Friday, July 3

How Manufacturers Can Benefit From The Theory Of Constraints

There are many valuable lessons in Dr. Eliyahu M. Goldratt’s classic book, The Goal regarding how manufacturers can benefit from the Theory of Constraints (TOC). What makes this book a must-read for anyone in manufacturing is how effectively it shows how constraints can also provide the needed data and insights to achieve greater process improvements.

My favorite part of the book is how Dr. Goldratt defines goals in the context of the Theory of Constraints and sees them as mile markers to continuous improvement, requiring many breakthroughs to achieve the desired result. All manufacturers can attest that the most ambitious and valuable goals they’ve achieved took many attempts to overcome challenges they’d never anticipated when they started.  And that’s where the Theory of Constraints delivers the greatest value to manufacturing today by providing insights into how and where manufacturing teams can systematically focus efforts, energy, and attention on the wide spectrum of system constraints they encounter in attempting to reach their goals.

One gets the sense Dr. Goldratt is saying that in challenging yourself as a manufacturer with a goal that requires continuous improvement, the constraint-based challenges you’ll face will redefine who you are as a business and how you view constraints for the better. DELMIAwork’s Capable to Promise (CTP) / Available to Promise (ATP) Software provides manufacturers with the tools they need to adopt the Theory of Constraints to improve production operations continuously, providing a scalable framework to pursue continuous process improvement.

How Manufacturers Can Benefit From The Theory Of Constraints

The essence of the Theory of Constraints, as defined by Goldratt, says identifying constraints and managing them also helps explain the primary leverage points for improving overall manufacturing system performance. For manufacturers to gain the most value from the Theory of Constraints, they need to do the following:

  • It’s time to start looking at constraints and bottlenecks that slow down manufacturing systems as the best providers of insights into how to improve them. Dr. Goldratt was emphatic about this point, often mentioning in his book that constraints provide the fastest route to significant improvement and form the bedrock for continuous growth.  When constraints are ignored, manufacturers are squandering large amounts of capacity. Instead of allowing constraints to define manufacturing performance, Goldratt argues that managing constraints is key to achieving long-term performance gains by learning from the insights gained.
  • Inventory visibility needs to include all planned inventory transactions, including on-hand, receipts, production, backlog, and forecasts so customers can be told accurate Capable To Promise (CTP) and Available To Promise (ATP) dates. That’s a key design goal for the DELMIAworks CTP/ATP software module as well, which includes the Theory of Constraints algorithms that provide a total picture of inventory availability.  The CTP/ATP Module combines materials, tools, and machine capacity into one cohesive view so constraints can be isolated, analyzed, and acted on faster than with manual reporting methods.
  • Seeing constraints as holding the knowledge needed to improve operations provides manufacturers with the data they need to achieve continuous fulfillment in every area of their business, starting with quoting and through production. It’s the manufacturers’ sales teams who provide the most complete quotes the fastest in any sales cycle who have the best chance of winning the most deals. Being able to provide CTP and ATP on a quote immediately provides customers with the most valuable data to them, which is when an order will ship and arrive at their facility. Manufacturers are improving sales, margins, and customer satisfaction by having CTP and ATP on every quote, often closing deals before competitors can react.
  • Left unchecked, supply chain constraints can result in missed customer order delivery dates, which is why having a CTP/ATP module that can provide real-time visibility across an entire supply chain is invaluable.  To excel at quoting and win more deals, design CTP/ATP so that it has visibility multiple layers deep into supply chains. Constraints in supply chains can be the most challenging to identify and act on. By combining all aspects of what is required to manufacture a product, DELMIAworks’ CTP/ATP software module gives manufacturers better visibility across all levels and suppliers who comprise an entire supply chain. Having that level of insight makes it possible to respond in real-time and with perfect accuracy to customers’ requests for order updates and if their orders are going to ship on time.
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