Georgijs Buklovskis Member of the Board Association for Business Efficiency, Latvia Plant manager Brabantia Latvia Ltd. BMDA conference, Rīga, May, 8th, 2014 Very practical Theory of Constraints (TOC). The way to increase companies results by decreasing “efficiency” on local operations.

Association for business efficiency

''Brabantia Latvia''

Management of which system is more simple, A or B? Simplicity A B

Which system gives possibility to make cup of coffee faster and more simple, A or B? A B Management of which system is more simple, A or B? Simplicity

A B B Management of which system is more simple, A or B?

Archimedes: "Give me a place to stand, and I shall move the Earth with it !" Simplicity

TOC based strategy Satisfied Customers Profit Satisfied Employees Now and in the future! Every system (business) has a Goal

TOC based management Every system (business) has a Goal Every system transfer "row materials" to the "Goal units" Every system has an internal "flow" What is systems constraints preventing from receiving more "Goal units"?

TOC – 5 Focusing Steps 1. Identify the constraint 2. Decide how to exploit the constraint 3. Subordinate/synchronize everything else to the constraint 4. If needed, elevate the systems constraint 5. If the constraint has been broken, go back to Step one. Do not let inertia become the constraint. Eliyahu Goldratt

Traditional Emphasis on production Make product to forecast ‘Push’ production system Machine utilization Reduce cost and increase efficiency Leadership by executive team Specialized employees Penalize mistakes Blame people Reactive Inspect in Quality Complexity Functional Management Structur e Lean enterprise Emphasis on customer service Make to customer demand “Pull” production system Employee utilization Reduce waste and add value Leadership by vision and broad participation Multi-functional employees Educate Identify and solve process failure Proactive Built in Quality Simplicity Manage by Value Stream Manage by increasing of Throughput through the whole system Combining TOC and Lean approach Lean enterprise Emphasis on customer service Make to customer demand “Pull” production system Employee utilization Reduce waste and add value Leadership by vision and broad participation Multi-functional employees Educate Identify and solve process failure Proactive Built in Quality Simplicity Manage by Value Stream System Constrains utilization Increase Throughput TOC

Traditional Machine utilization Reduce cost and increase efficiency Functional Management Structure Manage by increasing of Throughput through the whole system Combining TOC and Lean approach Lean enterprise Employee utilization Reduce waste and add value Manage by Value Stream System Constrains utilization Increase Throughput TOC Local efficiency Global efficiency ProductProcess System SavingPerfection Focus on Goal Complexity Simplicity

The way to increase companies results by decreasing “efficiency” on local operations.

6 Combining TOC and Lean approach Sample: Dryer production line Automatic wiring Assembly Prefabrication Packaging Finished products

6 Combining TOC and Lean approach Sample: Dryer production line Automatic wiring Assembly Prefabrication Packaging Finished products 8 8

Row material CCR (Drum) “Rope“ KANBANSupermarket Combining TOC and Lean approach DBR (Drum-Buffer-Rope) and KANBAN combination Delivery buffer CCR buffer

Combining TOC and Lean approach Sample: Dryer production line, results With present action was lowered local efficiency – hourly productivity of workers was decreasing two times! All orders was delivered at time, nobody from customers was "send to competitor" Earnings was increased for 30% Profit was increased for 200% But…

TOC “Road runner” culture and how to change management paradigm about utilization of workforce?

Time after start of the race: 05:00 TOC “Road runner” culture 18:00 19:01 19:03 19:30 30:00

Management paradigm x Based on Cost accounting approach

Be a responsible manager Be a responsible manager Management paradigm Conflict Cloud EARN! Utilize Bottleneck capacity Utilize Bottleneck capacity

Management paradigm changing tool TLS approach: “Road runner culture” and Heijunka cards Instruction: 1. Do not produce nothing if defined buffer (order) is fulfilled 2. Use your time for improving your workplace and yourself

Management paradigm changing tool TLS approach: “Road runner culture” and Heijunka cards 1. Do not produce nothing if defined buffer (order) is fulfilled 2. Use your time for improving your workplace and yourself

Customer Supplier Customer RM Stock 14 WIP 5 FG 1,5 Supplier RM Stock 7 0,5 0,2 Some TLS implementation results Supply chain cycle transformation Business cycle “Money-Goods-Money” reduced from ~ 22 to 8 weeks Internal cycle: RM stock 14 to 7 weeks; WIP – 5 to 0,5 week; Finished goods stock – 1,5 weeks to 1 day Lead-time reduced x 2 times Due-date performance - 99%

     Georgijs Buklovskis Georgijs has big experience in establishing, developing and managing manufacturing companies as well as a wholesales business. He is Brabantia Latvia factory manager since start of operations in Latvia in Georgijs is co-founder and member of the board of Association for Business Efficiency (Latvia), which promotes Lean and TOC approach in Latvia. His seminars and presentations attended by a number of various Latvian and foreign specialists. In 2013 he has printed Thomas Corbett “Throughput accounting” in Latvian language. Thank You!