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Lean Manufacturing MFC418

Analysis of : The Goal - A Process of Ongoing Improvement
by

aakash aggarwal

on 7 October 2012

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Transcript of Lean Manufacturing MFC418

Book Analysis : The Goal : A Process of Ongoing Improvement Lean Manufacturing MF C418 Eliyahu Moshe Goldratt (March 31, 1947 – June 11, 2011) was an Israeli physicist who became a business management guru. He was the originator of the Optimized Production Technique, the Theory of Constraints (TOC), the Thinking Processes, Drum-Buffer-Rope, Critical Chain Project Management (CCPM) and other TOC derived tools. Chapters 11-16 : Timeline Jonah introduces Alex to the concept of bottlenecks and non-bottlenecks. Jonah defines these terms as follows:
Bottleneck – any resource whose capacity is equal to or less than the demand placed upon it.
Non-bottleneck – any resource whose capacity is greater than the demand placed upon it. Bottlenecks and Non-Bottlenecks Alex organizes the bottlenecks to work on only overdue orders from the most overdue to the least. He then finds his wife. She is at her parent’s house. Through their conversation it is learned that she still needs to be away from everybody, even the kids. ` What did they discuss? Meanwhile, the job is causing problems at home with the extra workload.
Marriage is strained because of the devotion Alex needs to give to a plant. Jonah tells Alex how it is impossible to perfectly balance capacity with demand. This is CRUX of the following chapters. The meeting with Jonah is brief. Alex tells Jonah of the problems at the plant and the three months in which to fix them.
Jonah says they can be fixed in the prescribed time and then they go over the problems the plant has. What Jonah told Alex? Jonah tells Alex to forget about the robots. He also tells Alex that "A plant in which everyone is working all the time is very inefficient."
Jonah suggests that Alex questions how he is managing the capacity in the plant and consider the concept of a balanced plant.
According to Jonah, this "is a plant where the capacity of each and every resource is balanced exactly with demand from the market."
Alex thinks a balanced plant is a good idea. Jonah says no, "the closer you come to a balanced plant, the closer you are to bankruptcy."
“Impossible to perfectly balance capacity to demand, there even exists a mathematical proof showing if you did, inventories go through the roof?” But, Jonah leaves Alex with a riddle!

"Statistical Fluctuations"
"Dependent events" Alex thought that both of them seem harmless and should work themselves out in the production line! Valid idea? Stuck for the weekend as troop master, Alex discovers the importance of "dependent events" in relation to "statistical fluctuations". Through the analogy between a single file hike through the wilderness and a manufacturing plant.

How? How are both related? Both concepts become clear! Boy Scout hike. Dependent Events - a series of events must take place before another begins.

Statistical Fluctuations - the length of events and outcomes are not completely deterministic!

What lesson did Alex learn from the hike? Observations :
The walking speed of individuals fluctuate
All may have the same average walking speed, but gaps continue to lengthen, why?
There is no limit to how much an individual can slow down, but your top speed is dependent on the person in front.
Fluctuations are accumulating over time, and the slow fluctuations tend to accumulate faster because they are not limited like the fast ones. Analysis:
Product is "walk the trail"
Throughput is the rate at which the last person walks the trail.
Operating expense is the energy output of each boy.
Inventory (material inside the plant) is the distance between the first and last boy.
Fluctuations in operating speed is causing inventory to increase and causing throughput to decrease. Attempting to reduce gaps is increasing operating expense. Conclusion :
Put operations from slowest to fastest. The production line stays compressed, the inventory has gone down because the slowest operation is setting the pace of the line! ( In context to the boy scout hike. Herbie, the slowest kid is the first one in the line)
Offloading the operations from the slowest process increases efficiency i.e throughput; which in turn, increases throughput of the whole production line. After the camping trip the boys arrive home to find the mother has disappeared. All the stress of his job was too much for her so she left.

Now the kids and the job were all Alex’s responsibility. Jonah also suggested that balancing the flow of product through the plant with demand from the market is of prime importance. Not to balance the capacities of operations with demand! Read : Pull system.

What determines the flow of product through the plant?

The bottleneck resources Jonah makes a visit to the plant. Jonah tells Alex that a plant without bottlenecks would have enormous excess capacity. Every plant should have bottlenecks. Alex is confused. What is needed is to increase the capacity of the plant? Nah! The answer is more capacity at the bottlenecks. Alex flies off to New York to meet Jonah. What does this mean? How would increasing capacity at the bottlenecks helps? Later, Alex and his team recognize the bottlenecks, the areas where capacity doesn’t equal demand, like the slow kid Herbie on the hike.
With this discovery goes the idea related to reorganizing the plant like Alex did with the hike. Production is a process and it cannot be moved around so easily.
Many processes rely on the previous one to be able to complete the next. Alex would need more machines, which takes more capital, and division is not going to go for that. How to increase capacity at the bottlenecks?

Make sure it is never idle (focus your attention on it).
Increase cycle time on the machine
Add another duplicate machine
Outsource to another vendor
Reduce the demand (process change)
Inspect part quality before bottleneck (make sure bottleneck only works on good parts)
Ensure process controls on bottleneck are good so bad parts aren’t produced
Don’t let it work on parts that aren’t needed. Only deal with quality products at bottlenecks. Where does Alex and company find the bottleneck?
They find two bottlenecks, NCX-10 and Heat Treat. Principles involved :
Boy Scout theory i.e slowest first!
Dependent Events
Statistical Fluctuations
No concept as balanced production line
Bottlenecks (Contraints), bottlenecks are important!
Socratic Method : "I cannot change their thinking, I can only make them think".

Any questions?
Feedback appreciated! Jonah – “Do you run a balanced plant? Do you have any idle workers and is it good or not?”
Alex – “We try to keep all our employees productive” In short Jonah's golden words : "Balance flow NOT capacity!"
And, how can that be done?
Control production through the bottleneck.
Subordinate the production in nonbottlenecks to assure that the bottleneck is never delayed. Thank You!
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