Theory of Constraints Handbook - James Cox Iii [703]
2. Clarity about the learning gap between facilities, which is a tangible opportunity for Norris.
3. An extensive list of team-generated ideas for both Norris and AOT.
4. Multiple new relationships among counterparts at the facilities.
Results after Six Months
Once the team returned to Norris, they implemented several of the concepts and tools learned. A summary of the important results follows:
Increased focus on heat treat as the strategic constraint for both companies.
Norris increased profits by 6 percent despite taking 2 of the 6 furnaces out of service for repair.
AOT profits increased more than 6 percent and both of these improvements were achieved in spite of increased steel prices that were not passed on.
Forging at Norris increased flexibility by reducing setup times from an average of half a shift to 30 minutes (12.5 percent of the original setup time).
Reduced rework from a 50 percent rework rate to a 10 percent rework rate in several product lines (thus gaining additional constraint capacity for free).
AOT now shares formulations with Norris to improve efficiency.
More overall collaboration between the two companies.
As the implementation progressed, other changes were made to put the two companies more in alignment. One of the major changes was putting the CEO of AOT over both companies. Another was a change in the culture (mindsets/relationships) within and across plants.
Have You Really Defined the System?
Introduction
GKN Automotive is a company that produces half-shafts for front-wheel-drive cars. Their customers included Ford, General Motors, Toyota, Honda, and most other major automobile companies. Their president and CEO, Tom Stone, felt that he could improve performance by embracing the principles of TOC.
What is a half-shaft? If you climb up under your front-wheel-drive vehicle, you will note two small shafts that connect the transmission to each wheel. At the end of each shaft is a forged piece of metal that looks like a tulip—in fact that is what GKN folks call it. The end that attaches to the transmission is the “inboard end” and the one that attaches to the wheel is the “outboard end.”
There were four plants in the system. One plant produced the forged “tulips,” one plant machined the tulips and inners for the inboard side, another plant did the same for the out-board side, and both of these plants shipped to the assembly plant which assembled product for approximately 22 different car models.
All four plants were structured as separate cost centers and the entity of concern (or system) was the physical plant. During the assessment phase, it was clear to us that this structure made no sense. Looking at the GKN system from the perspective of four independent plants measured by cost actually made GKN more complex. What we learned is that all of the machining equipment was designated for a particular car model and that the auto manufacturer controlled “their” machines. It became apparent based on the outside control of scheduling of the plants and the dependent nature of the parts and processes across plants that considering each physical plant as the system was erroneous. Each plant had to deal with parts from all 22 car models and each plant’s management was focused on “local optimization” of their own plant. (See Fig. 37-2.)
If the system is not defined properly, then identifying a constraint or doing a Thinking Processes (TP) analysis is meaningless. In addition, it should always be our goal to look at a complex system in a manner that makes it less complex.
What Do We Need To Change?
GKN had been working on the wrong system—the physical plant location and treating them as independent cost centers. The individual plants saw themselves as having their own customers, all of which had different requirements and tendencies with respect to lead time, quality, and other issues.
What Do We Change To?
What did make sense was to segment GKN by specific models/markets. Now team members from the forging, inboard,