simulation and the realities of business

8/12/2019 Simulation and the Realities of Business

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Miichigan Simulation Users Group

Kevin A. Kohls Simulation & the Realities of Business

Annual Conference 2002 2 MSUG MSUG

Agenda• GM’s History & Background

• A Few Products

• “Simulating Reality”• Early Work in TOC

• TOC Basics

• Application to GM

• Using Games and Simulations

• Realizing our Future Reality

• Summary

• Q&A






Background•• Founded in 1908, it’s the world's largest automotive corporationFounded in 1908, it’s the world's largest automotive corporation

and full-line vehicle manufacturer.and full-line vehicle manufacturer.

•• In 2001, GM sold more than 8.5 million cars and trucks - moreIn 2001, GM sold more than 8.5 million cars and trucks - more

than any other automaker and 15.1 percent of the world vehiclethan any other automaker and 15.1 percent of the world vehiclemarketmarket.

•• Employs more than 362,000 peopleEmploys more than 362,000 people

•• Largest U.S. exporter of cars and trucksLargest U.S. exporter of cars and trucks

•• Manufacturing operations in 30 countries, has a globalManufacturing operations in 30 countries, has a global

presence in more than 200 countries.presence in more than 200 countries.

•• Has substantial interests in digital communications, financialHas substantial interests in digital communications, financial

and insurance services, locomotives, and heavy-duty automaticand insurance services, locomotives, and heavy-duty automatic

transmissions.transmissions.






New Products






Simulating RealitySimulation

I’m going to assume

that the vastmajority of you

know more about

Simulation than I’ll

ever know!

Reality

The reality of your

present businesssituation. What are

your problems, and

why do they occur?

Once we understand the causes of our business problems,

how can simulation help us resolve these issues?






Using the Theory of Constraints

• One of the ways we have addressed our business

issues is by using the Theory of Constraints (TOC).

Today I’ll specifically look at 2 areas of TOC: – Throughput Improvement

– The Thinking Processes - TP






Beginnings - Throughput Improvement

• Working as an engineer (circa 1986) in our Detroit/Hamtramck facility. – Not making rate

– Luxury product that was in demand

– Plant was losing money

– Plant manager was looking into a new software tooldeveloped by GM Research.

• Read Eli Goldratt's Book “The Goal” at the urging of one of thethe developers of this software.

• Software predicted throughput and bottleneck location.

• Took a Theory of Constraints class from Eli Goldratt

• Used this software in the plant to significantlyincrease throughput and reduce overtime.






Transitions

•• Moved to Central Office to expand the process, whichMoved to Central Office to expand the process, whichwe called the Throughput Improvement Process.we called the Throughput Improvement Process.

•• But despite our powerful tool and best efforts, weBut despite our powerful tool and best efforts, we

were not satisfied with the rate of our progress..were not satisfied with the rate of our progress..•• We understood the technical solution, but needed toWe understood the technical solution, but needed to

understand how to shift the paradigm.understand how to shift the paradigm.

•• It was apparent that we needed help, so we turnedIt was apparent that we needed help, so we turnedback to the Goldratt Institute.back to the Goldratt Institute.

– – They offered something called “Jonah training”They offered something called “Jonah training”•• Outlines the Thinking Processes, the overall framework of theOutlines the Thinking Processes, the overall framework of the

Theory of Constraints.Theory of Constraints.






TOC TP

• Took TOC training

– Jonah training

• Outlines the Thinking Processes

– Jonah's Jonah training

• Allow you to teach the Thinking Processes






What is the Theory of Constraints (TOC)?

TOC applies the beliefs, definitions and methodsTOC applies the beliefs, definitions and methods

used by the hard sciences to understand andused by the hard sciences to understand and

manage the material world to human-basedmanage the material world to human-based

systems (individuals and organizations).systems (individuals and organizations).

© Avraham Y. Goldratt Institute, 1999







DefinitionsComplexity of a system is defined by the number of points within the system that must be addressed in order

to affect the system (i.e., its degrees of freedom).

Basic BeliefsThere are no complex systems in reality.

There are no contradictions in reality.(i.e., It is assumed that underlying any contradiction there must beat least one erroneous assumption that is being made.)(TOC uses this same approach to resolve conflicts in human basedsystems.)

Theory of Constraints







The TOC Thinking Processes (TP) are tools which enable us touse cause-and-effect logic and necessity to, first gain an

understanding of our reality and why it is the way it is, andto then find ways of improving it by altering the currently

prevailing assumptions/causalities.

The 2 basic constructs that underlie all of the TOC TP:The 2 basic constructs that underlie all of the TOC TP:

1.1. Causality:Causality: “If… then…” “If… then…”

2.2. Necessity:Necessity: “In order to… I must…” “In order to… I must…”

TOC






Process of Ongoing Improvement

9© Avraham Y. Goldratt Institute, 1999

•• No matter what the subject matter, acceleratedNo matter what the subject matter, accelerated

improvement revolves around answering the followingimprovement revolves around answering the following

three questions:three questions:

1. What to Change?

2. What to Change to?

3. How to Cause a Change?






Answering each question means:


1. What to Change?Identifying the Core Conflict

2. What to Change to?Constructing a

Complete Solution

3. How to Cause a Change?Devising Implementation and

Action Plans






TOC TP Tools


1. What to Change?Generi c Cloud Process Generi c Cloud Process

Cur rent Reali ty Tree Current Reali ty Tree

2. What to Change to?Evaporating CloudEvaporating Cloud

Futur e Reali ty Tree Futur e Reali ty Tree

Negative Branch Reservations

3. How to Cause a Change?PreRequisite Tree

Transition Tree

TOC Buy-In






Undesirable Effects

• The key to coming to grips with a company’s reality isto honestly assess your current problems. Somecommon problems that many businesses have:

• Finger Pointing• Poor Teamwork

• Wasted meeting time

• Distrust between groups

• Divergent efforts

• Empire building

• We know how to do this, they don’t.

• Moving decisions up the chain, wasting more time

• etc.

In the TOC world,these are all called

“Undesirable Effects,”or UDE’s.







UDE’s in GM Manufacturing (before TOC)

• New or renovated plants started uppoorly.

• Efforts to improve throughput were

generating results slowly.• Large investments were made in theplants to try and improve throughput.

• Overtime was extensively used to tryand keep up with demand, which was

not being met for many products.• Simulation results did not matchactual performance.

• RONA and profit targets were far below expectations.






Example: Current Reality Tree

There isconstantfinger

pointing.

There is alack oftrust.

We run a lotof overtime

to makeschedule.

We’relosingmoney.

Improvementis not

happeningquickly.

We waste alot of time in

meetings.

Simulationdidn’t reflect

actualperformance.

Spending largeamounts to fix

problems.

Poor start ups.

Logically connect theUDE’s together in an

attempt to understandthe Core Conflict!






Conflicts

• Business policies

Balance Systems!

Unbalance Systems

Reduce

Inventory! Increase

Throughput!

Serial Lines!

Parallel Lines!

Reduce Program

Budget! Reduce Headcount!

Add Flexibility!Reduce Program

Budget

Commonize your

designs! Innovate your

designs.

• The Current Reality

Tree outlines many

conflicts. Upon

analysis, however, it

usually becomes

apparent that the Core

Conflict is “hiding”

behind these conflicts.






There isconstantfinger

pointing.

There is alack oftrust.

We run a lotof overtime

to make

schedule.

We’relosingmoney

Improvement is not

happeningquickly.

We waste alot of time in

meetings.

Simulationdidn’t reflect

actualperformance.

Spendinglarge

amountsto fix

problems.

Poorstartups.

ObjectiveObjective

1. Evaporating Cloud:What is the core conflict

that is responsible for the

UDEs?

Generic

Cloud

Core Conflict

2. Current Reality Tree:

Is the core conflict

responsible for all of the

UDEs?

Looking for the Core Conflict







Objective

• Many companies have become so engrossed in the

details, they often lose sight of the big picture.

What’s the overall goal?

– Do the right thing?

– Make your product world class?

– Become “The Best?”

• Relate to Brooks Automation

– Goal to make the best simulation package? – Have the best customer support?

– Etc.






The Goal

• Even though you will not usuallyfind it published this way, the folksat the Goldratt Institute wouldargue that ultimate goal of anybusiness is to make money now& in the future. – It comes with Necessary Conditions

• Safety

• Quality

• Laws• Core Values

• etc.

– Doesn’t include non-profitorganizations - they have a differentgoal.

I know the CEOsaid our goal is tomake money, but I

don’t think hemeant off a colorlaser printer!






Now that we understand ourNow that we understand our

overall goal, we can begin to boiloverall goal, we can begin to boilour conflicts down a coreour conflicts down a core

conflict, which we can representconflict, which we can represent

in something called a Cloud.in something called a Cloud.






Clouds

D

Develop policies that

are focused on each

one of these local

measures.

D'

Develop policies that

are focused towards

Net Profit & RONA.

C

Work to improve the

overall business

metrics, like Net Profit

& RONA.

B

Work to improve all

the measures that we

are being held

accountable for.

A

Make Money now and

in the future.

1

2

3

4

5

Clouds outlined the logical reasons for the conflicts -Clouds outlined the logical reasons for the conflicts -and take a look at the underlying assumptions thatand take a look at the underlying assumptions that

cause each side in the conflict to believe as they docause each side in the conflict to believe as they do.






Basic Connections

Goal MeasuresMeasures Policies

Measures are developed to help gauge progress

towards one’s goal.

Polices are developed to improve measures.






Common Current Reality

MeasuresMeasures

Goal

Policies

The overall goal was lost in the background, with perhaps, at

best, an indirect logic involved.

Measures and policies often became the goal, or objectives,

themselves. They then found themselves in conflict with

each other, with no logical way of resolution.






Global Measures

Net Profit

Inventory & InvestmentRONA =

Net Profit = (Selling Price - Raw Material Cost) * Throughput - Operation Expense

Up to demand

RONA is Return on Net Assets

It became clear that, while difficult, most of theelements of this equation were fairly well

understood -- except Throughput!






Throughput

Throughput

• Simulation was suppose to help us predict throughput

for new programs, but there were problems there as

well. Time to document the Current Reality in this

area.

U D E

U D E

U D E

U D E

U D E






Current Reality

• Some UDE’s you might see in the Simulation world.

– Ask the same question to two different simulation outfits

results in two different answers

• Due to different tools, processes, etc.

– Lack of data

– Customer wants to change the data to get the right answers

– “Guess-timations” used

– World class targets used, but not World class processes.

– Level of detail concerns

– Customer did not understand variation & dependency

– Technology is the answer - what's the question?Data






Simulation Cloud

D

Modify simulation data

to reflect future

improvement.

D'

Use simulation data

that reflects actual

performance.

C

Prevent losses in profit

by assuring new

systems will perform.

B

Set agressive targets

that the plants must

strive to reach.

A

Make Money now and

in the future, while

meeting our necessaryconditions.

1

2

3

4

5

We found our problems stemmed from how weWe found our problems stemmed from how welooked at the data that drove our simulationslooked at the data that drove our simulations.






Core Conflict

• The Customer’s Conflict on Throughput - Specify the

Target vs. Predict Throughput using Simulation.

– Difficult to calculate.

• Needs those expensive simulation software.• Needs those expensive simulation engineers.

– Includes all that probability stuff.

• “I pulled an all-nighter for the prob/stats final - I don’t

remember a thing.”

– Dependency not understood. – Considered a plant or operating problem when problem

arose in production.






What To Change To?What To Change To?

• Realistic view of future– NOT ideal

– Must be logical

Performs as anoverall system.

One overallgroup

working onThroughput.

Has acommon data

collectionmethod.

Usescommontools.

Simulationsare done inone place,one way.

ThroughputEngineer atevery plant.

Use NP &RONA for

systemoptimization.

Interactivedesign with

ourcustomers.

Uses training tohelp shift the

paradigms aboutThroughput.

Injection

3. Evaporating Cloud:What assumption(s) are we

going to challenge? Objective

Generic

Cloud

Injection!

4. Future Reality

Tree:Will the injection lead to

all desired effects

without creating new

UDEs?






Defined Future State

Performs asan overallsystem.

One overallgroup

working onThroughput.

Has acommon data

collectionmethod.

Usescommontools.

Simulationsare done inone place,one way.

ThroughputEngineer atevery plant.

Use NP &RONA for

systemoptimization.

Interactivedesign withour

customers.

Uses training tohelp shift the

paradigms about

Throughput.

• Realistic view offuture– NOT ideal– Must be logical






How To Cause the Change?How To Cause the Change?

I.O.I.O.

I.O.

I.O.

Obst.

Obst.

Obst.

I.O.

5. PreRequisite Tree:What currently prevents the

implementation of the

injection(s)?

I.O. I.O.

Obst.Obst.

Obst.

InjectionInjection

Initiator’s Action

(which deals with

obstacle)

I.O.

6. Transition Tree:What actions does the initiator

have to take to effectively

implement the injection(s)?

Initiator’s

Action

Initiator’sAction

I.O.







One part of that Tree

Injection

Our customers understand the impact

of throughput on the bottom line.

Intermediate Objective

Our customers understand the

impact of variation & dependency

on Throughput.

ObstacleOur customers do not

understand why it is difficult to

predict throughput.

– Management doesn’t understandvariation.

– Each area capable of 60JPH -should get 60 JPH!

– Role buffers play in absorbing variation.

– Impact due to dependencies betweenmachines.






One part of the Transition Tree

Intermediate Objective

Our customers understand the

impact of variation & dependency

on Throughput.

TAS action

Develop & administer training

sessions based on the TOC to teach

about Throughput.

Our customers want to

understand throughput in order to

make sure their designs aresuccessful.

Use a game environment to help learning.






The Dice Game• 5 operations, parts per hour ranges

from 1 to 6, determined by the roll of a

dice.

• What is our average production per

machine?

• What should the average production of the line be?






The Dice Game

After 10 throws,how many chips

will we have after

the last station?•1 •2 •3 •4 •5 •61/6

1

6

1

6

1

6

1

6

1

6






The Dice Game

5 3 4 2 6

Last machine rolled a 6. But there only 3, so

move the 3 out, leaving the buffer empty for

the moment






The Dice Game

5 3 4 2 6

With each step we move parts through the

operation to the next machine.






The Dice Game

5 3 4 2 6

And with that, the first “hour” is done, and our

system made 3 parts.






The Dice Game

Serial Line

Roll Buffer Roll Buffer Roll Buffer Roll Buffer Roll Result

1 0 4 0 3 0 4 0 3 0 0

2 0 4 0 3 0 4 0 3 0 0

3 0 4 0 3 0 4 0 3 0 0

4 0 4 0 3 0 4 0 3 0 0

5 0 4 0 3 0 4 0 3 0 0

6 0 4 0 3 0 4 0 3 0 0

7 0 4 0 3 0 4 0 3 0 0

8 0 4 0 3 0 4 0 3 0 0

9 0 4 0 3 0 4 0 3 0 0

10 0 4 0 3 0 4 0 3 0 0 0

0






TIP game

Overall Game Screen

Objective: To demonstrate how

using bottleneck analysis everyweek will give improved bottomline results as compare to our

present methods.

Objective: To demonstrate how

using bottleneck analysis everyweek will give improved bottomline results as compare to our

present methods.






TIP game

Players choose which workstationto improve with one of 4 types of

standard repairs.

Players choose which workstationto improve with one of 4 types of

standard repairs.






TIP game

Bottleneck Analysis is used for

the Second Round of play. Thischart shows the impact of thepredicted bottleneck.

Bottleneck Analysis is used for

the Second Round of play. Thischart shows the impact of thepredicted bottleneck.






TIP game

Players typicallyhave significantly

improvedthroughput

performance byfinding and fixing

the bottleneck.

Players typicallyhave significantly

improvedthroughput

performance byfinding and fixingthe bottleneck.






Design Game

Challengethose

involved indesign to

question themethods we

are usingtoday.

Challengethose

involved in

design toquestion themethods we

are usingtoday.






Design Game

Design forRONA & Net

Profit -

understandhow our localmeasurement

effortsimpact thebottom line.

Design forRONA & Net

Profit -

understandhow our localmeasurement

effortsimpact the

bottom line.






Basic Transitions

• Make the goal clear

• Global measure emphasized

– Net Profit – RONA

• Emphasize Throughput

– Hugh impact on Profits

– Requires Simulation

– Requires accurate data

• Focus Analysis tools on Throughput






Transitions - Data

• Data collection

– MCBF, MTTR, Speeds needed

– Install data collection in the PLC's

– Install servers to prepare data – Post results on internal web

• Phase 0 Database

– Data collected by style

– Represented averages created by station type.

– Can now be used in simulation

– Prevented us from changing the data to meet targets. If we arerequested to “improve” the data, we require proof of actualperformance in GM at production volumes.

Data






Transitions - Process & Tools

• Common tools

– Arena

– Simul8 with front end

• Syncs to Visio

– AutoMod for 3D

• Too complex for other programs

• Application required third dimension

– 80-20 rule

• Speed

– Conference room simulation analysis

• Common process

– Going for ISO 9002 certification

• RONA analysis

– Develop tools to allow painless financial analysis.






Realization

Our web page logodemonstrates the realizationof our Future Reality Tree.

simulation and the realities of business

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