I’ve been a strong proponent of Theory of Constraints as one of the best philosophies for running manufacturing operations. TOC gives you a perspective that helps you focus on constraints to flow in your operation and provides methods on how to deal with them to improve flow. This focus on “throughput” rather than “costs” is transformative and requires a different thinking process than used in the cost driven world. I had a good lesson in constraint identification and throughput improvement while making pancakes yesterday.
Imagine, as you will, that I have a market for my product. The demand is time dependent (my market is hungry and wants to eat – NOW) and satisfaction limited (they will eventually get their fill, and the demand will subside). Getting product to the market to fulfill this demand cycle is critical to my business. I have plenty of raw material (my pancake batter), but a constrained production resource, my cast iron griddle. My griddle is fixed in size, and the energy input to the griddle is limited by batter chemistry and the batter load (the more batter on the griddle, the more energy required to produce a pancake, but too high an energy input, and the pancakes burn). If I had a lot of WIP (several pancakes on the griddle), I found that the production time increased (due to the higher energy requirements and temperature variation on the griddle), the quality went down (undercooked or overcooked sections on a pancake), and I couldn’t supply my demand on time. When I reduced WIP to one pancake at a time, my pancake production velocity or “throughput” went up, quality improved, and I met the demand. Making one pancake at a time was actually faster than trying to make a bigger batch of pancakes at once (the lower unit cost mindset).
In the factory, we know that smaller batches and lower WIP increase production velocity. Higher velocity means higher sales revenue and higher throughput. All the lessons of the factory floor revealed while making a Sunday morning breakfast!