Theory of constraints and Lean manufacturing

In the first article of this series we saw what the theory of constraints is, in English Theory of Constraints or simply TOC, and we reviewed its history. In the second article, we deal with fundamental concepts such as throughput and the reasoning process for the application of the theory of constraints in the supply chain.

In this last article of the series, we will focus on the theory of restrictions applied to production, talking about the Drum-Buffer-Rope system as well as the similarities and differences between TOC and Lean Manufacturing.

The novel “The Goal” (“The goal” in Spanish), published in 1984, was Eliyahu Goldratt’s first book and, quickly becoming a best seller, launched the success of the theory of constraints that continues to thrive today in day, more than thirty years later.

In “The Goal”, Goldratt introduced the fundamental concepts of TOC applied to real situations in a production plant. Over the years, Goldratt continued to develop the theory of limitations, adapting it to different areas of business management (production, distribution, marketing, project management, etc).

Drum-Buffer-Rope, abbreviated DBR and translated into Spanish as Tambor-Amortiguador-Cuerda, is the methodology that serves as the basis for applying the theory of restrictions to production.

In “The Goal”, Eliyahu Goldratt introduced these concepts for the first time, using the simile of a group of boy scouts. Alex, the protagonist in “La meta”, who was already immersed in trying to optimize the production plant for which he was responsible, commits himself one weekend to accompany his young son’s boy scout group on a nature walk . Walking single file, Alex realizes that the smallest of the group is falling behind because he can’t keep up and the others have to stop every now and then to wait for him. By now you will have realized that the lagging child is a simile of the system constraint, the bottleneck.

Alex decides to put the slowest boy down first and relieve him of some of the weight of his backpack. In this way, the pace of the group is subordinated to the pace of the slowest, while the latter walks as far as their ability allows. This achieves a much higher overall performance than at the beginning. Remember that in TOC you have to see the system as a whole.

Similarly, in a manufacturing plant you will need to ensure that the bottleneck resource is working at peak performance and will act like a drum beating the pace of production.

To ensure that production on the constraint is not interrupted, time buffers are used. In other words, production is organized in such a way that if a problem occurs in phases prior to the bottleneck, there is time to correct it. The buffer acts as a buffer, absorbing any variability that may occur and ensuring that production flows are maintained. Remember that a system constraint shutdown would have a large impact on overall performance, while non-bottleneck resources can take advantage of their increased ability to smooth out variations before they affect the constraint. . Note that in TOC buffers are based on time and not WIP inventory levels.

Finally, the rope represents the communication between the bottleneck and the previous phases. By way of synchronization, it ensures that materials are not introduced into the production chain at a faster rate than the constraint can process them, avoiding WIP inventory buildups that overwhelm the bottleneck. The string also helps to prioritize jobs on non-constraint resources.

The Drum-Buffer-Rope system is the method of the theory of restrictions to implement a pull production system, reducing inventory needs and providing more reliable and stable responses to variations in demand, thereby increasing throughput.

When talking about different supply chain management philosophies, such as TOC, Six Sigma or Lean Manufacturing, it is common to see defenders and detractors of each of them, trying to justify the advantages and weaknesses of one over the other. In part, this is because it is difficult to have a lot of experience in the different methodologies at the same time, and often enough developed tools are not available to help combine them.

But Eliyahu Goldratt advocated breaking down the barriers between the different management philosophies (Theory of Constraints, Just-in-time, Six sigma, etc.). Sometimes, concepts of some of these philosophies are misunderstood because, having been originally created and developed for specific industrial sectors, their application to other business sectors requires adequate adaptation to obtain similar levels of success.

In our article on Lean thinking, we had already mentioned that the Lean philosophy was open in this sense and that those management tools that help eliminate waste (everything that does not create value for the customer) are welcome. Hence we sometimes see the combination of Lean and Six sigma, or the combination of TOC and Lean.

Focusing on the theory of restrictions and Lean Manufacturing, both have in common that they propose pull production systems, activated by demand, instead of push systems based on demand predictions. Both philosophies favor production in small batches and seek to ensure maximum fluidity (flow) throughout the entire production chain. This reduces costs and improves profits.

Both when applying Drum-Buffer-Rope (DBR) in TOC and Just-in-time in Lean, the result is the reduction of WIP (work-in-process) inventory. But in both systems, the priority is not to reduce inventory to reduce costs, as is sometimes misunderstood in JIT, but rather to have a greater ability to react to demand. This favors sales and, therefore, allows increased throughput.

One of the differences between TOC and Lean Manufacturing is that in DBR production protection is based on time through time-buffers, instead of WIP inventory levels as in JIT.

Both the theory of constraints and Lean thinking are philosophies based on continuous improvement and on identifying the roots of problems and not just their symptoms. Although sometimes it is said that TOC is a more focused philosophy, since it concentrates the efforts especially on one or a few constraints, the bottleneck.

When we talk about both Theory of Constraints and Lean thinking, we often refer to them as management philosophies. This is so because they imply a change in mentality, they are not just a set of technical management or production tools. And for them to be successful, the involvement of the company’s people is necessary.

Both philosophies highlight the importance and value that should be given to people, above technologies and machines. They are based on business models that give higher priority to increasing throughput than to “reducing costs” as a strategy to increase profits.

This has been precisely the main barrier that Lean Thinking had to face when it began to be adopted in the Western world. While in Japan everyone, from managers to factory workers, contributed several proposals for improvement each month, in the West they barely reached a few per year. Mistrust, the mentality of looking for blame instead of improving together, fears of reprisals and fears of reductions in personnel with policies of “cost reduction” with a higher priority than the increase in throughput prevented obtaining the same levels of success as in Japan.

In the application of the theory of restrictions there were also cases in which old management mentalities ended up being the problem. When a company began to apply TOC, optimizations were achieved and this revealed greater production capacity. But instead of sticking with the philosophy of continuous improvement, taking advantage of that increased capacity to find ways to keep increasing throughput, it went back to old models of cost reduction. This ended in a reduction in salaries and staff, precisely in the areas where the most improvements had been achieved, since in the bottlenecks the personnel continued to have to deal with work overloads. Performance would inevitably drop again and a spiral would end up in a worse situation than before starting to apply TOC.

This was the result of a misinterpretation of the continuous improvement theory of constraints. When applying TOC the system restriction is optimized, it can stop being the bottleneck, which will happen to be in another place. For example, when the constraint of a production plant is machinery and it is optimized, it will no longer be the bottleneck. The system constraint can then become an external constraint: the lack of demand. At this point, instead of “cutting costs” on the production floor, the greatest efforts should be focused on marketing and sales, to create more demand and improve throughput. With greater production capacity, more sales tools will now be available: offer shorter delivery times and accept smaller and more frequent orders. This frees up distributors, who can reduce their inventory, make better use of their warehouse space, and lower their operating costs. In this way, a win-win relationship is achieved that allows both the manufacturer and the distributors to increase throughput, without this implying that the manufacturer has to reduce its sales prices.

At ATOX Storage Systems we have always been clear that people are our most valuable resource. With a business life of more than 50 years, ATOX began in 1992 a comprehensive plan for updating, internationalization and continuous improvement. Since then, thanks to the commitment of our employees, our suppliers and collaborators and the loyalty of our customers, we have been growing together for 25 years, maintaining a consolidated reputation for our quality and excellence in service and continuing our international expansion.