Friday, 31 March 2006 17:00

Using 22-year-old biz theory to break down bottlenecks

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At first glance, it's hard to fathom what Eliyahu Goldratt, a 58-year-old Israel-born physicist, has to offer the collision industry. But more than 20 years after Goldratt authored (along with Jeff Cox) a "business novel" entitled "The Goal," his theory of process improvement is increasingly being discussed within many shop "20 groups" and implemented by a growing number of collision repair businesses. 

The "theory of constraints," as described in the form of a fast-paced novel in "The Goal," has obvious relevance to manufacturing facilities and assembly line factories. But Kent Carlson, co-owner of Collision Resources, a Midwest-based industry consulting firm, and others in this industry say it can be just as relevant and helpful in improving collision repair production.

"The goal that Goldratt writes about is the same for any business: making money," Carlson said. "Profit is like oxygen for your business. If you go without oxygen very long, you'll die. And if your business goes without profits for very long, it will die."

The most effective way to generate those profits, Goldratt believes, is by increasing sales and production (or what he calls "throughput") while inventory and operating expenses are held steady or even reduced. Accomplishing that requires finding and fixing the "constraints" on production, those bottlenecks that limit, in the case of a collision repair shop, the amount of production the shop is able to move through the shop. Goldratt sees it as a 5-step process.

Finding the constraints

The first step, naturally, is focusing on identifying the constraints in your business. Just as brake lights and stopped vehicles signal a constraint in the flow of traffic (a.k.a. a traffic jam), a back-up of vehicles not being worked on at some point in the production process in your shop signals a constraint.

You may know (or think you know) where that point is in your shop, but Carlson said it may be helpful to make some measurements to ensure you are correct. Twice a day for the next two weeks, take a walk through your shop and note how many vehicles are in each stage of the process: body, prep, paint, buff, re-assemble, sublet and detail. Note how many of those vehicles are actually being worked on at the time, and how many are sitting untouched. For each department, calculate what percentage of the vehicles are not actually being worked on, and if possible, note the reason why - for example, waiting for supplements or parts.

This process can be helpful, Carlson said, because it can help you differentiate what he calls a "self-inflicted" bottleneck from a genuine "constraint." If you bring most of the week's work in on Monday, for example, this creates a "wave" of work rolling through your shop, first in the front office and metal department early in the week, hitting the paint shop in mid-week, and crashing into the detail and delivery process late in the week.

"Just knowing where a bottleneck is doesn't tell you its cause, and in this case, your scheduling may be what is creating what looks like a bottleneck in various parts of the shop," Carlson said. "In that case, you'll want to control your workflow better, trying to bring in and deliver about the same number of vehicles every day."

A genuine constraint, however, is generally signaled by a regular backlog or inventory of work-in-progress just in front of the constraint. Too many vehicles ready but waiting to go into production may signal a constraint in the body department, for example. Too many idle vehicles in the paint prep department may mean the booth is the constraint - or that the prep department is the constraint, a good example of why identifying constraints is not always a quick process.

"You need to keep digging, asking yourself where the problem is and if people, equipment or procedures are causing the back-up," Carlson said.

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Addressing the constraint

The second step in the process is "exploiting the constraint." Once you've identified a trouble spot, make sure you're at least getting as much work through it as you can.

If you find work backing up waiting for a piece of equipment (a frame rack or the paint booth), for example, make sure that equipment isn't sitting idle, for instance because the entire paint department goes to lunch at the same time.

If defects and rework are creating a constraint, add a quality control check to the process where the problems will more likely be caught prior to causing a back-up. Make sure you've assigned the best people you can to the task causing the back-up.

Sometimes the division of labor exacerbates a constraint. Carlson worked with one shop, for example, that had a prep department that wasn't providing a steady flow of work into the paint department. The problem turned out to be that preppers were also responsible for buffing vehicles after paint and were often working on that even when painters didn't have any work and vehicles were sitting waiting to be prepped. The solution to such a situation could be to hire a buffer or reassign that responsibility, or work out procedures to reduce thecamount of buffing needed.

In any case, the goal is that if it's clear a constraint will only allow three cars through a day, "exploiting the constraint" ensures that those three cars - and not just two - move through that constraint every day.

Subordinate to the constraint

The third step in the process is to "subordinate everything else" to the constraint. Getting as much as you can through that constraint is critical, Carlson said, so don't make other decisions that end up defeating that goal. If a constraint will prevent you from producing more than five cars a day, why schedule in more than five cars a day? Let the constraint drive the tempo of your business, Carlson suggests, or else you'll create excess "inventory" of work in progress in front of the constraint, which leads to added expenses and problems.

Expand the constraint

That doesn't mean, however, that you're forever enslaved to the pace of the slowest spot in your production process. The fourth step in the theory of constraints is to expand or widen out the bottleneck. If five cars a day is all a constraint will allow you to move through, what would it take to improve that? If equipment is the problem, could you add, refurbish or replace it - or expand the number of hours per day/week it is being used - to allow you to process more? If staffing is the issue, could training, new procedures or other changes reduce the constraint? If space is the issue, could the shop layout or organization be changed?

Begin again

Obviously, as you focus on a constraint and the situation improves, another point in your production process becomes the new constraint. Step five in the process is starting the whole process again, focusing on what has become the new bottleneck as the old one is improved.

In this way, the theory of constraints is a continuous improvement process. It is never finished. But the beauty of it is the very tangible results: The improved profits, as Goldratt points out, are the goal of every business. One more car produced a day, Carlson points out, could add $500,000 to your shop's annual sales potential. Even one more car every two or three days will make the effort of implementing the "theory of constraints" to bust up the bottlenecks worthwhile for your business.

John Yoswick is a freelance writer based in Portland, Oregon, who has been writing about the automotive industry since 1988.

 

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