Intended learning outcomes: Explain bottleneck capacity as well as the five focusing steps in the theory of constraints (TOC) approach.
Continuation from previous subsection (5.1.5)
There is also another impetus for the (integrated) resource management approach, namely, the more in-depth consideration of throughput and bottlenecks and — finally and more comprehensively — the theory of constraints:
Throughput is the rate at which the (production) system generates a desired output. It is expressed for a given time period (cf. [ASCM22]).
A bottleneck, or a bottleneck capacity, is a work center where the required capacity is greater than the available capacity. Cf. [ASCM22].
A high capacity utilization tends to result in lower costs (see here Fig. 1.4.3.4). However, well-utilized capacity can also represent a bottleneck. Whenever capacity is not available to work, it directly reduces the throughput of the company and thus its output, its performance. Therefore, effective bottleneck management (and also the TOC approach) proposes:
- Utilization of the bottlenecked work center during breaks and with the greatest possible overtime. In addition, buffer stores, both downstream and upstream of the work center, should buffer the bottlenecked work center. On the one hand, this allows maximum utilization, because the bottlenecked work center does not have to wait for delayed delivery of materials. On the other hand, if downtime occurs in the bottlenecked work center, this will not directly affect the fill rate. In addition, through some increased administrative effort, various customer orders for the same item can be produced together at the bottleneck, which increases batch size, so that machine setup time and thus load are reduced.
- Production at non-bottlenecked work centers only when there are actual customer orders. Work centers should not make to stock — thus keeping work in process low. The reason for this is that too-early order releases do not improve capacity utilization; as a result, the work center simply does not work at a later time. In addition, goods will pile up that are not immediately required, implying carrying cost.
The theory of constraints (TOC) is an approach to integrated resource management that addresses the problem of bottlenecks in a logistics system, or — more generally — the factors that limit or constrain the throughput in the system.
The TOC was developed in the 1980s and early 1990s in North America by E. M. Goldratt ([GoCo14]). The basic premise of a theory views the planning problem in logistics and operations management as a problem-solving area limited by constraints.
A constraint is any element or factor that prevents a system from achieving a higher level of performance with respect to its objective ([ASCM22]).
Constraints can take the form of limited capacity, a customer requirement such as quantity or due date, or the availability of a material, for example. They can also be managerial.
The concept of a problem-solving area limited by constraints originated in operations research, which also supplies algorithms for solutions. However, the difficulty often does not lie in the algorithms, but rather in the constrained problem area itself, which may not allow for reasonable solutions. This is the point where the TOC attempts to exploit and expand the problem-solving area, successively and in targeted fashion, according to the five focusing steps shown in Figure 5.1.5.1.
The concept of a solution space limited by constraints originated in operations research, which also supplies algorithms for solutions. However, the difficulty often does not lie in the algorithms, but rather in the constrained problem area itself, which may not allow for reasonable solutions. This is the point where the TOC attempts to exploit and expand the solution space, successively and in targeted fashion, according to the five focusing steps shown in Figure 5.1.5.1. A production control technique that goes with TOC is called drum-buffer-rope [note 508]. See Section 14.3.3.
| Step | Comment | |
|---|---|---|
| 1 | Identify the most serious constraint. | That is, the constraint that is unduly constraining the solution space. This can be a bottleneck, for example. |
| 2 | Exploit the constraint. | For example, capacity of a bottleneck work center should be utilized during breaks by rotating crews so that the capacity is never idle. |
| 3 | Subordinate everything to the constraint. | For example, capacity utilization of other than a bottleneck work center is secondary. |
| 4 | Elevate the constraint. | Make capacity available, for example. |
| 5 | Return to step one. | That is, to the next iteration |
Fig. 5.1.5.1 The five focusing steps in the theory of constraints (TOC) approach.
Course section 5.1: Subsections and their intended learning outcomes
5.1 Business Processes and Tasks in Planning & Control
Intended learning outcomes: Describe the MRP II concept and its planning hierarchy. Explain the part processes and tasks in long-term, medium-term planning as well as in short-term planning & control. Present the reference model of processes and tasks in planning & control. Produce an overview beyond MRP II: DRP II, integrated resource management, and the “theory of constraints”.
5.1.1 The MRP II Concept and Its Planning Hierarchy
Intended learning outcomes: Explain the business processes in logistics and operations management of an enterprise, structured according to temporal range. Describe the different degrees of detail in planning. Disclose the aim of data management.
5.1.2 Part Processes and Tasks in Long-Term Planning
Intended learning outcomes: Present long-term planning, also called master planning. Differentiate between master planning and master scheduling. Produce an overview on bid processing, customer blanket order, sales and operations planning (SOP), (detailed) resource requirements planning, requests for quotations, and blanket order processing.
5.1.2b Part Processes and Tasks in Medium-Term Planning
Intended learning outcomes: Disclose medium-term planning & control, also called detailed planning and scheduling. Produce an overview on detailed resource requirements planning, and order proposal.
5.1.3 Part Processes and Tasks in Short-Term Planning & Control
Intended learning outcomes: Present in detail short-term planning & control, also called execution and control of operations. Produce an overview on order release, order coordination, order monitoring and order checking, delivery, job-order costing, and billing.
5.1.4 Priority Planning: Manufacturing Planning & Control Processes Within the Temporal Ranges in the MRP II Concept.
Intended learning outcomes: Explain the manufacturing planning & control processes and priority planning within the temporal ranges in the MRP II concept.
5.1.4b Processes and Tasks in Planning & Control: A Reference Model for the MRP II Concept
Intended learning outcomes: Describe the reference model for MRP II of business processes and tasks in planning & control. Differentiate between materials management, time management and scheduling, and capacity management. Produce an overview on inventory management and control, and master data.
5.1.5 Beyond MRP II: Distribution Resource Planning (DRP II) and Integrated Resource Management
Intended learning outcomes: Produce an overview on distribution planning, distribution inventory, and distribution resource planning (DRP II). Disclose the concept of (integrated) resource management.
5.1.5b Beyond MRP II: The “Theory of Constraints”
Intended learning outcomes: Explain bottleneck capacity as well as the five focusing steps in the theory of constraints (TOC) approach.
