@thinking-solutions.com

Thanks for your time!

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