Conditions for survival in the manufacturing industry in VUCA era
Satoru Murakami
CEO Goal-System consultants Inc.,
Three manufacturing giants,Henry Ford, Taiichi Ohno, and Eliyahu Goldratt.-5 TOC, Dr. Goldratt's Challenge (Against Major Fluctuations)
This time, I would like to introduce the approach of Israeli physicist Eliyahu M Goldratt (1948-2011) in the lean manufacturing method boom of "learn from Japan".
In the latter half of the 1980s, Dr. Goldratt became a man of the moment by insisting on a seemingly eccentric theory called TOC (Theory Of Constraints). If lean manufacturing was the secret weapon of the Japanese manufacturing industry, the TOC method could be said to be the secret weapon for the American manufacturing industry to catch up with Japanese companies.
The beginning of TOC was in the latter half of the 1970s. A friend of Dr. Goldratt who ran a factory brought in a production schedule problem to him who studying physics in Israel. He pioneered a different production scheduling method by incorporating some original ideas into this problem.
Since then, Dr. Goldratt has been keenly interested in production issues and has taken this approach further to develop breakthrough production scheduling software algorithms. He started up a company in the United States to sell the software, and he himself became chairman. The software was called OPT (Optimized Production Technology) and drew public attention.
The OPT algorithm was never disclosed because of trade secrets, so the OPT was wrapped in a mysterious veil. However, the introduction users reported that the sales of the factory increased and the work in progress decreased significantly even though they did not make any capital investment and OPT sold well to major companies mainly in the automobile industry. In addition, Dr. Goldratt, thinking of publishing the ideas behind him in the form of a novel, publishes a novel called "The Goal." The best-selling novel will produce unexpected effects.
Some readers responded that even if they did not introduce OPT, they had a great effect when they made improvements according to this novel. Therefore, it is far more successful to open up the world of manufacturing operation management (management technology) as depicted in "The Goal" and expand it to the activity of continuous improvement (Process of On Going Improvement). Dr. Goldratt named it TOC and it became popular.
After that, Dr. Goldratt published many business novels such as "It's Not Luck" and "Critical Chain" following "The Goal", and proposed a project management method called CCPM and an unrefusable offer (URO). He presented new theories in business such as methods one after another. In fact, the TOC theory was an evolved version of the "method" that was born by studying the "flow" principle that Mr. Ohno and his colleagues had built up.
Dr. Goldratt's focus was on how to apply the concept of flow in an "unstable environment," which was different from the time when Mr. Ohno built the Toyota Production System.
Dr. Goldratt talks about the problems of TPS as below,
- TPS application is limited to relatively stable environments
- Many companies are suffering from instability in the current environment
And in an unstable environment, the gains from improving the flow are much greater than those in a stable environment, and companies that suffer from being unable to cope with an unstable environment have a large amount of lost profit. He Insisted it is possible to dramatically increase profits by improving the flow.
In order for TPS to be effective, three stability of "product demand", "production process", and "factory load" are necessary, and he claimed concrete methodology that can be applied even in an environment where it cannot be secured is necessary.
In 2008, he published his article "Standing on the shoulders of Giants", discussing the TOC method and Ford System, and the relationship with TPS, and the evolution of operations management. In it, it was clarified that the TOC method system developed by himself was an application of the basic concept of Ford and Toyota, and this basic concept was changed from Ford to Taiichi Ohno (Toyota) and Goldratt (TOC).
Dr. Goldratt explained concretely that nothing has changed since concept has been passed down for over 100 years. According to it, the "purpose" that Ford, Toyota, and TOC pursued in common is summarized in the following "Fundamental Concept."
Improving flow (or equivalently lead time) is a primary objective of operations.
This primary objective should be translated into a practical mechanism that guides the operation when not to produce (prevents overproduction).
Local efficiencies must be abolished.
A focusing process to balance flow must be in place.
The technology for creating the flow of manufacturing in this way has gradually evolved on the basis of the achievements of our predecessors. Next time, I will think about "operation management technology" to create these flows.
