Date: Tuesday 15 March 2011
Venue: Two Bridges Hotel, South Queensferry, Midlothian
Hosts: East of Scotland Branch CQI, Alan Solway, Chairman
Speaker: Mat Norris, Operations Manager, Spanoptic Co. Ltd., Glenrothes
Subject: Constraint Management (CM)
Mat began by covering some of the theory behind CM. A constraint is anything that limits a system in reaching its goal. The original commentator was Dr Demming who indicated that a holistic approach should be used. Interaction-interdependencies among components of the system are as important, or more important, than the performance of the components themselves. Demming argued that as not all components are created equal, some may accept inefficiencies so that more critical components can succeed.
The most important, current writer on this topic is Dr. Eliyahu Goldratt whose seminal text is “Goal” (2004). He viewed CM as three separate but inter-related areas: Performance Management with five focusing steps; Logistics using a maximum flow system and Logical Thinking using quality and statistical tools. These are backed up by Critical Chain Project Management.
Goldratt’s assumptions are that every system has a goal and a set of necessary conditions that must be satisfied in order to maximize achievement of the goal. The constraints that are faced can never be eliminated as they simply move to a different place.
The types of constraint could be the market which the firm is operating in: i.e. not enough demand for a product or service. A typical constraint which most firms face is in resources as they never have enough people, equipment, or facilities. With the growth of China, there is a global shortage of materials such as raw steel, reinforcing bar and cement. Many firms are plagued by supplier problems of quality and excessive lead time.
Insufficient cash flow and budget cuts are perennial problems to firms trying to sustain their operations. As industrial espionage is a growth industry, many firms have problems keeping the information or knowledge to improve business performance that is not resident within the system or organization. They also have problems acquiring the requisite information owing to the shortage of trained engineers. Finally, there are many laws, regulations, rules and business practices that inhibit progress toward the system’s goal such as the International Traffic on Arms Regulation (in Spanoptic’s case).
To aid organizations in managing their constraints, Goldratt outlined Five Focusing Steps, commencing with what should be the obvious one of Identifying the system’s main constraints. There is usually one problem area which is visited more often than any other. Once this has been identified, Exploit this constraint by changing the way you operate so that the maximum financial benefit is achieved from the constraining element. Subordinate other constraints so that they are operated in such a way as not to hinder the main constraint. Now that the process is underway, Elevate other constraints in order to understand where the main constraint will go next. Then select the best alternative to elevate the constraint. Finally, Go Back to the original constraint as the new constraint may not be what was expected. This process is similar to the Shewhart or Deming cycle. A comprehensive Bibliography was provided as the last slide.
Mat concluded by indicating that repeated iteration of the Five Steps have reduced cost and improved efficiency for Spanoptic. A lively Q & A session followed indicating that a useful learning experience had been enjoyed by all.