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Unlocking Efficiency: Applying Theory of Constraints in Manufacturing

Man and woman happy because they have improved efficiency in manufacturing organisation.

After an incredibly challenging couple of years for British manufacturers, the sector is finally witnessing a boost in growth prospects as output and orders pick up. This is according to Make UK’s ‘Manufacturing Outlook 2024 Q2’ report published in June 2024. It also states that business confidence has risen to equal its highest level in the last decade.

“At long last, manufacturers can see concrete signs of growth and a much better economic outlook ahead.”

James Brougham, Senior Economist, Make UK.

So, things are looking positive. There is opportunity to take advantage of these encouraging conditions and guarantee improved performance over the coming months and years. Whilst the industry at large is looking up, your manufacturing plant might feel like a different story day-to-day…

If you work in manufacturing management you know it’s a busy, often chaotic environment. It can be difficult for Operations Managers to set aside time to improve processes when there are so many day-to-day challenges to overcome – you spend most of your day firefighting and chasing late orders. Frequently changing priorities and continuous expediting, lead-times that creep longer and longer, and a shopfloor flooded with WIP (work in progress) which leads to confusion and an overall lack of visibility. If you find these difficulties frustrating familiar, you need to look into Goldratt’s Theory of Constraints (TOC).

TOC can work alongside other production methodologies such as Lean or Six Sigma. It seeks to increase flow and capacity within a system with the ultimate aim of achieving the business’ goals and objectives. TOC emphasises the importance of identifying and alleviating the impact of bottlenecks (Constraints) within production processes to improve overall efficiency and output. Your bottleneck (or Constraint) is the limiting operation which dictates the rate at which product can flow through your system. It is imperative that the Constraint’s capacity is effectively managed – every minute your Constraint is not operating, your business loses money.

Eli Goldratt developed the Theory of Constraints and introduced it to the world in his business bestseller, ‘The Goal: A Process of Ongoing Improvement’. Featured on university reading lists and endorsed by Forbes, Times Magazine, and Jeff Bezos, ‘The Goal’ remains an important business book today.

Whilst TOC is now successfully applied within hundreds of organisations across many different sectors, it was within manufacturing that it first became established. ‘The Goal’ is a management novel which presents Goldratt’s theory through a fictional story set in a manufacturing plant. It follows Plant Manager, Alex Rogo, as he attempts to save his struggling manufacturing facility. Alex learns of the principles of TOC from a wise mentor, Jonah, who advises him to focus on identifying and exploiting his Constraints within production to improve overall efficiency, productivity, and profitability.

Through the implementation of TOC, Alex achieves his goal of transforming his plant from a failing operation to a successful and profitable enterprise. He commits to optimising the performance of his bottlenecks by aligning other resources to the pace of the bottleneck and investing in more bottleneck capacity when required. These actions resulted in reducing lead-times, improving on-time delivery, and increasing customer and stakeholder satisfaction.

‘The Goal’ is a fictional example of a successful TOC implementation, but can it work in reality?

Absolutely. The Theory of Constraints is a universally recognised approach to production operations and there have been thousands of successful case studies from across the world. Goldratt UK have been implementing these principles in UK (and European) manufacturing organisations for over twenty-five years. You can find our case study catalogue here.

Here, we will look at one example of how implementing TOC can transform a business.

Raybloc X-ray Protection Ltd

In 2023, Goldratt UK partnered with Raybloc X-Ray Protection to improve flow through production and reduce lead-times to increase customer satisfaction – and ultimately grow the business.

Raybloc is a manufacturer and supplier of high-quality radiation protection products. They not only cover X-ray in hospitals but also offer total radiation shielding solutions to private practices, dentists, vets, military, and nuclear environments. Their biggest challenge lay in Production. The lead-time being quoted to customers was 22 weeks and many customers decided that this was simply too long to wait for the products. The Sales department reported that over half a million pounds’ worth of orders was lost due to the lead-times being too long.

The business had enormous potential and there was a strong desire among the senior management team to grow. After some deliberation and research, they decided to partner with Goldratt UK to design a Theory of Constraints based solution to achieve their goals.

Some critical steps were taken including:

  • Release Gate – controlling the level of WIP at the point of release to minimise queues on the shopfloor and improve visibility and flow.
  • Constraint Obsession – mindset adopted to increase the output of their Constraint (the CNC), and by extension, the entire system.
  • Full Kit – orders were only released to the shop floor when they had everything necessary to finish the job available at the beginning.
  •  Single Priority System – created clear guidelines for production staff.

The result? That all important customer lead-time was dramatically reduced – Raybloc are now quoting 6-weeks as opposed to 22-weeks. The production lead-time specifically reduced from 12-18 days down to 5-9 days across the product range.

Production output increased to the point where the team was actively asking for more work! This increase equated to £12,000 more per week. And on-time, in full delivery performance increased to 90%.

There is now increased confidence across all levels of the business that production have the capability to deliver on promises to customers. Raybloc finally had the capacity for increased sales and business growth.

“We are now in a promising position to grow the business. We have increased capacity in production without the need to increase headcount or invest significantly which means sales can go straight to the bottom line.”Lewis Haydon, Director.

Begin your TOC journey and set your business on the path to exponential growth. Your first step? Request Eli Goldratt’s bestseller ‘The Goal’ free from Goldratt UK today. Request your free copy of the book here.

© Goldratt UK, 2024.