Chad Smith is the co-founder and Managing Partner of Constraints Management Group (CMG), a services and technology company specializing in pull-based manufacturing, materials and project management systems for mid-range and large manufacturers. We had a discussion is a past podcast on the Demand -Driven Techniques.
Related Podcast and Transcription: New Thoughts in Supply Chain Thinking
An Excerpt from the Podcast:
Joe: You wrote a chapter on integrated supply chain in the Theory of Constraints Handbook. How does that coincide with the theory of constraints and the drum buffer rope type of philosophy? How does that coincide with MRP and where you are saying the ships are meeting each other? Where is TOC crossing the path with that?
Chad: That’s a good question, Joe. I’ve spent a lot of time here, the last 15 years of my life, working predominantly in the Theory of Constraints realm. It’s just in the last few years where I’ve pushed beyond Theory of Constraints. One of the reasons why the Theory of Constraints isn’t the end-all, be-all philosophy, nor is Lean, there are aspects of all of these demand-driven types of techniques that need to be incorporated and blended for a complete solution.
One of the things that we consistently saw over and over again was when we went to put in a drum buffer rope scheduling system…and the same thing occurs in Lean when they go and they implement Lean manufacturing on the floor. Let’s just call it pull-based scheduling. There could be a pace setter, a drum, or a constrained resource that they are scheduling around. Almost all the time, in any sort of environment with scale and complexity and a decently sized bill of material, the real obstacle to making those types of pull-based scheduling techniques work effectively and sustainable in the environment, is the MRP system being able to adequately support them.
Let’s be honest here, you need two things to manufacture effectively. You’ve got to have the capacity available, and you’ve got to have the materials available. Unfortunately, a lot of times, both in TOC and Lean implementations, the focus is on how to schedule capacity. Often times they have tremendous success. Cycle times are dropped or lead times are dramatically reduced. But without the material system in line with being able to support that, what often happens is you still have chronic and frequent shortages. Even though you can make something faster, you can’t make it if you don’t have the materials.
We’ve actually seen this occur over and over again. When people implement Lean or TOC and they do get these lead time reductions, they are still hamstrung by the fact that they can’t get the materials on time. And they don’t shut the factory down. They don’t send everybody home. What they end up doing, is they make the wrong stuff faster. That’s completely the opposite of what we want to have happen.
So if you really want to get the investment out of your Lean manufacturing techniques or your drum buffer rope system, you have to have the MRP system with the ability to support it effectively. Otherwise, you risk squandering all of the potential of that type of implementation and all the time, effort, and money that went into putting in place.
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