Innovation and R&D


Article 17

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What is Theory of Constraints?

Let me start with a simple example. It has massive implications.

Look at a steel chain shown in Figure 1.

Here are a few trivial quiz questions: 

  1. What determines the strength of the steel chain depicted in Figure 1? 
  2. If you were to repair the chain where would you apply your limited resources?
  3. What would you say if a consultant says we should distribute our limited resources equally and apply to each link?

Here are answers couched in scientific terms:

  1. “Strength of the strongest chain is determined by its weakest link.”
  2. To produce maximum benefit, apply limited resources at the weakest link.
  3. Resources applied at any place other than the weakest link is a wasted effort.

 

This is a simple example of Theory of Constraints, TOC for short,  invented by an Israeli, Eliyahu M. Goldratt.

 Goldratt(1947-2011) was an entrepreneur, programmer and a physicist who was working on optimization algorithms and looked at the programming code to determine where the code is making next iterative improvement. He recognized that the optimization code consistently made an incremental improvement at the “weakest” link. To explain his insights, Goldratt wrote and published several books: The Goal, Critical Chain, It is not Luck, Theory of Constraints, Race, Haystack Syndrome, and a few others.

 Goldratt says, if you have an assembly line, and you want to improve its production rate, you need to find the “weakest link,” the limiting resource, the rate limiting step, or bottleneck and figure out how to increase the rate of that limiting step. He also goes on to say, if instead, you apply a resource anywhere else, it is a wasted resource. He further generalizes that to say, on any assembly line, resources that are not applied at the bottleneck step, must remain idle for some time until the bottleneck resource catches up! Management finds this scary, “Eliyahu, do you mean we need to deliberately keep most of the resources idle and non-productive?”

 I read several books by Eliyahu Goldratt, while some of them are elegantly written (The Goal, is a fictionalized version of life in a Manufacturing Plant.) the finer details of the TOC concept still eluded me till I found an elegant simulation by an Australian organization TOCCA.com.au dedicated to TOC. A picture is worth a thousand words. Look at this simulation. “TOC in Operations” at TOCCA Animation  [ref. 1]

Toyota capitalizes on this thought process in their Just-in-Time production and Kanban system. In order to identify where the bottleneck is, you discourage excess production at each step, by reducing in-process inventory. Reducing excess production at each step helps you discover the bottleneck step, so resources can be applied and bottleneck removed.

So how would you use TOC in Chemical R&D? 

Ask:

  • Which unit process or operation is the bottleneck? 
  • How can you remove the bottleneck? 
  • Where should you put fewer resources? 
  • If you want to increase Return on Investment (ROI) which step should be most capital intensive?

So crank up your Product Development engines… Let us speedup new product development and growth rates. And let the fun begin!

 

References:

  1. “TOC in Operations” at http://www.tocca.com.au/default.asp 



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