< The eNAble Flow SerieS orders with correct priority, ensuring a bank of work orders before constraint to prevent work starvation, ensuring that the constraint is working on the parts that have been verified for quality, planning for manpower during breaks, etc.). Very often, the exploitation step alone releases a significant amount of otherwise masked capacity. The core logic of Drum-Buffer-Rope (DBR) revolves around controlling the rate at which work is released to the shop floor after aligning the constraint capacity to demand, initiating a shop floor culture that operates as per global priorities (in managing work orders), and putting in place a process that instils ongoing improvement to analyse/improve the causes for deviation. In the manufacturing environment where the DBR process was implemented, companies experienced quick and significant results in terms of 30 percent - 50 percent reduction in manufacturA few decades ago, quality ing lead times, 30 percent-50 percent reduction in work in was a significant need terms of process inventory of the market, but many and more than 95 percent oncompanies were unable to time delivery performance. It simultaneously exposed acquire the quality culture significant capacity. All these instantly. translated into significant gains for the company’s bottom line. These benefits came quite fast and contributed significantly to the short-term (stability) performance of these companies. The companies were able to deliver their products to their customers as per the delivery schedule (and therefore fire fighting due to non-adherence to delivery schedules was eliminated) and a significant amount of investment, otherwise stuck as inventories, was released. While the stability (short-term) aspect of the company’s performance was well-addressed, the growth aspect needed attention. Since abundant capacity was exposed, many companies which implemented DBR utilized the benefit to downsize their workforce as they were unable to find other productive ways of using it. Retrenching manpower caused instability (as it takes a long time to regain skilled manpower) within the companies’ various operations and drained significant management capacity to streamline the issues arising from it.
Customer is King, Market is The Constraint During the 1990s and later, the situation reversed from a supplier-driven market to a customer-driven market, as several suppliers entered the fray and customers started imposing stringent expectations. In order to secure ongoing business, it was evident that merely offering good
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February 2012 | www.logisticsweek.com
quality products at the right price was insufficient. It was clear that the companies were compelled to start focussing on how their association would add value to their customers’ business and hence they started developing their internal capabilities to do it. Re-aligning company strategies by making the market, ‘the constraint’, was the only way out. Now re-applying TOC’s five focussing steps as explained previously with the market as the constraint, exploiting the constraint (second step of the five focussing steps), would mean that the company needs to improve its new customer conversation rates, (hit rates) and gain more business share from existing customers. When competition is intense and at par (in terms of offering the right product, at the right quality, at the right price etc), gaining more business would be feasible only when the company is able to fulfil a very important need of its customer base and that too, only if the company can streamline its own operations (core capability). A few decades ago, quality was a significant need of the market, but many companies were unable to acquire the quality culture instantly. The Japanese auto companies seized this opportunity by offering PPM service levels of quality by realigning the perspective towards quality in their operations and the market swung in their favour. Of course, over a period of time competition caught up and closed this window of opportunity. It took at least a decade for most companies to bridge this gap. No more can quality act as a decisive edge or as a special offering to customers; it is a mandatory need to stay in the business. Therefore, in order to exploit the market further, companies needed to identify yet another window of opportunity in their respective markets and also develop the inherent capability to address this opportunity. For example, the companies that have implemented DBR, have gained significant improvement in operations (such as consistent 95 percent on-time deliveries), to the extent that it can capitalize on this capability with potential clients to support on-going growth. It is important to note that unreliability in delivery is a major challenge in several industries (typically in Made-to-Order and Engineer-to-Order environments). By developing the internal capability to supply on time and by targeting customers who are desperately in need of it, the company can get significant additional business in various markets. It is very important to note that by subordinating (third step of the five focussing steps) to the market constraint, not only does the company need to undergo several paradigm shifts across