February 2021 Volume 3

OPERATIONS & MANAGEMENT

Implementation of Theory of Constraints (TOC) at Scot Forge I would like to begin by saying that from my perspective there is no one concept that is a silver bullet that works in all environments; all have both positive and adverse implications that must be considered. From a supply chain perspective, what a unique opportunity for a team to develop a system in this type of environment that can perform reliably over time. The potential to provide value back to the customers seems substantial. Based upon the teams learning in the supply chain environment, we felt the methodology to establish and continually improve on a process of ongoing improvement based upon the Theory of Constraint was the best. Concentrating on balancing the flow of the system by spending our efforts to identify the constraint and then subordinating and synchronizing the other links in the chain would better leverage our collective efforts. Applying those collective efforts into the five-step process at the constraint versus attempting to respond to the variable local improvements throughout the supply chain seemed more practical. In order to implement the Drum-Buffer-Rope solution, we had to develop a system that enables flexible modeling, analytics and feedback mechanisms to support execution. We routinely spend time weekly evaluating our supply chain by modeling the lowering of the inventory in the system to help us identify the constraint. From an execution point of view, sizing the buffers is accomplished by measuring the variation that occurs at the buffers and their ability to protect the overall throughput and reliability of the system. Discipline and familiarity of executing the Drum Buffer-Rope solution in our daily collaboration activities and measuring results weekly within the supply chain has helped us gain experience to properly size and adjust the buffers as necessary and not mistake a temporary condition of losing slack in the rope for a new constraint. Which leads to one of the common risk contentions in implementing Drum-Buffer-Rope in these types of environments. There can be a potential risk for the constraint to constantly be changing rapidly without any meaningful activities creating a system that sends false singles making it extremely unreliable and more like the old Whack-A-Mole arcade game than a supply chain solution. Leveraging the knowledge of the team and thinking strategically by asking the question that if we could design the supply chain from scratch where would you want the constraint in the supply chain to be located enabling the largest amount of

flexibility that could perform reliability over time for the customers. I know sounds great, but is it reasonable in a capital-intensive setting with several established supply chain links? Our tactic to address this is not perfect, but building a supply chain team built on earning trust and transparency seems to facilitate repeated incremental improvements. I am not sure we will ever really be done with our approach. For several years we have been listening to our customers and continually learning and working on the supply chain. Our experience tells us that continuous improvement within the supply chain is more like a journey than a destination with an ending. How successful has this worked at Scot Forge? We will need to leave that evaluation in the capable judgment of our customers and supply chain partners. FinalThoughts Investments made to attain better knowledge and experience about the different environments and interconnections of the supply chain links can add value in helping to select an optimizing methodology and process. Since there is low probability a supply chain can eliminate Murphy (variation) from the environment, the importance of selecting the appropriate solution is a key contributor to enabling the supply chain to reliably demonstrate performance over time. I would encourage any business to consider how to implement continual learning within the supply chain environment into the path of their work. Focusing on how it interacts as connected links both externally and internally. This is certainly a journey with both bumps in the road and several incremental successes along the way. ■ John Coward Executive Director Supply Chain Scot Forge Company Phone: 815-675-4244 Email: jcoward@scotforge.com

FIA MAGAZINE | FEBRUARY 2021 65