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Theory of Constraints
Jeeva Kumar/Tim Ehlman
Business Unit / Continuous Improvement Managers
Bosch Automotive Steering
Robert Bosch started his company 125 years ago. Bosch Automotive Technology
was introduced to the market 114 years ago.
His first automotive product – the magneto ignition device. Which became the
company logo.
In 1897, Robert Bosch himself could not have imagined just how important Bosch
would be in the automotive market. Innovations from Bosch have had a decisive
influence on automobile history. As the world's largest independent parts supplier
to the automotive industry, Bosch significantly contribute toward making driving
ever safer, cleaner, more economical and to cars driving themselves.
2 significant events happened!
• Why did economic growth (global GDP) increase by more than 10 folds in the last 100 years?
• How did we collectively become smarter in the last 100 years compared to the 200,000 years before that?
• 1st significant event was the industrial revolution that accelerated the method and time to communicate
• 2nd significant event is the internet boom which is continuously propelling us towards instantaneous
communication that is increasing efficiency worldwide
• It is all about increasing instantaneous communication. Now, what have we done in shop floor to speed up
communication?
Project Details Initial Scenario
Severe problems in production causing high scrap and low output
Actual product costs way above business plan
Overall project profitability was endangered
Various action items and recovery ideas tried by multiple cross functional
divisions failed
Troubled relationship with customer due to distrust on commercial side
and quality issues
Challenges Faced by Team
Firefighting in production hinders organized improvement activities
Inexperienced and highly stressed workforce
More reporting from customer and internal management hinders personnel
to work on improvement activities
Project Objectives
Get transparency to the problems in the shop floor for everyone to see
Improve instantaneous communication between various functional
disciplines to improve output, reduce rejects and improve overall morale of
the team
Identify and implement measures to improve the commercial situation
Alignment with other Electric Power Steering (EPS) business units globally
and increase synergies
Understand variation of cycle time in an assembly line
Define constraint stations
Define and explain the rules to manage constraint stations
Create a matrix team (Process+Quality+Production)
Targets for all team members must be same regardless of functional discipline
Encourage decentralized decision making
Understand a closed loop pallet system and teach all shop floor leadership
Problems affecting constraints is the priority regardless of the scale of issue
Team meets everyday at the line to arrive at solutions and not “point fingers”
Cross-functional KPI’s make everyone aligned
Clear expectation and protocol leads to independent thinking
Constraints are clearly identified for everyone to see (over cycle timer above constraint station)
Project Approach
Key Performance Indicator % Change (<1 year)
Production output (Line 1) Increase by 114%
Production output (Line 2) Increase by 61%
Reject rate (Line 1) Decrease by 78%
Reject rate (Line 2) Decrease by 62%
Product cost / pc (USD) Decrease by 24%
Scrap (% of sales) Decrease by 75%
Results After Improvements
Production
Understand flow of parts in the complete system
rather than the individual elements of the system
Use the bell-curve approach to recognize talent and
to “pair” constraint stations with talented operators
Install over cycle timers above constraint
stations to visualize “lost” time to everyone
Focus on top 3 rejects on each assembly line rather
than output
Constraint stations within an assembly line are
monitored for 100% utilization
Any issues leading to less than 100% utilization
of constraint stations must be prioritized
and fixed immediately
Give 100% OEE as the target for all functions
Cross-functional KPI’s for all personnel in the
matrix team
Decreasing reject rate and increasing throughput
was the target for quality, process engineering and
production
Direct escalation from operators to process
engineers and production supervisors
Top 3 stations that produce rejects on the assembly
line were clearly identified for everyone in the
production and engineering team to see
Process engineering
Escalation mechanism Target setting
Success
Factors
CONSTRAINTS MANAGEMENT
A “Systems Level” Process of Improvement
Optimizing Performance & Stability
Lean Manufacturing?
How does this square with…
Fit or Contradiction?
Constraint:
That which most severely limits the organization’s
ability to achieve higher performance relative to its
purpose or goal.
“any resource whose capacity is less than demand”.
Bottleneck:
DEFINITION
Constraint vs. Bottleneck
CONSTRAINTS MANAGEMENT
Steps to Improvement Process
IDENTIFY the system’s constraint.
Decide how to EXPLOIT the system’s constraint.
SUBORDINATE everything else.
ELEVATE the system’s constraint.
CONSTRAINTS
MANAGEMENT (C/M) Objective:
To eliminate or manage constraints, while simultaneously
increasing throughput, reducing inventory and operating
expenses.
Throughput (T)
Inventory (I)
Operating Expenses (OE)
Capacity Output < Demand
Demand A B
3000 4000 5000
Bottleneck ?
Constraint ?
Market Output > Demand
Policy hiring, overtime, capital spending, etc ???
or…
TYPES OF CONSTRAINTS
Books written by Eliyahu Goldratt
• The Goal
• It’s Not Luck
• Critical Chain
• Theory Of Constraints
• Necessary But Not Sufficient
• The Race
• The Haystack Syndrome
• Essays on the Theory of
Constraints
TOC REFERENCE MATERIALS
Thank You!
Please complete the session survey at:
www.ame.org/survey
Session: (TP/05 )
Value stream transformation using Theory of
Constraints (TOC)
Jeeva Kumar/Tim Ehlman
Bosch Automotive Steering
Jeeva.Kumar@bosch.com
Timothy.Ehlman@bosch.com
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