Manufacturing Turnaround Using Theory of Constraints (TOC) Principles

By February 2, 2018Strategy

Client

$300 million consumer product manufacturing company.

Business case

CEO and executive team needed to reassess their manufacturing operations after experiencing significant losses due to market erosion from late deliveries.

Scope

Evaluate manufacturing plant with $300 million in cost base:

  • Identify the key constraints in the plant operations.
  • Understand the inter-dependent events subjected to fluctuations.
  • Review procurement policies, material requirements and equipment sourcing/management to determine where cost reductions can be applied.
  • Evaluate lead times, expected Vs actual delivery times.

Background

Client losing market share in a particular segment due to manufacturing plant not being able to deliver on time and at competitive cost. Client needed turnaround plan to mitigate the losses and implement a leaner and more efficient manufacturing process.

Approach

Using our years of knowledge base in lean six sigma and theory of constraints (TOC) fields, we:

  • Identified the key constraints affecting the production and delivery of the plant.
  • Identified the dependencies and inter-relationships in operations and defining the rules governing them.
  • Identified those activities involving waste or loss of time in the constraint.
  • Streamlined their production operations around constraint management principles.
  • Proposed restructuring of the plant floor by adding key equipment and staffing to eliminate key constraints.

Solution

We were able to:

  • Identify key constraints affecting the delivery time.
  • Eliminate those activities that affected both production and delivery.
  • Restructure the plant to eliminate those constraints.

Results

With minimal restructuring and equipment investment the client was able to achieve:

  • 2X increase in plant throughput.
  • Reduced plant footprint by 50%.
  • Higher throughput capability.

This resulted in faster production speeds, thereby cutting down on manufacturing lead times and increasing on-time KPI delivery times to mid 90s percentile.

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