The pace of every operation in a production chain should be dictated by its weakest link, and that's where improvements should first be focused. It's not a new idea but it's one that a surprising number of manufacturers have yet to adopt.
Meet Herbie. He's a corpulent child reluctantly taking part in a route march with fitter, leaner boys than he, scouts who have the added advantage that their rucksacks are not weighed down with pots and pickles to stave off hunger. The trail is a single track and inevitably the group spreads out as most of the faster boys march on ahead. Everyone who has the misfortune to be walking behind a snail-like Herbie finds their route blocked.
The problem is that the whole group needs to be at the camp site before it gets dark, and while the boys up ahead will have no trouble, Herbie and those stuck at the back with him will be marching well into the night.
What to do? Inspiration strikes. Put Herbie up at the top of the file, forbid everyone to overtake him, and divvy up the contents of his backpack to the fitter boys. That way, Herbie, under pressure to walk swiftly, is freed up, while the more athletic bods with excess but unnecessary energy are slowed down slightly. Our telling tale ends with the entire group installed at the campsite comfortably before sundown, and the heroic organiser patting himself on the back for having worked out that it was the slowest not the fastest boy who set the pace for the assembled company.
The chances are that you've already met Herbie, since he is a crucial character in Eli Goldratt's runaway management bestseller The Goal, first published in 1984. Even if you haven't met him in the pages of a book, you've probably met him on a shop floor. For Herbie, read the one machine or process or operation which ultimately dictates the speed of throughput, a bottleneck by another name. For the group of boys spreading out in front of the bottleneck, read increased but ultimately useless inventory as each pulls his own way, trying to prove how fit he is.
Herbie's creator, following a fairly disastrous sortie into scheduling software known as Optimised Production Technology (OPT), now runs the Avraham Y Goldratt Institute and although his ideas on bottleneck management, which he now calls the Theory of Constraints (TOC), have moved on slightly, the basic message is remarkably similar. While Goldratt is keen to claim TOC is a useful approach to issues of project management and constraints in company policies, independent experts say production is where the true value still lies. 'A lot of work is being done to see how you can apply manufacturing theory outside of manufacturing,' explains Roy Westbrook, associate professor of operations management and chairman of the Sloan Masters Programme at the London Business School, 'but you always come up against the problem of environments that don't even have the stability offered by manufacturing, where at least if something takes an hour to make, it takes an hour to make. Outside of manufacturing, there is so much scope for informal systems.'
TOC boils down to the argument that the throughput (that is, output which is sold) of an entire plant is the measure of success for any company; that it is nonsensical for individual departments to work on improving their performance locally since this will only result in stockpiles of inventory or work-in-progress; and that there is always one weakest link in the chain, the point where improvement efforts should be focused first and whose limitations or constraints should inform all other steps. 'If you optimise already strong links without strengthening the weakest, all you do is heighten the imbalance - which translates into inventory,' says Goldratt.
The Word according to Goldratt is based on a user-friendly five-point action plan. Step one is to identify the constraints in the system and establish the weakest link; step two is to exploit the constraints (making sure the bottleneck machine works every hour of the day, for example); and step three is to subordinate everything else to the above (making sure the pace of every other operation is dictated by the bottleneck).
Steps four and five are to elevate the constraint (that is, bring in extra capacity, outsource bottleneck work) and to remember that once this bottleneck is sorted, the weakest link in the chain will lie elsewhere. The aim is to operate what Goldratt terms a drum-buffer-rope system, where the bottleneck (the drum) dictates the overall pace of work, and where inventory is only allowed to build up in finished goods and in front of the bottleneck, to act as a buffer which will enable the crucial function to continue even if there are breakdowns upstream. The rope links all upstream operations to the pace of the bottleneck, to keep those at the front end of the process from churning out more than the bottleneck can handle.
If it all sounds reasonably straightforward, that's because in many ways it is - as ever, it's just the implementation that can prove tricky. And if it all sounds like a history lesson from the dark ages of the '80s (remember them?), the experts agree that there is still a surprisingly large part for such a basic theory to play in this brave new manufacturing world. 'The message is not radically new, it just hasn't got through to everyone it should have reached yet,' says Caroline Bilbrough, senior consultant in manufacturing and operations with Coopers & Lybrand and vice-chairman of the Institute of Operations Management. 'It is a commonsense way of using cellular units where activities are watched carefully to minimise inventory and maximise throughput,' says Dr John Parnaby, group director for development with Lucas Industries and president of the Institute of Electrical Engineers. 'And Goldratt's clearly identified points are an easy way in.' 'TOC certainly ought to be part of every manager's toolkit,' says West-brook. In the US, where companies such as Ford Electronics, General Motors and Avery Dennison claim that TOC has revolutionised their business, a session or chapter on it is de rigueur in many a conference or textbook.
Ken Bell, director of manufacturing for the UK with United Technologies Automotive (UTA), responsible for plants which make wire harnesses and steering wheels, first worked on TOC when he introduced a drum-buffer-rope system in a plant in Michigan. He has since done the same again in the company's plant in Clifford in the Midlands and is currently introducing TOC thinking to its Londonderry operation. Marcus Heather, plant manager at UTA Clifford, worked with Bell on the programme of reform at the 500-people, £25 million turnover steering wheel site. They began back in 1993 by launching a communication and education drive to help employees with the impending changes, and by manually auditing inventory all over the plant. Concrete modifications to working practices were first implemented in 1994.
Foam moulding was identified as the constraint in Clifford. Not that it was a difficult brake to spot: back in 1993, if a foam moulding operation was completing six parts an hour, every other operation was putting out between 50 and 100 (Heather does not want to divulge the real numbers but says the ratios are right). Half the foam moulding operation relies on human intervention to add a release agent to the mould, to spray the mould up with paint, to put the insert into the mould and to release the covering material, and half the procedure is automated. The duo's first efforts therefore focused on trying to reduce the cycle time by introducing materials which had a quicker cure time and by scrutinising the way the operators worked. Where it turned out, for instance, that for some steering wheels, the mould was open for longer than necessary because operators were spraying on paint that took too long to dry, those responsible for specifying the paint were simply told to specify another.
Bell and Heather also made sure that moulding equipment did not stand idle when there was work to be done, by arranging relief cover when operators were having a break and, when required, by running three shifts instead of two (having three shifts was an 'exceptional' development in some areas, says Heather). Where more capacity was still needed, they invested in modifying moulding equipment from another product line to cover the shortfall.
'We would spend a bit of money - £3,000 or £4,000 - modifying the mounting position on an existing piece of equipment,' says Heather. 'Most factories do have enough spare capacity on machines to be able to do this. It's just that people tend to be very fixed in the way that they work.'
At the same time, Heather and Bell moved the plant onto an accounting system which measures the productivity of the operation as a whole, and they installed quality controllers just in front of the foam mould operators, the only place other than in finished goods where inventory is allowed to accumulate, 'to ensure that the constraints work on nothing that isn't perfect,' says Bell. The controllers have since been relieved as operators further upstream have been taught to do their own QC and have learnt the cost of an imperfect part going all the way through the system only to be rejected at the end.
The results of all this? Well, the number of parts completed by some of the plant's foam moulding operations is now up by 75% on 1993 levels and the improvements are as much as 100% to 150% in some places. Heather says that it is more interesting to look at the yield enhancement than absolute numbers; that the moulds may have been producing their hypothetical six parts an hour back in 1993 but two to three of these were usually imperfect and consequently rejected. So if the machine is now putting out 12 perfect parts an hour, the improvement is at least threefold, Heather argues. As for inventory turns, developments in Clifford reflect those in Michigan, says Bell, where a norm of eight to 10 inventory turns a year was converted into 22 turns a year almost overnight.
Meanwhile a plant which frequently operated for six or six-and-a-half days a week has been able to reduce its working week to five days, has managed to break even from a loss-making position and has succeeded in regaining the Ford Q1 approved supplier rating which it lost a couple of years ago. In fact, the company has gone one better: at the beginning of the year UTA passed its assessment for the QS9000 rating which, says Heather, now ranks the plant as Ford's best rated steering wheel supplier in the UK.
In the process, almost each and every one of the site's 500 employees has been trained to do at least one job other than their own, an essential development if workers are not to stand idle when, for instance, a sufficient buffer is already in place before the bottleneck. Where before workers might have continued in one operation amassing expensive inventory, now they will be asked to work on something else. The logic behind TOC is that 'if a department only needs to run for three days a week', asserts Bell, 'then only run it for three days a week,' but he is well aware of the risk that redundancies will be called for if employees are seen to be without occupation. It's the old dilemma: 'If people generate an improvement and redundancy is the outcome, then the process of improvement will be discontinued.' Herbie, after all, would no doubt prefer to trudge at the back of his scout troop, overloaded back pack and all, than see some of his chums taken off the trail.