CHAPTER 4.0 SYNCHRONOUS MANUFACTURING SYSTEM

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1 CHAPTER 4.0 SYNCHRONOUS MANUFACTURING SYSTEM 4.1 Introduction Synchronous manufacturing is an all-encompassing manufacturing management philosophy that includes a consistent set of principles, procedures and techniques where every action is evaluated in terms of common goal of the organization. Synchronous manufacturing can produce rapid improvements in most manufacturing environments because it provides the means to identify and focus on the common goal of the organization. Every program, every decision and every activity is evaluated in terms of whether it contributes to the successful accomplishment of the common global goal. This is in sharp contrast to the standard cost system, which emphasizes only efficiency and utilization and focuses on local performance of the system such as labour or material utilization. Synchronous manufacturing refers to the entire manufacturing process working together in harmony to achieve the goals of the firm. This logic attempts to coordinate all resources so that they work together and are in harmony or are synchronized. In such a synchronous state, emphasis is on the total system performance. 4.2 Development of Synchronous Manufacturing System (SMS) In the late 1970s Eliyahu Goldratt, an Israeli physicist began to present his ideas on production scheduling. He developed a software called Optimized Production Technology (OPT). In 1984 Goldratt and Cox published a novel, The Goal which presented some of the concepts underlying OPT. This was followed in 1986 by The Race, which further explained the concepts. Umble and Srikanth presented a detailed look at these concepts, then known as Synchronous Manufacturing (SM), in 1990 and claimed that the term was coined in 1984 at General Motors. In the late 1980s Goldratt refined his ideas into what is known as 46

2 theory of constraints which includes a management philosophy on improvement based on identifying the constraints to increasing profits. 4.3 Concepts of SMS The flow of material through a system, not the capacity of the system, should be balanced. This results in materials moving smoothly and continuously from one operation to the next; and thus lead times and Work-In-Process (WIP) inventory waiting in queues can be reduced. Improvement on the use of equipment and reduced inventories can reduce total cost and can speed up the customer delivery, allowing an organization to compete more effectively. Shorter lead times improve customer service. 4.4 Interface between Theory of Constraints (TOC) and SMS In synchronous manufacturing, the bottlenecks are identified and used to determine the rate of flow. To maximize flow through the system, bottlenecks must be managed effectively. Called capacity constrained resources, these bottlenecks led to the idea of managing constraints. Every organization has constraints preventing it from achieving a higher level of performance. These constraints should be identified and controlled to improve performance. When a constraint is broken, one has to identify the next constraint and improve, thus continuing the process of improvement. 4.5 Five steps in Theory of Constraints At any time, usually very few constraints prevent the improvement of performance. A five-step process works at one constraint at a time. 1. Identification of the system s constraints 2. Description of how to exploit the system s constraints. 3. Subordination of everything else to the above decision 4. Elevation of system s constraints 5. If in the previous steps a constraint has been broken, starting from step 1 again. 47

3 Step 1 is to identify the system s constraints and to prioritize them according to their impact on the goal. Step 2 is to determine how to exploit those constraints to improve performance. Step 3 is included to ensure that the other resources are subordinated to the constraints. Step 4 states that the constraints must be elevated so that action is taken to reduce their impact and improve performance. Step 5 is included to make sure that after one constraint is managed or eliminated, the above steps should be followed once again to identify and eliminate the next constraint. 4,6 Performance Measures The relationship between financial and operational measures is explained in Fig. 4.1 Fig. 4.1 Relationship between Financial and Operational Measures 48

4 The financial performance measures of importance are Net profit (NP) - an absolute measurement, Return on Investment (ROI) - a relative measurement based on the investment and Cash Flow (CF) - a survival measurement. Operational measures are Throughput (T), the Inventory (I) and Operating Expense (OE). The relationship between these two measures is ROI = (T - OE)/1. These measure are defined this way to focus decision making on activities that will improve the goal of making a profit. Because it has the greatest impact on net profit and ROI, throughput is elevated to the most important measure. Then the constraints that prevent the throughput from increasing can be determined and steps can be taken to increase profit. The operational measures are : Throughput: This is defined as the quantity of money generated by the firm through sales over a period of time. Inventory: This is defined as the quantity of money invested in materials that the firm intends to sell. Operating Expense: This is defined as the quantity of money spent by the firm to convert inventory into throughput over a specified period of time. 4.7 Objectives of synchronous manufacturing O To balance the flow through the system O To determine the level of utilization of a nonbottleneck and other related constraint. o To monitor the utilization and activation of a resource. O To evaluate the time lost at a bottleneck because the time lost at it is the time lost for the entire system. O To sum up the time saved at a nonbottleneck Q To identify the bottlenecks governing both throughput and inventory, o To set the priorities through the system s constraints. 49

5 4.8 Assumptions to analyze synchronous manufacturing 8 Workcentre - It can accommodate only one job at a time 8 Continuous Operation - After every operation, job is loaded onto the machine 8 Machine breakdown - Scheduled maintenance is carried out in the shop 8 Labour constraints - labour force is available all the time in the shop 8 Processing Time - the sum of setup time and machining time 4.9 Definition of terms related to synchronous manufacturing Bottleneck Resource (BR) A bottleneck resource is one whose capacity is equal to or less than the demand placed on it. Non Bottleneck Resource (NBR) A nonbottleneck resource is one whose capacity is greater than the demand placed on it. Capacity Constraint Resource (CCR) A capacity constraint resource is a resource that, if not properly scheduled and managed, is likely to prevent the product flow to deviate from the planned flow. A bottleneck can be a CCR, but so could a nonbottleneck if not properly scheduled. Constraint A constraint is something that prevents the organization from achieving higher level of performance. Besides CCR, there are other constraints like material constraint, logistical constraint, managerial constraint, behavioural constraint etc., 4.10 Synchronous Manufacturing System Philosophy To implement this, three elements are necessary, i) Definition of common goal of the organization in terms that are understandable and meaningful to everyone in the organization. 50

6 This introduces a set of operational measures that can evaluate the effect of manufacturing,actions on the productivity and profitability of the entire firm. ii) Development of relationship between individual actions and the common global goal. iii) Management of various actions so as to achieve the greatest benefit Principles of Synchronous Manufacturing This does not focus on balancing capacities of individual resources but on synchronizing the flow of products through the production line. Any productivity improvement program at a nonbottleneck resource will generally have little or no impact on the operational measures. Any productivity improvement program at a bottleneck resource will directly transform into increased throughput and hence better performance of the manufacturing system. The level of utilization of a nonbottleneck resource is controlled by other constraints within the system. A resource or workcentre must be used only when it contributes positively to the performance of the company. 4:12 Drum-Buffer-Rope (DBR) approach The drum-buffer-rope approach is effectively used in synchronous manufacturing system. Every manufactuing system needs some control points to control the flow of products through the system. If the system contains a bottleneck, the bottleneck is the best place for control. This control point is called the Drum for it strikes the beat that the rest of the system uses to function. Fig.4.2 and Fig.4.3 illustrate the approach of drum-buffer-rope along with the location of a time buffer in the manufacturing line. If there is no bottleneck, the next place to set the drum would be a capacity constrained resource, which is one that is operating near capacity 51

7 Fig.4.2 Drum-Buffer-Rope approach with a single buffer in the production line Fig.4.3 Drum-Buffer-Rope approach with two buffers in the production line If neither a bottleneck nor a CCR is present, the control point can be located anywhere. The best position would be at some divergent point where the output of the resource is used in several operations. There are two things to be done with the bottleneck. a) A buffer inventory in front of the bottleneck that determines the throughput of the system should be kept. 52

8 b) The workcentre that has been identified as bottleneck resource and the work centre in the beginning of the production line should be communicated. This communication is known as Rope. This will help in reducing the inventory level. c) The buffer inventory in front of a bottleneck is a Time Buffer. If the drum is not a bottleneck but a CCR, two buffer inventories - one in front of the CCR and the second at the end as finished goods. The finished goods inventory protects the market and the time buffer in front of the CCR protects the throughput Conclusion The manufacturing management methodology known as synchronous manufacturing is introduced in this chapter. This chapter further explains the theory of constraints and the steps involved in identifying and managing the bottleneck resources found in a manufacturing line. This chapter also deals with the relationship existing between financial and operational performance measures. Besides these techniques, this chapter enlightens on the rules of synchronous manufacturing and gives definition of various terms that are associated with synchronous manufacturing. Towards the end, philosophy and important principles of synchronous manufacturing are discussed. The drum-buffer-rope approach adopted for reduction of inventory levels in the manufacturing system is also presented. The scheduling of bottleneck resources in a manufacturing system is explained in Chapter 5. 53