In my last post we completed our example of how to calculate the marginal values for both bottleneck and non-bottleneck resources. We saw that improvements which result in more output at non-bottlenecks have little value or impact on the bottom line. In fact, when a bottleneck is present, the non-bottleneck resources contribute no value to the bottom line except as it relates to reduce inventory or operating expenses. We also saw that if bottlenecks exist, then the gain for the company when these resources are improved can be very significant. The implication here is that all priority improvement efforts should be focused on the bottleneck resources.
In today’s post we will begin a discussion on the different types of constraints that exist in most companies. We’ll discuss how to identify and manage the various types of constraints.
For the past several posts we have been discussing the difference between bottlenecks (i.e. constraints) and non-bottlenecks (non-constraints) as they apply to a physical process. It’s important to understand that not all constraints are physical in nature. Let’s begin this discussion with the definition of a constraint as follows:
- A constraint is any element that limits the organization from achieving higher levels of performance, where performance is measured in terms of the organization’s goal. Most organizations spend an enormous amount of time, effort and money implementing some kind of improvement initiative, but unfortunately many of these organizations don’t achieve the results they had hoped for so disappointment dominates the landscape. Based on my experience, these disappointing results are the direct result of two distinct causes.
- Constraints are neither identified or managed correctly. If the constraint is not identified and exploited, then the output will be below the capacity of the constraint. That is, since the constraint controls the throughput for the entire plant, the throughput for the plant will be much less than it should or could be.
- Many production managers do not understand how to achieve optimum flow in an ever-changing environment. In fact, many production managers tend to push product through their processes rather than establish the correct cadence based upon the output of the constraint.
Management of Constraints
Assuming that constraints exist within any manufacturing facility, what’s the proper way to manage them? The bottom line is that constraints must be managed so as to maximize their performance. In addition, non-constraints must be managed so that they never interfere with the performance of the constraint(s). Quite simply, the non-constraints that directly supply the constraint must never starve it for work to process. In addition, the non-constraints, which are upstream from the constraint, must guarantee that the quality of product arriving at the constraint is not scrapable.
Thus far we have focused on physical constraints (a.k.a. resources constraints) that typically exist within a manufacturing facility. There are other kinds of constraints that impact a company’s ability to make an acceptable profit. So let’s review other types of constraints.
Keeping in mind, the basic definition of a constraint we know that a constraint is any element or factor that stands in the way of an organization from achieving a higher level of performance with respect to its goal. The basic philosophy of constraints management is based on identifying the causes that will prevent the system from reaching its goal.
There are primarily five types of constraints that exist within any management system that we need to consider:
- Physical/Resource constraints
- Market constraints
- Policy constraints
- Dummy constraints
- Material constraints
In the past few posts we have spent much of our time explaining and discussing physical or resource constraints, so we won’t spend much time on this type of constraint. Basically, a physical/resource constraint is a resource that is so heavily loaded that it is unable to meet the current market demand. This type of constraint could be labor shortages, lack of equipment, or some other physical factor that is preventing market demand from being met. If this kind of constraint is manpower-shortage related, I do not recommend hiring additional manpower until processing time reductions are considered.
Sometimes there is a situation whereby there is a specific time that the shortage occurs (i.e. peak time resource constraint). If this is the case, then part-time “out-sourcing” might be the answer or possibly the use of overtime. By the same token, there could be “seasonal” shortages that occur during a specific time of the year. Sometimes firms who normally have more than enough capacity to meet market demand face situations that create capacity shortages due to unforeseen circumstances. For example, there could be an extended equipment breakdown, or maybe a labor dispute or even a natural disaster. Situations like these require the need to develop a plan to temporarily accommodate the shortages.
In my next post, we continue discussing the remaining types of constraints and how to manage them. As always, if you have any questions or comments about any of my posts, leave me a message and I will respond.
Until next time.
 L. Srikanth and Michael Umble, Synchronous Management – Profit-Based Manufacturing for the 21st Century, Volume One – 1997, The Spectrum Publishing Company, Wallingford, CT
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