In 2008, well known business consultant, author (of the best-selling book “The Goal” among many others) and ‘founding father’ of the Theory of Constraints, Eliyahu Goldratt, penned a rather lengthy (20 page) article entitled “Standing on the Shoulders of Giants.” My friend Dr. Donn Novotny recently passed along a copy of the article, which I thought might prove instructive to those in manufacturing with an interest in Lean, TOC and logistics and process improvement.
If you’re interested in a full copy, send me a note or comment in this blog.
Any improvement in production flow usually comes down in one form or another to flow control – that is, the idea that by increasing or decreasing supply of material (or space, or time) to a work center and managing the resulting buffers, one can optimize the rate of production while minimizing the cost of inventory required to meet that flow. The results can include faster throughput, better due-date delivery, and lowered expenses. On this basis, Goldratt’s article supplies some background on the evolution, theory and more importantly, the effective practice of these “lean” techniques. I’ll take the liberty of synopsizing here…
Roughly, the prevailing school of thought that is generally lumped into the category of “lean” is built on three primary foundations:
1. Henry Ford, and Ford Motor Co., which in the early part of the 20th century solved production dilemmas found in high volume production facilities with little variety or variability. Essentially, Ford espoused limiting space between work centers (when that space is full, stop production!), and improve the work center after this position, because that is the current bottleneck. The controlling concept was space reduction and this was often known simply as in-line production.
2. Next came Taiichi Ohno, and Toyota Motors, during the mid to latter 20th century. Where Ford limited space between work centers, Ohno proposed limiting inventory between centers as well as in the material supply chain. This led to the term ‘just-in-time’. When maximum allowed inventory accumulated anywhere in the line, stop production! These principles worked best for Toyota’s high volume, but “medium” variety environment – one that was often a “stable” environment as well. (With Toyota, some limited variability in model production was allowed.) Like Ford, Ohno sought to improve the work center directly after the point where inventory (or in Ford’s case, space) was accumulating, as this pointed to the current bottleneck. In this environment, Kanban came to exist, and the terms “lean” and TPS (Toyota Production System) came into play.
3. And then, in the 1980s and later, MRP (Material Requirements Planning) and the theories of Eli Goldratt (among others) took the matter to the world of low-volume / high-variety (or unstable) production. Where Ford limited space and Ohno limited inventory between work centers, Goldratt proposed to limit time between them. The current bottlenecks would then be those with the most material waiting in front of them – basically, a step up on the shoulders of Ohno, and before him, Ford. MRP and TOC were the results of this evolution in the process of production.
Each major theory built on the one before it, at last finishing with Goldratt’s Drum-Buffer-Rope concepts, as described in his seminal work, The Goal.
Goldratt’s full article explores in more depth than here the implications of the third generation, and the challenges between theory and practice in production centers where variety runs high. We’ll look at how that worked for one well known manufacturer,Hitachi, in our next post. Stay tuned…