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Lessons From Henry Ford - How to Achieve Just-in-Time Production, Minimal Inventories and Shorter Lead Times for Order Fulfillment.
Eliyahu Goldratt's Theory of Constraints (TOC) shows why it is impossible to run a balanced factory at 100 percent capacity, and also why projects are likely to finish late regardless of predictions by the PERT (Project Evaluation and Review Technique). Goldratt's principles also apply to traffic jams that seem to appear out of nowhere, and the same concepts carry over into production management.
The root cause consists of variation in processing and material transfer times in manufacturing, and variation in activity completion times in project management. Henry Ford, however, claims to have done what Goldratt said to be impossible, and he did it more than 25 years before Goldratt's birth: operate a balanced factory at close to 100 percent capacity!
This presentation by quality, productivity and management expert, William A. Levinson will describe how Ford did it, and equip today's practitioner to achieve just in time production, minimal inventories, and short lead times for order fulfilment.
Quality management practitioners are most familiar with variation in product dimensions and other quality characteristics. Production managers and supply chain professionals need to be equally familiar with destructive variation in processing and material transfer times. This variation is why bubbles of inventory appear in a factory with purportedly adequate capacity.
- Goldratt's matchsticks and dice exercise is an excellent classroom illustration of the effect of variation in a balanced factory, which includes inventory bubbles.
- A key takeaway from this presentation is that the variation is often not, however, random or common cause variation as might be implied by a dice roll. Special or assignable causes are frequently responsible, and therefore removable.
- It can therefore be argued that the inventory buffer in Goldratt's drum-buffer-rope (DBR) production control system is containment of the variation problem, rather than corrective action for it. To paraphrase General Curtis Lemay, containment means swatting flies, and corrective action means getting rid of the garbage pile that attracts the flies.
- Variation in processing and material transfer times increases cycle time, and therefore inventory. Henry Ford wrote explicitly in My Life and Work (1922): 'If transportation were perfect and an even flow of materials could be assured, it would not be necessary to carry any stock whatsoever. …With bad transportation one has to carry larger stocks.'
- Short cycle times may mean the company can make to order rather than to forecast.
- Ford proved that it is possible to remove most of this variation from a system even as complex as his 'continent-spanning conveyor,' and he claimed to have operated a balanced factory at close to 100 percent capacity: 'The idea is that a man must not be hurried in his work-he must have every second necessary but not a single unnecessary second.' (That is, no operation had excess capacity but, contrary to the scenario in The Goal, this did not result in accumulation of inventory.)
- This statement is not a matter of theory, but of proven results that Ford achieved more than 90 years ago, and without computerized production control or logistics systems. Subdivision of tasks, single-unit processing, work cells, and continuous flow via conveyor belts and work slides, suppress or eliminate time variation in the factory.
- A reliable logistics system removes variation from the supply chain.
- The concept of takt time, and the drum in the DBR production control system, date back to military drills in which everybody had to work at exactly the same pace to deliver optimal performance. Application of the same principles to the factory plays a major role in the removal of the variation.
- The role of continuous flow cannot be overemphasized. Batch and queue processes are the mortal enemies of productivity as well as quality.
Benefits of the Session:
When management professionals think of variation, product dimensions are the first things that come to mind. The primary takeaway from this presentation is that there is also variation in processing time, material transfer time (e.g. between process stations in a factory), and supplier-customer shipment times in a supply chain. This presentation will equip production and supply chain professionals to recognize such variation, along with the reasons for its presence, and provide techniques for its elimination.
Who should attend?
- Production and supply chain professionals
- Project management professionals