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Managing Process Constraints

The document discusses managing constraints and bottlenecks in production processes. It defines constraints as any factors that limit output and identifies physical, market, and managerial constraints. Bottlenecks refer to constraints that limit the overall production capacity. The Theory of Constraints provides a framework for identifying bottlenecks and maximizing throughput by managing flow at the bottleneck. Key steps involve identifying bottlenecks, exploiting them to increase output, and elevating or removing bottlenecks over time. Assembly line balancing aims to distribute work evenly across stations to improve efficiency.

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akshit aggarwal
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41 views

Managing Process Constraints

The document discusses managing constraints and bottlenecks in production processes. It defines constraints as any factors that limit output and identifies physical, market, and managerial constraints. Bottlenecks refer to constraints that limit the overall production capacity. The Theory of Constraints provides a framework for identifying bottlenecks and maximizing throughput by managing flow at the bottleneck. Key steps involve identifying bottlenecks, exploiting them to increase output, and elevating or removing bottlenecks over time. Assembly line balancing aims to distribute work evenly across stations to improve efficiency.

Uploaded by

akshit aggarwal
Copyright
© © All Rights Reserved
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Managing process constraints

The theory of constraints


A constraint is any factor that limits the performance of a system and restricts its output, while capacity is
the maximum rate of output of a process or a system.
Leading problem due to existence of constraint in system –
Capacity imbalance
Over all performance suffer
Constraints can occur
Throughout the supply chain
Within a firm
• Three kinds of constraints can generally be identified:
• Physical: Usually machine, labor, or workstation capacity or material shortages, but could be space or
quality.
• Market: Demand is less than capacity
• Managerial: Policy, metrics, or mind-sets that create constraints that impede work flow
Bottleneck: A special type of a constraint that relates to the capacity shortage of a process, and is
defined as any resource whose available capacity limits the organization’s ability to meet the service
or product volume, product mix, or fluctuating requirements demanded by the marketplace.
Under certain conditions, a bottleneck is also called a capacity constrained resource (CCR). The
process with the least capacity is called a bottleneck if its output is less than the market demand, or
called a CCR.
Managing constraint –
 At process level
 At organizational level
How to manage constraints ?
Theory of constraints (TOC): A systematic management approach that focuses on actively
managing those constraints. Eli Goldratt, a well-known business systems analyst developed the
theory.
How the firm’s operational measures relate to its financial measures
Operational TOC View Relationship to financial measures
Measures

Inventory (I) All the money invested in a system in A decrease in I leads to an increase in net
purchasing things that it intends to sell profit, ROI, and cash flow.
Throughput (T) Rate at which a system generates money An increase in T leads to an increase in net
through sales profit, ROI, and cash flows.
Operating All the money a system spends to turn A decrease in OE leads to an increase in net
Expenses (OE) inventory into throughput profit, ROI, and cash flows.
Utilization (U) The degree to which equipment, space, or An increase in U at the bottleneck leads to an
workforce is currently being used, and is increase in net profit, ROI, and cash flows.
measured as the ratio of average output rate
to maximum capacity, expressed as a
percentage
Key Principles of the TOC
1. The focus should be on balancing flow, not on balancing capacity.
2. Maximizing the output and efficiency of every resource may not maximize the throughput of the entire system.
3. An hour lost at a bottleneck or a constrained resource is an hour lost for the whole system. In contrast, an hour
saved at a nonbottleneck resource is a mirage because it does not make the whole system more productive.
4. Inventory is needed only in front of the bottlenecks in order to prevent them from sitting idle, and in front of
assembly and shipping points in order to protect customer schedules. Building inventories elsewhere should be
avoided.
5. Work, which can be materials, information to be processed, documents, or customers, should be released into
the system only as frequently as the bottlenecks need it. Bottleneck flows should be equal to the market
demand. Pacing everything to the slowest resource minimizes inventory and operating expenses.
6. Activating a nonbottleneck resource (using it for improved efficiency that does not increase throughput) is not
the same as utilizing a bottleneck resource (that does lead to increased throughput). Activation of nonbottleneck
resources cannot increase throughput, nor promote better performance on financial measures outlined.
7. Every capital investment must be viewed from the perspective of its global impact on overall throughput (T),
inventory (I), and operating expense (OE).
Practical application of the TOC involves the implementation
of the following steps.
Step 1- Identify the System Bottleneck(s).
Step 2- Exploit the Bottleneck(s).
Step 3- Subordinate All Other Decisions to Step 2.
Step 4- Elevate the Bottleneck(s).
Step 5- Do Not Let Inertia Set In
Identification and Management of Bottlenecks
• Bottlenecks can both be internal or external to the firm, and typically represent a
process, a step, or a workstation with the lowest capacity. Throughput time is the total
elapsed time from the start to the finish of a job or a customer being processed at one or
more work centers. Where a bottleneck lies in a given service or manufacturing process
can be identified in two ways. A workstation in a process is a bottleneck if
(1) it has the highest total time per unit processed, or
(2) it has the highest average utilization and total workload
Bottleneck occurs because of
(1) High per unit processing time
(2) High variation in job
Bottleneck can be remove through
(3) Relieving bottleneck
(4) Product mix decision
Managing Bottlenecks in Manufacturing Processes
• Identifying Bottlenecks
• Relieving Bottlenecks
• In short-term perspective
• Reduce the setup time
• Carefully scheduling the work
• In Long-term perspective
• Expand the bottleneck facility
• Reengineering/improvement in process
• Product mix to optimize the profit
Identification of bottleneck through Aggregate workload

Workstation X is the bottleneck as the Aggregate workload is higher than rest


other workstations
Decision rule1. Determining product mix
Step1. calculate contribution margin

Step2. allocate resources


Step.3: Profitability for the selected product mix
Decision rule2. Bottleneck method
Calculate contribution margin using Bottleneck resource X
Step 2. Allocate
resource

Step 3. profit
for product-mix
An Assembly Line (Product Layout)
• Assembly line balancing operates under two constraints, precedence requirements and cycle time
restrictions.
Balanced Line and its effect
Unbalance Line and Its effect  Promotes one piece flow
 Avoids excessive work load in some stages (overburden)
 High work load in some stages (Overburden)
 Minimizes wastes (over-processing, inventory, waiting,
 Maximizes wastes (over-processing, inventory, waiting,
rework, transportation, motion)
rework, transportation, motion)
 Reduces variation
 High variation in output
 Increased Efficiency
 Restrict one piece flow
 Minimizes Idle time
 Maximizes Idle time
 Poor efficiency Racks containing
Racks containing
Racks containing
headlight sub-assembly steering wheels
backlight sub-assembly
sub-assembly
Workstation 1 Workstation 2
Workstation 3

Car 1 Car 2 Car 3

Conveyor
How Can Assembly-Line Balancing Help Organization
• Increased efficiency
• Increased productivity
• Potential increase in profits and decrease in costs

Steps in Balancing an Assembly Line


1. List the sequential relationships among tasks and then draw a precedence diagram.
2. Calculate the required workstation cycle time.
3. Calculate the theoretical minimum number of workstations.
4. Choose a primary rule that will determine how tasks are to be assigned to workstations.
5. Beginning with the first workstation, assign each task, one at a time, until the sum of the task times is
equal to the workstation cycle time or until no other tasks can be assigned due to sequence or time
restrictions.
6. Repeat step 5 for the remaining workstations until all the tasks have been assigned to a workstation.
7. Evaluate the efficiency of the line balance.
8. Rebalance if necessary.
• Example

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