REDUCING BOTTLENECKS WITH INDUSTRIAL AUTOMATION

The scope and direction of this article would be to introduce the concept of bottleneck in an industry and show how eliminating them is a step towards achieving what is called 'competitive advantage'. In today’s world achieving this is easier said than done, businesses must boost their operational efficiency wherever and whenever possible. It’s a given that – if a company fails to operate efficiently it will soon find itself at the verge of extinction.

Let’s start with an understanding of what exactly a bottleneck is and what automation has anything to do with it? A bottleneck (or constraint) in a supply chain refers to the resource that requires the longest time in operations for a certain demand. An important thing about bottlenecks is that they determine the throughput of a supply chain. Now this brings us to another term - Throughput, which indicates the productivity of a process, a machine, a procedure or a system over a unit period. It’s a part of the Theory of Constraints of business management. The guiding ideology of which is that a chain is only as strong as its weakest link. So the important thing to note that if bottlenecks are not recognized fast enough, it’s highly likely that you miss out on a chance to increase the overall throughput of the system in consideration.

Now that we know what a bottleneck is and how it affects the productivity of a system let’s start to look at how they can be minimized, I say minimize because in no system can bottlenecks be completely eliminated for the simple reason that as you move on from removing one bottleneck to another a new one seems to appear, though the overall performance of the system may have improved there would still be scope for improvement at every stage of operation. These improvements in processes can be brought upon by better utilization of existing resources or by implementing new techniques. One such method would be to adopt automation, the degree of which may vary across industries.  Automation is a technique of making a process or a system to operate by itself (automatically). It encompasses many vital elements and job functions and virtually provides benefits to almost every industry in existence for example:

Book Review: The Goal

The following Book Review has received II Prize in the Book Review Competition held at Indian Institute of Management, Raipur.

The Goal is an international bestseller business novel. It was authored by Dr. Eliyahu M. Goldratt and Mr. Jeff Cox and was first published in 1984 by The North River Press.

Dr. Goldratt was an Israeli physicist, who later became a business management guru. He has written this book as a piece of fiction. In the introduction of the book, Dr. Goldratt has stated that science can be utilized to understand and solve many industrial issues. Secondly, he has said that the main requisite for expanding the learning about anything is the courage to face inconsistencies and to question the existing popular beliefs and methods. “The Goal” also demonstrates the effectiveness of Socratic way of approaching and resolving problems, which in this story, includes the complexities of a manufacturing unit as well as marital issues. Dr. Goldratt has justified this by asserting his belief that the deductive process is the only way through which we can learn. The book aims at explaining the validity of and logic behind Dr. Goldratt’s Theory of Constraints.

The story describes the exciting journey of one Mr. Alex Rogo, in which he discovers the obvious flaws in the current industry practices, and with the help of his ex-teacher and physicist - Dr. Jonah, sets out to fix them. Alex is the plant manager at one of the manufacturing units of UniCo in a town called Bearington. UniCo has been running in losses for the last few years, and one of the major reasons for this is the unprofitability of the division to which Alex’s plant belongs. The conditions in his plant are also very tough. Everything seems to be delayed and utterly urgent. Most of the orders are running late by weeks. Everybody seems to be busy all the time, and yet, the unit is running into losses. All of this is despite the fact that this plant is equipped with the latest technology including industrial robots and computer systems.

On the other hand, a parallel storyline depicts the marital problems faced by Alex with his wife Julie. This highlights the difficulties faced by managers, especially those who are obsessed with their work, in their personal lives. Alex is repeatedly accused by Julie of not paying enough attention towards her and their children.

The story begins at a point when Mr. Bill Peach, the division vice president, asks Alex to make his plant profitable within three months. In case of failure, the plant was to be shut down by the management. Alex has the option to look for another job, but he decides to do whatever he can to save the plant. Here, he recollects a conversation he had with Dr. Jonah, when the latter, through a few simple questions, convinced Alex that the hi-tech robots in his plant are not contributing to the actual goal of the company. He also encouraged Alex to figure out the true goal of his organization. Faced with grave difficulties, Alex figures out that the true goal of the company is to make money. Equipped with this newly-found answer, he immediately gets in touch with Jonah and asks for his help and guidance.

Jonah explains to Alex that for generating profits, only three components of the system need to be in order. They are:

1.       Throughput: this refers to the money generated by sales and needs to be maximized.

2.       Inventory: this refers to the money invested by the system in purchasing things that it intends to sell, and must be minimized.

3.       Operational Expenses: this refers to the money spent by the system in converting inventory into throughput, and must be minimized.

Alex takes into confidence four people working in the plant - Bob Donovan (Production Manager), Ralph Nakamura (runs data processing for the plant), Stacey Potazenik (inventory control manager) and Lou (Plant controller). They discuss the three new points of measure, and conclude that they make great sense. Thereafter, Jonah, through telephone conversations and even personal visits to the plant, explains to them that the traditional points of measure such as efficiency of individual equipments, wages, etc. do not represent the true state of the system. And the reason for this is the combination of the two phenomena that exist in every plant – dependent processes and statistical fluctuations.

Alex gets a closer and better look at this concept during a forest hike with his son and other kids, where he realizes that the speed of the whole line depends on the speed of the slowest kid (bottleneck or constraint), and to improve the speed of the line, the slowest kid must be enabled to move faster. Alex, with his team, sets out to apply these principles in the plant. They successfully manage to discover bottlenecks in the system and accordingly used them to improve the throughput and reduce the inventories and operational expenses.

Needless to say, they observe huge improvements in the plant as the pending orders start shipping at a fast rate. Moreover, they successfully deliver a very large order from an important client and get themselves a long term contract as well as the faith of the marketing manager Johnny Jons.

Following a similar route and constantly debating and understanding the principles taught by Jonah, Alex and his team finally figured out the precise steps for the process of improvement:

1.       Identify the system’s constraint(s).

2.       Decide how to exploit the constraint(s).

3.       Subordinate everything else to the above decision.

4.       Elevate the system’s constraint(s).

5.       If, in a previous step, a constraint has been broken, go back to step 1, but do not allow inertia to cause a system’s constraint.

Socratic approach has been given a lot of emphasis in the book. At one point, Jonah tells Alex that he would not provide him with straight solutions, as it would be detrimental to his understanding of the concepts. Instead, Jonah gives Alex the basic principles and some relevant questions, which helps him in figuring out the solutions himself. Besides, this approach has also been adopted by Alex to resolve the marital issues with Julie, by looking for an answer to the question: what is the goal of their marriage?

Overall, “The Goal” is a very interesting and entertaining novel, which, at the same time, provides a basic and simple understanding of the Theory of Constraints. This theory, despite being plain common sense, seems far from the conventional approach of manufacturing. Moreover, the implications of these principles are applicable in many other fields and industries.

The writer of this article, Akshay Agarwal is a PGP student of Indian Institute of Management, Raipur and has done his B.Tech from Indian Institute of Technology, Guwahati.
The Book Review of the Winner of the Book Review Competition will be published in the Half Yearly Magazine. To request a copy of the magazine, mail us at opep@iimraipur.ac.in  

Theory of Constraints

(Dr. Eliyahu M. Goldratt)

The literal concept of this theory is explained by the idiom “A chain is no stronger than its weakest link”. It may seem a simple concept to understand that when any problem is encountered in any organization, steps are taken in order to solve the problem. The Theory of Constraints just looks a little bit more into this very problem.

The theory implies that there are constraints in an organization which eventually disrupts the organization in attaining its maximum throughput thus reducing its efficiency. Well, it isn’t called a theory for just implying that a problem does not help achieve a goal but does provide a very logical solution to it.

An organization will have a lot of constraints or conditions to be put simpler. In order to solve a particular constraint, the organization must re-organize itself around this constraint thus making it easy to solve. This theory provides five main steps to accomplish this process known as "Process of Ongoing Improvement" (POOGI).

The first and foremost step is to identify the constraint, and by identifying it also means to prioritize the constraints present and select the one that is the most vital at that moment for the organization. Secondly, decide how to exploit the constraint. Create ways by which the maximum output could be extracted from the constraint. Thirdly, subordinate all other processes to above decision, by this the organization must structure itself in order to tackle the problem in the most efficient manner. Fourthly, elevate the constraint i.e., make all possible efforts and decisions to suppress the constraint. Finally, if as a result of these processes the constraint has been elevated then move on to the first step and never let the inertia become a constraint in itself.

With ‘constraint’ being an essential term in the argument being made it is only reasonable to ask what these constraints are. These constraints could basically be divided into internal constraints and external constraints. The constraint could be considered as any hiccup or a bottle neck that prevents an organization from operating efficiently. The major constraints that are basically faced by an organization are people, policy and equipment. This theory just revolves around solving these constraints thus creating optimum throughput.

The theory of constraints could easily be represented by a just a couple of blocks as follows,

The writer of this article, Anshu Katiyar is a PGP student of Indian Institute of Management, Raipur. He has done his B.Tech in Information Technology from Dr. M.G.R. University, Chennai and can be reached at anshukatiyar@hotmail.com.

Virtua Health using six sigma: Taking a cue from GE electric

Virtua health is a four hospital system in New Jersey. It was created in 1998 through the merger of West Jersey Health System and Memorial Health Alliance of Burlington County. It has now become a dominant player in the New Jersey suburbs of Philadelphia, bringing together four hospitals, two ambulatory surgery centres, two long-term care facilities, a health fitness centre, and a home health company. Virtua in order to become more competitive in the market thought to change management and operating culture at fundamental level by applying six sigma procedure.

A cultural transformation program called STAR initiative was started which was aimed for creating an outstanding patient experience. The aim was to transform Virtua into a high performing organization making quick decisions,  removing bureaucratic barriers for employees and physicians in order to create an outstanding patient experience, and driven by valid measurement and accountability for results. To implement the STAR initiative Virtua tied up with GE medical systems.

Six Sigma at Virtua

The partnership between GE and Virtua began in September 2000. GE Medical Systems representatives taught Virtua the Six Sigma tools, including the key components, the Change Acceleration Process (CAP) and Workout. Workout refers to getting extraneous work out of a process through brainstorming. It helps in removing barriers between departments and generates the action steps. CAP refers to a range of management tools to drive strategic change by getting everyone speaking a same language and making all stakeholders to accept the change. Six full time “Black-Belts” have been identified and they work on any issue identified by management. They brainstorm with the key stakeholders involved and stakeholders get organizational support in this fashion as the black belts represent the entire organization. It has also helped in improving the organizational culture.

Moreover six sigma projects have been identified in fields of             

• Improve patient satisfaction in the emergency room and medical/surgical units.                    
• Improve throughput (cases/day) in two of the systems' busiest operating rooms 
• Find a way to rapidly hire the best employees       
• Improve employee retention in such critical areas as nursing   
• Improve the revenue cycle
• Improve the efficiency of home health nurses
• Reduce errors in the use of high risk meditations
• Reduce length of stay for elderly patients with congestive heart failure.
                                                                            

Several other workout projects have been successfully completed throughout the Virtua health care system. Virtua has trained 60 coaches who are experts in CAP and workout methods. So, Six sigma is helping in enabling the whole organization through these skills.

The six sigma methodology has helped Virtua clients/employees to:

·         Be generally informed about the project, process, and projected outcomes in all domains of the health care system

·         Participate in goal setting

·         Understand how to interpret quality

·         Base their directives on hard information

·         Evaluate progress and judge success

References : http://search.proquest.com/docview/204788093?accountid=274812

The writer of this article, Naman Jain, a PGP student of Indian Institute of Management, Raipur has worked in GE Healthcare Labs. He has done his B.Tech in Computer Science & Engineering from Vellore Institute of Technology, Vellore and can be reached at namanvit @ gmail . com