Improving the Supply Chain: Continuous Improvement Part 3

This is a series on Supply Chain Basics looking at the discipline from the Society of Operations Management perspective. Supply chain is also essential to project management as PMs are typically trained in world class contracting. For example, my Masters program had several courses involving contracting and the Defense Acquisition Workforce Improvement Act, DAWIA, certification highlights the combination of project management and supply chain. In this post, we will explore continuous improvement methods adding some additional support as well.

Theory of Constraints (TOC)

TOC has the premise which states that in any system there is,  at least, one constraint that limits maximum output. The constraint can be any elemental part of a system such as people, machines, processes, facilities, or even a way of thinking.  Because the constraint limits output, the constraint naturally becomes the focus of any improvement efforts.  The limiting constraints throttle the supply chain. Thus, improving other elements beyond the constraint is futile as the chain can only produce results up to the constraint.  TOC is a five step process ad detailed:

1. Identify the constraint: The common indicator of a constraint is large amounts of backlog or jobs in the queue.  The work can be of any genre from a widget awaiting work or install to paperwork sitting in the bin awaiting review and approval.  Comment:  Most companies that are not traditional manufacturers. Thus, they do not organize around work centers and have little understanding of work in progress management. They rely on corporate knowledge to determine how something gets done. Often in these environments the complaint is that operations was left out, that finance needed a chop, or someone somewhere did get their input. Some companies try to center around project management setting up processes like tollgates and AGILE to resolve these issues. Yet they fail to organize work centers and job queues and creating the operational accounting processes making the OM's and PM's job more difficult since work center loading cannot be seen nor realistically managed. The effort suddenly becomes a lot of dialogue, trust, and juggling of schedules creating problems - building relationships with people who, in some cases, could care less. 
2. Exploit the constraint: A constraint should never operate below peak capacity given that its indicator is a backlog. Exploiting the constraint is a means of testing the constraint to ensure that the constraint is in fact operating at peak capacity before any major changes. 
3. Subordinate the other processes to the constraint: Processes that feed a constraint often require adjustments after changing the constraint to ensure optimum flow. Processes above the constraint should have buffers in the event the constraint shifts up the line or production slows and the corrected or former constraint is feeding at higher rates. 
4. Elevate the constraint: After review of the adjustments the constriction does not clear then the issue may require a larger investment in equipment, training, or other resources and solutions. 
5. Repeat the cycle: There is always at least one constraint in the system. After completing the first four steps the process may need to be started over to address the next constraint. 

TOC is often expressed as a turning drum that has a rope that pulls the demand through the chain. The tension of the rope is the level of the constraint or resistance and the speed of the drum is the tempo of the operation. 

Reference:

(2011). APICS Certified Supply Chain Professional Learning System. (2011 ed.). Version 2.2.