A Guide to Implementing the Theory of
How Do We Manage Production Processes?
Serial processes where there are dependencies between one step and another are a relatively new phenomenon. Prior to the industrial revolution such organizations did not exist. Since the beginning of industrial revolution many have done little more than become larger and more complicated as they take advantage of economies of scale and economies of scope (1). In addition to dependency we also recognize that variability is an important factor to consider. So let’s examine in a generalized way how we have approached managing production processes in the past and then we will we delved into the Theory of Constraints logistical solution – drum-buffer-rope.
Let’s break things down a little using some fairly common classifications; into job shops and flow shops, and into discrete and non-discrete products. Then we will examine the range of scheduling solutions that have been applied in these instances in the past.
Imagine a process where similar machines, or people who are doing similar operations, are grouped together. Work moves in a sequence between these specialist areas, sometimes flowing back the way it came to a previous area before continuing on in the process. This layout is known as a “job shop.” A simple example might be a small engineering firm. Each job in the process could be unique or it could be a repetition of a standard design. Each job could consist of single unit or a batch of many units.
A hospital is a rather sophisticated version of a job shop. You don’t believe me? Then follow an individual patient around the process for a day or so.
At the other end of the scale from the job shop is a “flow shop.” Here machinery or people are sequenced throughout the plant in the order that most work will require. Again the work might be unique or a repetition of a standard design. Each job could consist of a single unit or a batch of many units.
Furniture companies that produce for the retail trade are usually a flow shop. Tool bit manufacturers are another example. So too are electronics and automotive, however, as the diversity of products decreases and the batch size increases the flow in parts of these flow shops becomes more and more continuous. Ultimately theses parts may become a dedicated flow shop – one flow or process for one product or product family.
So, why can’t these flow shops become truly continuous, like a pulp and paper plant, or a petrochemical process? The answer is that the items in the process are discrete, made of individual parts, rather than non-discrete like a liquid or a crushed ore. In fact many of the truly continuous industries are in the primary or extractive industries – pulp and paper, petrochemical, and dairy. Most of these industries benefit from economies of scale and are capital intensive with a concomitant reduction or replacement of labor.
The industries we are addressing here, those which manufacture or assemble discrete products, are more likely to occur in secondary industries and more likely to benefit from economies of scope. Of course there are always exceptions, both steel mills and saw mills for instance are primary industries yet deal in discrete products. There is a branch of strategy devoted to economy of scope and scale considerations – operations strategy. Operations strategy is an important and often overlooked source of strategic advantage. One that we will return to and discuss further in the page on strategic advantage.
Within the discrete product job shop and flow shops there are 4 basic topologies which describe the flow of material within the process (2, 3).
Let’s start with the I-plant seeing that it is the simplest. A joinery shop is a good example, different wood products flow through essentially the same sequence; cutting, sanding, assembly, and polishing for instance, to make a varied range of different products.
The V-plant is divergent in nature, a reasonably undifferentiated raw material, maybe steel coil in a steel mill or saw logs in a saw mill, travels through a variety of paths to produce a range of products. However, once a product has passed a divergence point, it can’t travel backwards. You can’t unsaw a 2 by 4 into a 4 by 4. V-type or divergent plants are the plants of basic producers, converters, and fabricators (2).
The opposite case of this is the A-plant; here multiple different starting materials are combined and assembled into a final product. At each step of the process the assembly can only take place if all the other parts are also ready for assembly. A-type or convergent plants are the plants of assembly works (2).
Finally there is the T-plant. The text-book example of a T-plant is a faucet manufacturer, although it is likely many electronic assembly plants are quite similar. A limited number of basic units in multiple configurations are assembled into a wide variety of final products. Differences in size, finish, and combination leading to an explosion of product possibilities at assembly. T-type plants, like A-type plants, are also the plants of assembly works (2).
Umble and Srikanth identify and describe a further 5 common composite plants built from these basic elements (2). They are;
(1) V-base with a T-top.
(2) A-base with a T-top.
(3) V-base with an A-top.
(4) V-base with an A-middle and a T-top.
(5) A-base and a V-base with a T-top.
The recognition of these basic topologies is a fundamental step forward in understanding manufacturing processes and was a direct development from Theory of Constraints or at least its forerunner, Optimized Production Technology (4). Once the type of plant is understood then the mechanics of how to schedule and control becomes straightforward.
So how do we schedule something as simple as a joinery shop or as complicated as a steel mill? Well, traditionally when production scheduling systems are mentioned, most people probably think of the following;
(1) mrp – materials requirements planning.
(2) MRPII – manufacturing resource planning.
(3) ERP – enterprise resource planning.
These systems break down our discrete end-products into their component parts and component pathways, and develop a production schedule and a bill of materials for everything. Essentially these are detail complexity systems – or reductionist/local optimum approaches. If we can obtain sufficient accurate data about everything, everywhere, all of the time, then we will be able to schedule the plant. Consider the following for instance with respect to inventory records. “Some plants have achieved 99 percent record accuracy. They had to approach that accuracy, or MRP would not work (5).”
Another cautionary tale about the detail accuracy of MRP comes from the demise of the American machine tool industry (6). “Since the printouts were no better than the information fed into the computer, every single item that affected the production schedule or product had to be documented, for entry into the computer. MRP turned everyone – foremen, engineers, and machinists – into clerks while taking them away from necessary duties.”
“Worse MRP did not work, no matter how hard everyone tried. … there were simply too many variables and too much lead time between the initial master schedule and final assembly. Despite updates and changes, delays in production had a way of cascading in the MRP program, so that what was correct in the January computer printout was misleading by February and grossly inaccurate by March.”
We will return to MRPII later, but first there is another family of scheduling methods. These are;
(1) Ford Production system – mass production.
(2) Toyota production system – lean production.
(3) Drum-buffer-rope – the Theory of Constraints production solution.
These 3 methods are collectively known as synchronous manufacturing methods (7-8). Essentially these are dynamic complexity systems or systemic/global optimum approaches. They manage and protect only what is most important, the slowest step in the process. Let’s look at these in more detail.
The Ford production system, “Fordism,” occupies a special period in history when the industrial revolution and machine tools made it possible for the first time to move from craft production to mass production. Uniform and inexpensive interchangeable parts allowed semi-skilled workers to carry out tasks formerly the domain of individual tradesman. In addition, “Taylorism” or scientific management had already made significant inroads into the standardization of work practice and the reduction of waste – especially the reduction of waste of movement (9).
Huge reductions in effort had already occurred through the implementation of dedicated machine tooling and the assignment of a single task to each assembler at Ford’s Highland Park factory by 1908. However, the introduction of the first moving assembly line in 1913 halved the effort again by reducing the waste of movement of workers moving from car to car and enforcing a faster work pace. Also it reduced the waste that occurred previously when faster workers overtook slower workers in front of them and caused “jam-ups” (10).
The moving assembly line in the Ford production system became not only the material handling system, but also the scheduling system. By default the rate of production was tied to the slowest step in the assembly line.
The key to inexpensive interchangeable parts lay in high volume machine tool production with low or no set-up costs. The Ford production system is therefore most often limited to large scale production with little product variation.
The Toyota production system is, in many ways, an evolutionary outcome of the Ford production system. Taiichi Ohno realized that by reducing set-up times he could substantially reduce the waste that occurred in the mature implementations of the Ford production system. Instead of a moving assembly line to synchronize the system he used cards, called kanban, to signal product flow from each preceding step in the process.
Ohno leaves no doubt of his awe for Ford (11). Ohno developed the Toyota production system on the basis of the absolute elimination of waste. He characterized 7 such wastes; overproduction, waiting, transportation, over-processing, inventories, movement, defective parts and products.
The two pillars needed to support the Toyota production system are;
(2) autonomation, or automation with a human touch
“Just-in-time means that, in a flow process, the right parts needed in assembly reach the assembly line at the time they are needed and only in the amount needed. A company establishing this flow throughout the system can approach zero inventory.” Ohno recognized that the large inventories needed to support inexpensive parts in the Ford system had a hidden cost – poor quality.
"Every link in the just-in-time chain is connected and synchronized."
"The kanban method is the means by which the Toyota production system moves smoothly."
Kanban is the logistical system that ensures against the waste of overproduction and (with andon) against the waste of making defective products. Kanban, essentially a card that calls for more work from the prior work station, functions as the production chain does in mass production, it limits the rate of the whole process to the rate of the slowest step – wherever that may be.
Just-in-time has been immensely successful in certain industries in Japan. It is much more capable of lower volume and higher product diversity than mass production. However, like mass production, it too, seems most prevalent in industries such as consumer electronics and automobiles.
Both the Ford production system and the Toyota production system are implicitly tied to the rate of the slowest step, either by a physical line, or a card. Safety time, the time we need to take care of “unexpected problems” is spread throughout the system. Both systems are therefore incomplete subsets of synchronous manufacturing.
Let’s now turn our attention to the concept of synchronous manufacturing.
Both the Ford production system and the Toyota production have a commonality in their implicit treatment of the constraint or slowest step. Both systems seek to synchronize the remainder of the system to the slowest step, either by a physical moving line or by kanban cards. The constraint, in-turn, can be synchronized to the external market demand.
Exploitation of these systems occurs via “line balancing” and also by inventory reduction in just-in-time.
The Theory of Constraints production solution, drum-buffer-rope, in contrast is explicit in it’s recognition of the existence of constraints. As such, only the key control points of raw material release, points of convergence or divergence, the constraint, and shipping need to be “tied” together by the logistical system. The mechanism to tie the points together is a time-phased schedule.
Because drum-buffer-rope explicitly recognizes the constraint and exploits it’s capability to the full, drum-buffer-rope is able to operate at any product volume or level of diversity.
Umble and Srikanth recognize the similarities of the Ford production system, Toyota production system and drum-buffer-rope under the term synchronous manufacturing. In this classification, the Ford production system and the Toyota production system can be viewed as partial implementations, or sub-sets, of synchronous manufacturing and drum-buffer-rope as a full set of the capabilities (2).
Let’s examine some of the broader points of synchronous manufacturing in more detail. To do that we will use the scout troop analogy (12, 13).
In The Goal Goldratt uses a fictional story of a scout troop hike – fictional we guess; but like most of his books usually grounded in personal experience somewhere. The slowest person on the hike is a fellow called Herbie. To give you some idea of the penetration of The Goal there are plants where the concept of drum-buffer-rope may as well have been from Mars, and yet people will proudly explain where their “Herbies” are.
Back to the story. A scout troop is an analogy that most of us can easily relate to. It starts out looking like this;
After a while – maybe just a little while, it begins to change in character. Eventually it will begin to look like this;
Spot the slowest member of the group – apart from the fact that the member is shaded; other giveaways are that the faster members in the front are gaining ground and the member at the back is trapped behind the slowest member.
Goldratt has used this as consistent analogy for production systems. The road traveled is analogous to the work done. The portion of road occupied by the troop at any one stage is analogous to the work-in-process, and the slowest member is the constraint. And of course on a hike the faster members can’t run around in front of the constraint – so we have dependency and variation just as in any serial process.
Of course there is a very common solution to this problem known to trampers and hikers the world over – put the slowest member at the front.
Let’s do that.
Now everyone must proceed at the pace of the slowest member. Everyone gets to the destination at the same time. We rate limit the process to the rate of the slowest member – the constraint. We also minimize the spread or work-in-process in the system. Also, as you know, when the person in the front stops – everyone else must stop as well.
The army has a variation on this theme. They used a drummer to ensure that everyone marches to the same beat. Let’s have look at that.
That is all well and good. Simple solutions for simple problems. But how does that relate to modern production systems. You can’t just rearrange the machinery to suit by putting the slowest production stage at the start of the process.
Lets have look at the Ford Production System – Mass Production, and the first example we have of synchronised manufacturing. Here a conveyor or process chain synchronises every step to the pace of the slowest process stage regardless of where that process stage may be.
In the Ford Production System the material handling system and the logistical system that carries out the synchronization are the same. There is little danger of a work-in-process build up, it has nowhere to go (well in theory). No one can build faster than the slowest step. Lead times are uniform and short.
In the Toyota Production system even if a conveyor is used for material handling, the logistical system consists of cards (kanban) flowing back up the system pulling material forward at each stage – just in time. The kanban tie the rate of production to the rate of production of the slowest step.
Let’s have a look at this.
Now why do we need to tie each stage to the previous stage? So long as workers work at their normal pace when there is work, and wait when there isn’t work, then so long as we tie material release at the first step to the rate of consumption at the slowest step – with adequate safety inserted, then we need to tie only two points, and instead of using cards we can simply use time – a schedule – to synchronize the process. This is the drum-buffer-solution to process synchronization. Let’s have a look.
Drum-buffer-rope is the simplest and therefore quickest system to implement. It doesn’t require a physical chain, and it doesn’t require kanban to be set up at every step for every type of part. It also has a robust tolerance for process variability. In this respect it can be used over a much larger spectrum of applications than mass production or just-in-time and is much more rapid to establish – weeks rather than years.
There remains one further difference between mass production/just-in-time and drum-buffer-rope and that is how these systems handle safety time or buffering. In a process, “things happen,” the right material doesn’t always arrive at the right place at the right time. We need to be able to absorb these “bumps” in the system.
Let’s examine how mass production and just-in-time protect themselves against process variability.
In both mass production and just-in-time, safety is localized. If we consider that the average process time plus some margin of safety, which we will call safety time, is required at each stage; then the buffer is composed of these two components. On a mass production line, the buffer is the length of the chain at each section, in just-in-time it is the number of kanban between each step. In fact the tolerance for variability in these two systems is actually quite small indeed.
In mass production systems this results in defective work being pulled off the chain in order for it to keep moving – after all if we stop it in one place, it stops in all other places also. In just-in-time the opposite has occurred and there has been a relentless pursuit of kaizen or total quality management to reduce variability in the product and the process itself. Not that Ford wasn’t averse to using mass production methods to reduce product variability – 15 engine blocks and 30 heads milled at a time in two separate machines (14). Of course the converse of this was massive scrap if there was an error.
In both systems, the time and effort to get to the stage where the logistical system can run without constant breakdown is measured in years – because of the very small tolerance for variability on the line. Of course, as we well know, once quality is mastered both of these systems are capable of tremendous output. The foresight of Ford, Ohno, and Toyoda in pursuing these systems in their earliest implementations has to be admired.
How then does drum-buffer-rope differ from this? Let’s have a look.
In drum-buffer-rope the local buffers have been replaced by one or a few global buffers – generally at the constraint, assembly or divergence points, and shipping. Global buffers allow us to aggregate our safety time. If you compare the two diagrams above then the 3rd process now has roughly three times the safety time that was available under the other systems, and the 2nd process now has twice the safety time that was available under the other systems. The gating operation has the same amount of safety. The important point is that the same amount of safety is now available to all stages. So now when there is a “bump” in the system it is much more likely that it can be overcome before it causes a problem at the constraint and results in a decrease in production.
If you have ever seen a slinky spring, then consider a global buffer as a set of process steps joined by short slinky springs. The steps are joined, and there is a maximum stretch to the springs, but there is also a lot of flexibility in-between.
Buffers in theory of constraints protect the system and processes against the effects of special cause variation and uncertainty (15). Schragenheim and Dettmer list several common causes of variation as; absences, breakdowns, longer than expected setups, unanticipated quality problems (usually there is much more colorful language to describe these), fires, and electrical outages. Fires must be an endemic cause variation in joinery firms “the welder left yesterday, we didn’t expect the fire when we turned the dust extraction system on!”
We will examine buffering issues in more detail in the section on implementation. However, it should be apparent here that drum-buffer-rope is much more robust towards process and product variability. Therefore it can be implemented much quicker and in situations where current quality standards would preclude the other methods.
One useful outcome of using global buffers is that there is an automatic awareness of points in the process that are causing consistent problems. Work from these areas will be late to the constraint and management will know exactly where to concentrate their improvement efforts – focus and leverage.
We can evaluate any system in terms of a set of synchronous manufacturing principles (16). The principles are;
(1) Do not focus on balancing capacities, focus on synchronizing the flow.
(2) The marginal value of time at a bottleneck resource is equal to the throughput rate of the products processed by the bottleneck.
(3) The marginal value of time at a non-bottleneck resource is negligible.
(4) The level of utilization of a non-bottleneck resource is controlled by other constraints within the system.
(5) Resources must be utilized, not simply activated.
(6) The transfer batch need not, and many times should not, equal the process batch.
(7) A process batch may be variable both along its route and over time.
MRPII deals with detail complexity. If we can identify and know; the material, and quantity, and pathway, and schedule, and performance of each item in most places most of the time, then the overall system will be effective. Exploitation occurs via cost reduction – lowering the unit cost per part. Again the assumption is that the whole system is the sum of the parts. However, a new critical assumption is that there is infinite capacity everywhere. Clearly when there is a constraint in production, there is not infinite capacity everywhere.
MRP is a solution brought about by technology (the computer) that allowed a formerly intractable problem to be addressed – how to schedule a job shop. When job shops were small, the foreman did this in his head. When whole factories operated as job shops with specialist operators using specialist machines in specialist areas such manual scheduling became impossible and MRP did offer a complex solution to this complex problem. In fact today, ERP, allows us to address the same problems on an enterprise-wide basis. However, it is possible that MRPII/ERP is structurally unsuited to repetitive manufacturing environments, having been ported there from its original job shop environment (17).
However, if you already have an investment in MRPII/ERP, then it can still be put to good use to schedule a drum-buffer-rope environment. There are a number of ways to do this depending upon whether the environment is job shop or repetitive processing (17) and whether the MRP lead times are fixed or dynamic (18).
Where the output is high volume and product variation is low, then the process can be rearranged into a flow shop and the kanban pull system of just-in-time is an effective means of scheduling. However, in either this high volume/low variation system, or a low volume/high variation process, drum-buffer-rope is also an effective means of scheduling without the need to form a flow shop. Moreover implementation is a matter of weeks.
Note that both just-in-time/kanban and drum-buffer-rope are dynamic, constraint-based, synchronous management systems. We can overcome the limitations of MRPII and its focus on detail complexity, only by implementing one of these two systems which address dynamic complexity.
But why then choose drum-buffer-rope? Because, if there is not a pre-existing investment in just-in-time, then drum-buffer-rope is going to be the fastest, most cost effective means of gaining more throughput.
World class manufacturing might best be considered as an American reaction to the Japanese exportation of just-in-time to that continent. It was developed and championed by Richard Schonberger (19, 20, & 21). World class manufacturing is quite a broad concept, but the term has become debased.
Schonberger was one of the first American academics to draw broad attention to; just-in-time, kaizen, and total quality management methods through his book Japanese Manufacturing Techniques. He did this through his observation of Kawasaki in Nebraska and others from the mid-1970’s onwards – albeit a Japanese system with American management and staff. And although Schonberger’s insights into the Japanese system were keen and advanced for the time, they were colored by the “cost” and reductionist lens of his homeland.
As an aside we can also see from Schonberger’s language that by the mid-90’s Theory of Constraints was making itself felt even if not actually acknowledged. “The direct goal of the firm is not to produce revenue or make money. It is to serve customers. Making money is a derivative (21).”
Indeed, such a goal as serving customers might be correct from a quality management viewpoint, but if so, then we need to take especial note of Stein’s admonishments that clearly one can improve customer service and similar aspects but if profit does not also improve, then the question becomes one of how long the firm can keep this up (22, 23). Therefore the goal can not be serving customers; it must be profitability; although clearly customer service is one of the necessary conditions for this. See more on Stein’s TQM II argument below and also in the quality/TQM II page.
Lean production, like world class manufacturing, is a development out of an amalgam of just-in-time, kaizen, and total quality management and arises from the research activities of the International Motor Vehicle Program (24). Once again the insight of the authors into the systemic approach of the Japanese manufacturers in comparison to the reductionist approaches of the American and European manufacturers is quite clear. But, they too, by the time of their second book Lean Thinking are clearly falling foul of their reductionist roots (25). “So you’ve got too many people if sales remain constant. What are you going to do? The one thing you must do is remove excess people from activities where they are no longer needed.” … “But what do you do with these people?”
Their considered reply was “the correct thing to do is to face it up front, by estimating the number of people needed to do the job the right way, and moving immediately to this level. Then you must guarantee that no one will lose their job in the future due to the introduction of lean techniques. And you must keep your promise.”
Sounds like heroic western management; “many workers will lose their jobs but that is a sacrifice management is willing to make” (apologies to Lord Farquaad – Shrek). Why would sales remain constant other than if no additional value to the customer has been produced? So why undertake a lean initiative in the first place? It seems, all too often, that lean production is just a new name for cost reduction.
Deming stressed the need to bring any system under control in order to improve it. That is we should reduce variability sufficiently that we are able to see whether changes result in an improvement or not, rather than being swallowed up in the “noise” of the system. Lepore and Cohen (26) call this “making the system stable” and in their synthesis of the methodologies of Deming and Goldratt place it as the step before employing the 5 focusing steps of; identify, exploit, subordinate and elevate. However it would seem more likely that in fact identifying or nominating a constraint and managing according to that; be it a process constraint, or in sales, or in marketing, or in distribution, should precede stabilizing the system. In fact it enables stabilization to occur.
Certainly once a constraint has been identified or nominated then we know where to concentrate the detail complexity toolsets of total quality management, kaizen, and total productive maintenance – on the constraint itself and those parts of the system causing holes to appear in the buffer. Total quality management is just as important to the process of on-going improvement of drum-buffer-rope as it is to just-in-time or the detail complexity systems. Creating improved process and product quality creates additional sprint capacity that is necessary to continue increasing output. However to obtain real value from TQM we need to know that the benefits will actually carry to the bottom line. For that we need to introduce the concept of TQM II (22).
Robert Stein coined the term TQM II to describe the traditional TQM toolsets directed by the focusing and leveraging power of Theory of Constraints. The problem as he sees it is; “the focusing mechanisms provided by the traditional methods such as
o Single minute exchange of die (SMED)
o Total productive maintenance (TPM)
o Statistical process control (SPC)
o Design of experiments (DOE)
o Quality function deployment
lack an effective mechanism for focusing activity so that the use of the tool is in line with the goal of the company. The TOC based information system can provide that focus. From a physical perspective, the task of determining what to fix and when to fix it is made easy (23).”
Stein uses knowledge of the location of constraints and near capacity constraints to direct improvement efforts and throughput measures to quantify the benefits. He uses buffer management to prioritize and direct activities at stations that cause lateness or quality issues downstream. TQM II addresses not only process quality but also product quality in line with the goal of the organization. As such it is a very powerful adjunct to drum-buffer-rope and one that deserves far greater attention.
The use of a physical chain or kanban makes both the Ford mass production system and Toyota’s just-in-time approach systemic in as far as it is not possible add more work to the system than the rate of output from the system. The rate of the individual steps is also subordinated to the rate of the slowest step and this too is consistent with the systemic/global optimum approach. Yet, in other aspects, both approaches seem firmly entrenched in the older reductionist/local optima view. For instance safety is localized amongst all the steps within the process. Line balancing and total quality initiatives seek to reduce variability equally everywhere and thus reduce the total amount of safety required. Maybe a more correct view is that mass production and just-in-time are somewhat transitional between the two approaches. We can capture this in a diagram much as we did for accounting systems in the page on accounting for change.
Here we can see that MRP II, its predecessor mrp, and its successor ERP, are firmly reductionist/local optima approaches. The older Ford production system and Toyota production system are transitional. World Class Manufacturing and Lean production then represent two different reversions from this transitional phase back to true reductionist approaches. All of these are recognizable production systems. Drum-buffer-rope, however, is the only true dynamic complexity system, a systemic/global optimum approach focused on substantial increases in output and quality, reductions in lead time and work-in-process, and extremely short implementation durations. We will examine each of these aspects in more detail in the following pages. Drum-buffer-rope is the only approach in which there is true subordination – a point we will return to in the section on strategy where will examine the fundamentals of the paradigms underlie and drive modern business practice.
Next, let’s develop our understanding drum-buffer-rope fundamentals.
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(2) Umble, M., and Srikanth, M. L., (1995) Synchronous manufacturing: principles for world-class excellence. Spectrum Publishing, pp 211-255.
(3) Cox, J. F., and Spencer, M. S., (1998) The constraints management handbook. St. Lucie Press, pp 101-128.
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(26) Lepore, D., and Cohen, O., (1999) Deming and Goldratt: the Theory of Constraints and the System of Profound Knowledge. North River Press, pp 43-57.
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