Rockford Project V8-Libre PDF

Warsaw University of Technology
Operations & Production Management

Subject: Rockford Motor Systems
Maks ilia Kdzie ski

Jakub Borowski
Warsaw, 2013
Table of Content
1.
Introduction............................................................ 3
2.
Mission of the company ......................................... 4
3.
Vision of the company ............................................ 5
4.
SWOT Analysis ........................................................ 6
5.
Balanced Scorecard ................................................ 7
6.
Strategy Map .......................................................... 8
7.
Ishikawa Cause and Effect diagram ...................... 9
8.
Strategic Vision ..................................................... 12
9.
ISO/IEC 27001:2005 .............................................. 13
10.
Kaizen ................................................................... 17
11.
Theory of Constraints (ToC) and SMED ................. 22
12.
Total Productive Maintenance (TPM) ................... 29
13.
Just-in-time (JiT) ................................................... 39
14.
Intelligent Organization ........................................ 45
15.
Overall schedule ................................................... 48
PAGE
Warsaw University of Technology / Faculty of Production Engineering / Institute for Organization of Production Systems
Operations & Production Management / Rockford Motor Systems
1. Introduction
Rockford Motor Systems, established in 1970, is an enterprise operating in the
automobile industry. It produces a range of car parts initially only driving axles for
Rambler, to expand the activity to camshafts and low-power electric motors of various
applications. The significant sign of the success of the company is the Original Equipment
Manufacturer status obtained in 1990. In the beginnings, the company employed 80 people
and currently the number has grown to 275 employees.
The company consists of two departments Mechanical Processing and Assembly.
The first one deals with the whole process of production of camshafts and driving axles and
some elements supplying the Assembly Department. It is done with the use of conventional
machining equipment.
The Assembly Department workers manually conduct the process of assembly of the
rest of the enterprise manufactures. Company also cooperates with customers from both
Americas and Europe. The reason for the analysis that would be conducted is a plan to enter
the Asian market in the near future. It would mean the predicted rise in the total demand of
about 100%. To make it more smooth and predictable the company would need rather
radical changes in the way it functions and this in turn has to be based on a reasonable plan.
The aim is to make the Assembly Department independent of the external suppliers, so that
all the required components would be supplied by the Mechanical Processing Department.
The enterprise wants to increase its production capacity not only by building new
facilities or purchasing machinery, but as a vital point also by reorganising the processes and
implementing the modern solutions for organising the production. It would require the
thorough analysis of the current situation in a wide spectre of aspects.
PAGE
2. Mission of the company

The mission of the company is a statement of the purpose of the activity that has a
clear vision of the current and future business operations related to a product, service or
market, as well as a system of values and principles and characteristics that distinguish it
from competitors. This declaration sets out the direction in decision-making at all levels of
the organizational structure that makes the entire organisation more flexible.
Rockford Motor Systems mission is built on several pillars. These are:
Only highest quality of the products,

Customer satisfaction as the highest value,
Respect for the environment,
E plo ees satisfaction,
Development of the neighbouring community.
These assu ptio s a e the dete

guidelines for all the employees.
i a ts of the o pa
PAGE
s development and serve as the
3. Vision of the company

The vision is the desired future state of the organization. It is a picture of the future
of the company and its target market position. It consists of goals and aspirations related to
the business, a representation of the future resulting from the analysis of the current
situation and the imagination and ambition of managers. The vision of Rockford is clearly
stated in the provided documents. It is:
"To become the leader in motor products trade, to deliver products
of the highest quality and the best services to its customers"
As it can be seen, there are the main points of the mission included in the vision
statement highest quality of products and service. They are then the means for achieving a
goal becoming a leader in motor products trade.
In 10 years RMC want to be competitive in Asian markets as well as in Europe, North
and Latin America. We will produce motor parts for new clients which will lead, to increased
demand which was also predicted by forecasts. Currently company is not producing any of
motors for Honda but in the future we are going to produce 250 pieces per month.
According to external consultations which predicted increasing demand, RMS are
making preparations to product all of components needed for production.
PAGE
4. SWOT Analysis
Strengths
Weaknesses
No information system (database)

No internal communication system
(mostly verbally)
Frequent delays on the assembly line
Poor inventory control
Trainings not corresponding to needs
Shortage in time for trainings
New products, technology not wellknown
Bad production organisation
No communication procedures
Information lost between departments
High share of indirect costs
High share of maintenance cost
High brand recognition

Good financial condition
Large variety of products
OEM status
Long-term cooperation with contractors
Skilled and experienced employees
Opportunities
Threats
Possibility of entering new markets

Fast development of companies
(contractors) in emerging markets
Lower production costs in Asia
Demand increase in the home market
forecasted
training improvement
commonly used automation inventory
control systems
Development of new technologies
Government investments in transport
infrastructure near plant
PAGE
Dependence on parts' suppliers

Environmental limitations
Demand lower than forecasted
High distance from the customers
Lower cost competitors
Currency rates fluctuations
5. Balanced Scorecard
Table 5.1. Balanced Scorecard
Learning and growth
Internal perspective
Financial
perspective
Customer perspective
Objective
Measures
Initiatives
Target
Actual level
40%
37%
Increase market share
expand on Asian markets
Minimise number
of complaints
review complains
Shorten delivery time
redesign ordering method
Maximise customer
satisfaction
Increase customer focus on

brand
0,5%
1,3%
Increase profit
whole implementation
n/a
Increase the value

of the company
n/a
Reduce costs per unit of

output
1,5 USD
2,75 USD
Reduce Mean Time

Between Failures
preventive actions
100 h
300 h
Increase equipment
availability
prepare every process

which can be done when
machine is not working
78%
70%
Reduce rework
and scrap
find processes with highest

rate of failures and react
0,5%
2%
Reduce unit production

time
improve ergonomics of
workspace
120
200
Reduce number
of setups
plan in advance
10
Organise trainings
define process with high

rates of failures and train
workers
24
12
Employees satisfaction
prepare meeting each

month to consult most
valuable ideas
10
Minimise staff turnover
improve promotion
programme
R&D investment
train people with R&D

workers to become future
profit
5%
2%
Reduce CO2 emission
investigate new filtering

technologies
3,8
4,5
PAGE
6. Strategy Map
Diagram 6.1. Housing Strategy Map
PAGE
7. Ishikawa Cause and Effect diagram
Diagram 7.1. Ishikawa diagram - poor inventory control
As it can be seen, poor inventory control has various, mainly procedural causes. The
elements on which the focus should be put are the company-wide communication system,
new information system and a new design of the warehouse. The two systems are necessary
for the whole organisation to improve its functioning, while the last point is the warehouse
affair. Communication within the company is currently realised mostly verbally. Its
disadvantages are that the information can be easily lost or simply forgotten. It also usually
takes more time to establish such contact. The new information system would also help
improving communication but the main benefit would be faster flow of information that
would allow for better production organisation, limiting stocks and implementing some
other tools. It would positively influence virtually whole organisation.
The new layout will also have numerous advantages. It would shorten the delivery
time, make it easier to find elements and reduce the unnecessary effort of the warehouse
workers. The new layout can be done for example according to ABC analysis and 80/20 rule,
which relies on locating the elements with the highest turnover in the most convenient
places.
The element which does not lay in scope of responsibilities of the warehouse, although
affecting it to a high degree, is a time between the arrival of the final product and sending it
to the customer. It is rather a matter of the production schedule and production system to
shorten it. Mo i g f o push to pull s stem and to just-in-time should help the company
to cut this time.
PAGE
Diagram 7.2. Ishikawa diagram - technology of new products not well-known
The company is not much familiar with the technology of the new products. That is
because they have not dealt with it before and so the staff does not have experience and
deep knowledge about it. What is more, no trainings or consultations have been organised
so far to discuss the new products and various aspects of their production. It can allow the
company to avoid unexpected problems. However, at the beginning of new production,
some time has to be found to organise the trainings or meetings. That is a problem now
because of the current overloaded schedule. Taking into account high prices of the new
materials it is desirable to negotiate them with the vendors and establish some system of
reworking scrap, if possible. The problem of financial nature also exists the research
infrastructure is old and should be replaced in order to make more up to date. It requires
high investment, although the benefits are also significant.
A conclusion here is that the company has to liquidate the most important causes
from the described. The tools which can be helpful are Theory of Constraints, Kaizen and
Total Quality Management. They do not provide the solutions ready to apply in order to
eliminate these causes, but rather tools that would indirectly lead to that.
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10
Diagram 7.3. Ishikawa diagram - high share of maintenance costs
Maintenance costs constitute a considerable part of the overall costs of the company,
limiting its competitiveness. Being able to reduce these costs, the company would be able to
offer lower price or, leaving the price unchanged, to increase its profit. In order to do that,
several steps can be undertaken. There are also various causes for such a high share of the
costs. The main reason is the reactive maintenance model which is applied in the company.
This implicates the existence of some other undesirable occurrences. Reactive maintenance
relies on repairing the equipment when it breaks down. This, combined with no spare parts
control, causes high cost of spare parts and of the production stopped.
Another source of costs is long changeover time which results in lost production
capacity. Also having a breakdown registry would help estimate some preventive system.
Currently there is no such registry. As it is seen in the example of unit cost calculation,
maintenance costs account for 10.9% of total cost. Combined with the other costs
dependent of maintenance department, they constitute over 20% of the unit cost. That is
altogether with the costs of defects and non-productive time.
Other elements that require attention are the workplace instructions and machinery
documentation that can help to avoid improper use of the workplace equipment and so to
keep it in good condition for longer. The element that can also help in it is the use of more
durable tools. Currently, they are made of fast-cutting steel which is not the best material
for this use.
The main conclusion from these considerations is that the company needs different
maintenance system. The tool which is considered most effective is nowadays Total
Productive Maintenance, which would be described later. It is a complex approach to
maintenance management and ought to solve at least most of the described problems.
PAGE
11
8. Strategic Vision
In order to achieve the assumed goals, some strategy has to be chosen. The
implementation would be based on cone concept that involves production management
tools and techniques.
Diagram 8.1. Model of continuous improvement
Out of the elements forming the cone, one of each level and from the core are to be
chosen and implemented. The components which were chosen by the group are:
TQM Total Quality Management
1. ISO 27001:2005
2. Kaizen
3. TOC Theory of Constraints
4. TPM Total Productive Maintenance
5. JIT Just-in-Time
6. CIM Continuous Improvement Management
7. Intelligent organisation
8. The order of implementing is as listed.
The specific goals, already presented in the balanced scorecard, which were decided to focus
on, are:
Increase market share

Reduce costs per unit of output
Increase equipment availability
Organise trainings
Some other elements, resulting from the Ishikawa diagrams analysis are:
1. Improving inventory control.
2. Acquiring the knowledge about new products technology and organise trainings
about it for employees.
3. Reduce maintenance and maintenance-related costs.
PAGE
12
9. ISO/IEC 27001:2005
ISO (International Standardization Organization) and IEC (International Electronic
Commission) are making together specialized normalization system. ISO 27001:2005 was
prepared to present a model and settlements for implementations, exploitations, reviewing,
maintaining and constant improvement of Information Security Management Systems
(ISMS). Implementing this standard has to be a strategic choice. Projecting and
implementing should consider such aspects as: security requirements, realized processes,
size and structure of the company.
Introduction
In order to achieve smooth and secure information flow between specific operations,
company decided to implement and maintain a ISO 27001 which will increase productivity
and reduce scrap. It will also help in reducing unit cost, which is crucial because of huge
competition on Asian market. Other benefit from implementation should be increased
workers satisfaction. The new organization of Information Management is supposed to take
some responsibilities from them and make them focus on manufacturing and maintain high
quality.
ISO 27001 uses process approach to implement, explore, monitor, maintain and
improve. This standard is based on Plan-Do-Check-Act model. It is fitted to ISO 9001:2000
and ISO 14001:2004 to support integrated implementation. One well-designed management
system can fulfil all of standards requirements. It can be implemented in any kind of
organization. It defines management implementation requirements
Diagram 9.1. PDCA Model used in management of information flow and security
PDCA model is commonly used method of continuous improvement of products and

production processes . It is also called Deming's cycle. A key thing in this method is iteration.
It means when one cycle is completed running in again will give us more detailed
information. Repeating the four steps will bring us closer and closer to perfect product or
process.
First step is Plan which stands for establishing objectives and processes needed to
achieve expected results. Goals has to be defined with their accuracy. Next step is simple DO
PAGE
13
which delivers clear statement. Implement designed plan and execute essential processes
and produce product with according to new plan. Then there is need to CHECK if
improvement plan made any change to final product. For this job some measurements have
to be defined. Then our goals defined in first step have to be compared with collected data.
Best way to see deviations in time is to make control charts. There are several formula to
make those charts, depending on process type. Last step is to ACT or better said adjust
between current state and planned one. For instance it can be any point on control chart
which shows significant difference from mean. For those points there is a need for corrective
action. Analyzing data should also lead to finding root causes of problems. When the root
causes are known there is time for eliminating them by determining where to address
changes that will improve process or product. Sometimes results show no space for
improvement, in this case next iteration of cycle has to more detailed or attention needs to
be placed in a different process.
Establishment
Information Security Management System has to be implemented in several ways.
First one is to implement information flow system between taking order and parts
process department. Between them, new order is checked for manufacture process
correctness.
Second is when processed parts are semi-finished products. Then there is need for
information flow between semi-finished product warehouse and order taking bureau and
most important assembly process line.
Third implementation takes place between finished product warehouse and order
taking bureau.
Fourth is connected with 3rd party suppliers which provide some parts for assembly
line. They have to adapt to new requirements as well.
Implementation
Company will achieve goals by:

Implementation, development and continuous improvement of quality of Information
security management system based on ISO 27001:2005
Improvement of collaboration with suppliers on own terms
Provide new orders standard for clients
Workers training to meet new software knowledge requirements
Information flow to ensure that warehouse is not overfilled and line availability
Reducing Lead Time and downtime for better Asian market entrance
Identification, planning and management of connection between processes to achieve
continuous improvement
Implementing automated inventory control
PAGE
14
Schedule and costs

Time
[days]
Number
of
workers
Man
hours
Rate per
hour []
Date begin
Date end
0,5
15
1 January 2013
2 January 2013
2 Designing schedule
24
15
2 January 2013
4 January 2013
Meeting with CEO and

3 choosing crucial point of
implementation
15
4 January 2013
5 January 2013
4 Design process map
24
15
5 January 2013
7 January 2013
19 January 2013
Activity
1
Choosing proxy for ISO

27001
Preparing and spreading

information flow policy
12
144
15
7 January 2013
Following and reviewing

current information flow
10
120
15
19 January 2013 29 January 2013
20
480
15
29 January 2013
18 February
2013
7 Conducting training
8
Introducing descriptions of
procedures
10
360
15
18 February
2013
28 February
2013
Implementation
procedures
10
360
15
28 February
2013
10 March 2013
Creating documentation of
implemented stages
96
15
10 March 2013
14 March 2013
84
15
14 March 2013
21 March 2013
10
11 Reducing lead time
Diagram 9.1 Gantt diagram
PAGE
15
Total cost of investment can be estimated on workers cost and new equipment cost.
Total workers cost is 98 500 du i g al ost
oths of i ple e tatio s. Necessary
equipment for this activity such as: displays, power supplies, data loggers, calibrators,
transmitters, temperature and humidity control, are about 8
fo hole p o ess.
1. Proxy for Information Security Management System is chosen from board of
a age s. This step is si ple a d eas a d takes little ti e that s h osts fo
this operation were abandoned.
2. Manager responsible for project is drawing schedule. Its creation is key to specify
time needed to fully implement new standard. Schedule also tells us how many
people is taking part in each stage and who is responsible.
3. Presenting schedule and elements important from implementation points of
view. Determination of employees responsible for implementing various stages.
4. Process map is designed to identify each step and process needed to manufacture
as well as interactions between them. It represents data in graphical way.
5. Preparing and spreading information flow policy/ Information flow policy will be a
public document for each worker to introduce. Those procedures have to be
documented, maintained and available for anyone.
6. Following and reviewing current information flow By following information flow
we get complete data about bottlenecks, information losses and mi
7. Conducting training is very important stage. Workers need to know about all
changes that will be made as well as future possibilities. It is needed to have at
least one perfectly informed worker per shift in case of any questions and
problems.
8. Purpose of introducing descriptions of procedures is to determine and
standardize reactions for specific actions.
9. Approved by management and CEO procedures are transferred to employees
responsible for specific stages
10. Creating documentation of implemented stages. When all procedures are already
implemented there is a need to write down every step which was taken. This
document will consist of recommendations, precautions, and all general
information about information flow
11. Reduce in Lead Time investigate if lead time shorten and if how big was the gain
PAGE
16
10.
Kaizen
In simple words, Kaizen directs the company towards products of better quality and
more efficient production process. Kaizen bases mainly on constant improvements and
alterations to a better state.
Kaizen aims for eliminating any waste present in the company. There are 7 main
types of waste mentioned in most of the Toyota Production System handbooks:
Over-production
Inventories
Transport
Motion
Waiting
Over-Processing
Defects
Kaize s otati g p o ess flo o sists of follo i g a tio s: Pla , Do, Check, Act, so
called Deming cycle described before. It helps the company standardise the solutions which
were created thanks to the continuous improvement practices.
In fact, continuous improvement is a basic element of most of the modern methods
in production management. Some elements of this philosophy have already been introduced
at the previous stage ISO implementation. However, it applied mostly to the information
system and at the current point it would be introduced for the entire factory.
It has 10 main rules:
1. Problems generate opportunities to develop and innovate.
2. Use 5-Why method Keep asking why until you get the deepest root of the
problem.
3. Money is not only answer. You can improve many things by wise actions, your
intuition and efforts to make things better.
4. Take ideas from all surrounding you people. Each idea can be really valuable.
5. Do not make excuses, look for solutions. Spend your time thinking how you can
do it athe tha h ou a t.
6. Look for the easiest solution, do not look for the ideal ones, you will never find.
Simple ideas that have been implemented successfully are a very good ground for
further improvements.
7. Set the final goal towards which you head, but focus on what must be done
immediately.
8. Do t o a out thi gs that happe ed o ould ha e happe ed. Fo us o
future.
9. O e the e ha e e t is do e a d he ked, do t look a k. Keep moving
forward with continuous uphill movement and come back only to control the
results of changes.
10. Do not rest when you have reached your goal. Kaizen is a continuous process and
there is no limit to it.
PAGE
17
Some of the problems are already listed in the given scenario. As a result, there are
even more opportunities to develop than the number of problems, because each problem is
usually quite complex. In order to deal with these problems it is necessary to implement
some tools, for instance Employee Suggestion System and 5-Why.
The first element serves as a way of improving communication within an
organisation. It enables employees to do it efficiently and usually to address the proper
person. It eliminates the problem of disturbances. The Suggestion System can be realised by
providing Suggestion Cards and boxes, so every worker is able to give his remark. If the
suggestion is implemented and gives a result, the person is awarded with some bonus.
Depending on the character of the improvement, it can be calculated as a part of the
potential saving or additional revenue for the company or be fixed at some levels.
Another element that can be a part of Suggestion System is organisation of meetings,
sometimes called Quality Circles. These are meetings of a number of workers organised to
discuss quality issues and to give suggestions that can improve the performance of an
organisation. After some time, Quality Circles can be empowered to take some decisions on
their own. Such delegation of authority increases employee morale and makes them feel
responsible for the company. An obvious benefit from such meetings is an improvement of
the company as whole.
The described elements were concerning mainly line workers and low management.
However, there are also Kaizen tools for higher management. The basic one that should be
present in Rockford is 5-Why.
The solution of a problem and effective corrective actions require the identification
of the cause of the problem. If a person does not identify and remove (also only remove
already formed inconsistency), he can be sure that the re-emergence of the problem is only
a matter of time. It is therefore important to identify the actual cause of the problem and
removal it to prevent recurrence of the problem. One of the many ways to determine the
cause of the problem is the method of 5-Why.
The principle of application of 5-Wh ethod is aski g the uestio Wh ? fi e ti es
to create the cause and effect sequence. It starts from the effect, observation and Often the
answer for the last question identifies the problem. This method often takes advantage of
the group work, which is characteristic of the previously discussed solutions. An example of
the use of 5-Why is:
Question 1: Why employee fell over?
Answer: The floor was wet
Question 2: Why the floor was wet?
Answer: Because water leaked from a leaky valve
Question 3: Why is the valve leaking?
Answer: Because the seal was worn out
Question 4: Why seal was worn out?
Answer: Because it was replaced 3 years ago
Question 5: Why hasnt it een repla ed for 3 years?
Answer: There is no prevention plan in the factory
This simple example illustrates the simplicity and effectiveness of the method. By
asking only 5 questions the fundamental cause was identified which is not as simple as a bad
seal. The real cause is that the prevention plan omits valve check and this can generate
PAGE
18
future problems. By creating a prevention plan not only would the seal be monitored and
replaced, but also the rest of the equipment would be taken care of.
5S is a method of creating a clean and organized workplace that exposes waste and
makes anomalies visible. 5S stand for 5 Japanese words connected with this ideology, but
method origins may not be Japanese at all. 5 rules of this method are:
sort (jap. seiri)

straighten (jap. seiton)
sweep or shine (jap. seisou)
standardize (jap. seiketsu)
self-discipline (jap. shitsuke)
The most important improvement of implementing of 5S is in safety area. That

means this method always focuses on creating and maintaining workplace as safe as
possible. Another visible improvement is in workers' productivity which is result of
decluttered clean workplace. The best reason for implementing 5S is its high impact on many
production aspects with relatively low costs. 5S is key building part to lean tools and
concepts production such as Total Productive Maintenance or Single Minute Exchange of
Die.
Schedule and costs
Time
[days]
Number
of
workers
Man
hours
Rate per
hour []
Date begin
Date end
1 Select target process
24
15
1 January 2013
2 January 2013
2 Create Team
24
15
2 January 2013
4 January 2013
Set project goals and

plans
48
15
4 January 2013
8 January 2013
4 Observe the process
14
168
15
8 January 2013
5 Analyze the process
108
15
22 January 2013
108
15
28 January 2013
7 Implementation
14
252
15
3 February 2013
8 Presentation
48
15
14
168
15
Activity
Create improvement
plan
Standardize and
monitor
PAGE
17 February
2013
21 February
2013
22 January
2013
28 January
2013
3 February
2013
17 February
2013
21 February
2013
7 March 2013
19
Diagram 10.1 Gantt diagram
Total investment cost consists mostly of o ke s ost hi h i this ase is

. Othe
costs like plates for instructions and procedures depend on scale of improvement, but
comparing to other costs they are low.
Benefits and risks
There are numerous benefits from the introduction. In fact, they are unlimited
because of the continuous and universal character of Kaizen. It can be applied for the
solution of any problem.
First benefits should be limiting the influence of some factors listed at the beginning
production delays, wrong organisation of trainings and generally bad production
organisation. For these it would be a direct aim while to virtually all other factors it would
have indirect contribution. Examples of such are poor inventory control or high share of
maintenance costs. It may seem that there is no connection between Kaizen and these
p o le s ut
liste i g to e plo ees suggestio s, applying 5S and 5-Why method for
more particular problems, it is possible to get rid of the problems.
Such tools as Quality Circles and Suggestion System apart from the potential for
improvements have also a motivational role. They make workers responsible for what they
do and make it possible to change their situation for better.
The general benefit from the implementation is waste elimination. Other, more
specific benefits result from this one. It is not exactly thanks to the presence of the Kaizen
system, but rather the effects of its application so the effect is not visible at the moment of
introducing but later because of suggestions and consultations. Obviously, Kaizen enables
company to increase quality of products and minimise costs. Properly applied, it results in
higher productivity and reducing the amount of unnecessary work.
The obstacles in the implementation process include:
concern about additional costs that may appear,
possible resistance of some managers to lose control over the processes,
PAGE
20
Lack of belief in the possibility of implementing a proposed solution,

short-term thinking,
problems seen as negatives, not opportunities to improve.
PAGE
21
11.
Theory of Constraints (ToC) and SMED
The origins of the Theory of Constraints are linked with the figure of Eliyahu Goldratt
doctor of physics and manager. He used his scientific knowledge and practical experience
to formulate the theory. Production Management was the first area of interest of Goldratt
while formulating it. This was not without reason - many plants despite having continuous,
uninterrupted production achieved results far below their potential. What is more, stocks
and work-in-progress often reached unreasonably high levels, and the delay in the supply of
products was a normal thing. Goldratt noticed that all these phenomena have a common
cause constraint within the system. He called it the Capacity Constraint Resource (CCR). In
the system there is always a CCR, but their number is normally small. Quite surprising is the
fact that the theory of constraints considers CCR useful, if managers use them correctly. That
is because in the real world the production capacity at every stage of production is limited,
so the only way to get rid of the CCR is to balance the plant. However, Goldratt pointed out
that such a situation would not only be ineffective but also unpredictable. In the sustainable
plant production capacities are balanced in such a way that no resource is wasted, although
even then there are some statistical fluctuations.1
Analysing this case, the conclusion arises the delays or productivity decreases
would accumulate and procrastinate all the process but the additional, extra capacity would
be wasted. Despite having the machines with the above-average capacity the production
capabilities would be limited by the weakest link. However, the fact of becoming aware of
the CCR does not solve the problems, that is why TOC has developed its own method
designed for production management.2
It is called Drum - Buffer Rope (DBR) method, because it takes its name from its
three constituent elements:
1. Drum
The first thing is to find the DBR assumed limitations. In this method there must be
internal constraints. They would be the drum. This means that the production planning
process begins with a precise timetable for the work restrictions. In this way we can easily
assess the size of the entire production system and the time for the individual elements.
2. Buffer
Theory of Constraints emphasizes how important it is to ensure bottlenecks the
conditions to achieve the maximum possible performance. For this reason, buffer is so
important in this method. There is a certain specified amount of material to be stored before
the bottleneck. Thanks to the buffer, the statistical fluctuations and failures of the nonconstrained resources does not affect the volume of bottleneck production, and hence the
efficiency of the entire system.
It is worth noting that the buffer size is negatively correlated with spare capacity of
the resources prior to the bottleneck. The reason for that is the fact that with the increase in
global production (eg. through better use of constraints) the excess capacity is reduced in
the stages prior to the CCR, which in turn reduces their ability to refill the buffer.
1
2
http://www.ciras.iastate.edu/library/toc/, retrieved: 06.06.2013

E. Goldratt, What is this Thing Called Theory of Constraints, North River Press, New York 1999, p. 4-6
PAGE
22
3. Rope
The concept of a rope involves delivering into the system only as much material as it
is necessary to ensure continuous operation of the bottleneck. This means that the
downtime can occur, which are in turn believed to be necessary. Goldratt has stressed that
the full use of the resource, only to avoid downtime is very harmful for the company. In this
way it is possible to reduce the value of work in progress and shorten the production cycle.
However, this approach stays in contrary to the Mayority of production incentive systems
and the opinion, the employee must work every minute, for which he is paid. 3
Gold att, i the ook Theo of Co st ai ts , esta lishes a app oa h to deal ith
the constraint. It consists of the following steps, which are alled The Fi e Fo usi g Steps :
Diagram 11.1. Five Focusing Steps
These steps require:

1. Identify - Identifying the constraint.
2. Exploit - Making quick improvements to the throughput of the constraint using
existing resources (make the most of what you have).
3. Subordinate - Reviewing the rest of the process to ensure that it is aligned with
and supports the needs of the constraint.
4. Elevate - If the constraint still exists, considering what further actions can be
taken to eliminate it from being the limitation. Usually, actions are continued at
this step until the constraint has been removed (moved somewhere else).
Sometimes, capital investment is required at this point.
5. Repeat - The Five Focusing Steps are a continuous improvement cycle. Therefore,
when a constraint is removed, the next constraint should immediately be found.
This step is a reminder to never become fully satisfied after improving the
current constraint, immediately move on to the next one. It is similar in principle
to the PDCA cycle which is a part of quality management programs introduced
before.
The constraint which is considered the most necessary to deal with is a changeover
time of the machines. Currently, it varies from 4 to 8 hours, as for the Mechanical
Department. Apart from the approach that results from Theory of Constraints, what would
3
http://www.goldratt.co.uk/resources/drum_buffer_rope/, retrieved: 06.06.2013

PAGE
23
be now implemented is Single Minute Exchange of Die tool (SMED). Simply speaking, it is a
method used for shortening changeover time by performing all the tasks, for which it is not
necessary to stop the machine, without stopping it. The analysis would now be done for one
of the lathes from Mechanical Department. The table below presents time structure of the
changeover process for a lathe. As it can be easily seen, the reduction is significant but the
table requires also an explanation. It is in fact a simplification to be able to compare certain
times before, less processes were performed parallel. What is more, the changeover
before reorganising consisted of more operations, which were removed because it was
decided that they are not necessary. Examples are: producing more trial parts or
intermediary position changes during the changeover. In this way, the time was reduced by
approximately 78% - from over 247 to 53 minutes, which gave a result similar to the leading
manufacturers. However, surely there is still some space for improvements, because for
example the changeover time for considerably large presses in leading companies is as low
as about 3 to 5 minutes.
Activity
Clock into setup:
Collets and pushers finished
Left side positions 1-5: 1st worker
St ip all the tools:
Put the sto k stop head o :
Put st, d a d d d ills i :
Set d a d th fo s:
Put utoff ushi g i
d:
Set th positio step ea e :
Set th positio e ess:
Right side positions 6-8: 2nd worker
Cha ge a positio utoff bushing:
Set th positio e ess holde :
Cha ge spi dle gea s:
Set th a d th e ess ushi gs:
Get gages a d pla e o e h:
Clea a d put a a gea s, tooling:
Jog a hi e ahead a d ha ge pi koff:
Run machine and finish right side: 1st and 2nd worker
Feed a out:
I de a hi e to th:
Cha ge th utoff ushi g:
Set th positio ea e :
All tools in machine are set:
Fi st pie e off:
Put feed-out cam on:
Adjust th positio step ea e :
Fi st good pie e off machine:
Clock out of setup:
Before
0:00:00
40:48:00
After
0:00:00
8:30:00
59:24:00
67:53:00
82:48:00
90:00:00
101:24:00
128:24:00
134:16:00
12:22:00
13:48:00
17:15:00
18:45:00
21:07:00
26:45:00
27:58:00
49:04:00
53:16:00
72:00:00
91:07:00
102:14:00
134:16:00
135:27:00
10:13:00
12:00:00
15:00:00
18:45:00
21:18:00
27:58:00
32:15:00
169:44:00
175:48:00
182:24:00
189:36:00
34:30:00
36:37:00
38:00:00
39:30:00
199:48:00
200:38:00
240:00:00
246:19:00
247:05:00
41:37:00
44:00:00
50:00:00
52:30:00
53:00:00
Table 11.1. Time structure of changeover process

source: http://www.productionmachining.com/articles/changing-your-approach-to-change-over
PAGE
24
The actions were taken in accordance not only with SMED methodology, but rather with
The Fi e Fo usi g Steps p oposed Gold att. The a tio s u de ea h step a e:
1. Identify. The constraints were identified and the most critical was chosen long
changeover and setup times.
2. Exploit. The times were measured as shown in the table above, so the duration of
each operation was known. Then the results could be consulted with the
operators, mechanics and engineers and the whole process could be reorganised.
The unnecessary points were removed and, when possible, they were simplified
or made simultaneously.
3. Subordinate. Reviewing the rest of the process was also an important point here.
Often when one machine is changed over, some other pieces of equipment
require it as well, as it is usually connected with the change of product
manufactured. It is then vital to ensure that by reducing the changeover time for
one machine, it would cause the reduction of lead time. It could happen that the
machine would wait for other machines to be set up. Actually, the time reduction
should be conducted for all the machines which is surely very time-consuming,
yet worth the effort. This would significantly shorten whole lead time and so
increase efficiency and productivity.
4. Elevate. The organisation dealt with one constraint of this type, while the
changeover time is still long or very long for all the rest. As stated above, the
procedure should be repeated for all the machines. It would probably be similar
for all the lathes and also some elements can be utilised in case of other
machines. The activities that can be performed in order to limit the influence of
the constraint are mostly trainings and practicing the new changeover procedure.
5. Repeat. Obviously, the improvement is never perfect. Having the new, better
procedures the company should constantly seek for further improvements. The
results ought to be regularly measured, recorded and evaluated.
PAGE
25
Schedule and costs

Activity
Time
[days]
Number
of
workers
Man
hours
Rate per
hour
Date begin
Date end
Identify the main

weaknesses
12
15
1 January 2013
2 January 2013
Find out the root causes of

weaknesses
24
15
2 January 2013
4 January 2013
Look for solutions to

3 increase the performance
of constraints
48
15
4 January 2013
8 January 2013
Determine parameters for

synchronization
36
15
8 January 2013
10 January 2013
Determine the demand

ordering management
12
15
Synchronize the
production
60
15
72
15
Start continuous
improvement workshops
48
15
9 Adjust lots size if necessary
18
15
Analyze the work load

profiles by resource
36
15
30 January 2013 2 February 2013
Evaluate inventory carrying

11 costs and extra-capacity
resources
18
15
2 February 2013 5 February 2013
12
Forecast the long term

demand
24
15
13
Find out the constraints

that require investments
12
15
7 Follow-up buffer stocks

8
10
PAGE
26
Diagram 11.1. Gantt diagram
Cost of first constraint removal plan is always most expensive. For this, company
need a budget of
. Co pa i g to othe i p o e e t pla s this ost is relatively small.
This is because of only few workers needed for this process. Plan can be multiplied to
identify and remove constraints faster.
Benefits and risks
The benefits of ToC include:
focus on quick, bottom line results
Focus on the most critical elements
Can be applied to all that is done - manufacturing, engineering, projects, business
systems, government systems
It is based on logic
Increased profit
Improved capacity
Reduced lead times
Often reduced inventory
Great solution for kick starting improvement process as it provides immediate and very
tangible benefits.
The obstacles for the implementation are:
Some people think it adds inventory that they see as waste
Many people see it in conflict with lean some TOC practitioners said they were in
conflict only a few years ago
Can be difficult to apply if the demand is hard to foresee
Can be difficult to apply in a jobbing environment
PAGE
27
Conclusions
Theory of Constraints is a powerful tool to deal with the limitations within the
company. It is very universal and can help eliminate both measurable and immeasurable
constraints. In the analysed case the constraint was easy to measure the time of
changeover was far too long. By taking advantage of another method SMED it was
possible to shorten the time dramatically so the constraint was removed. One machine,
however, is not enough and according to the theoretical basis of ToC, it is not a solution. The
limitation here was changeover time, treated very generally, so for virtually all the machines.
Only when all of them have similar values of such time, the method can be considered
successfully introduced. One machine or one type of a machine is a good start the
procedure is created which can be repeated for all the machines and some more specific
elements can be also applied for the rest of equipment.
PAGE
28
12.
Total Productive Maintenance (TPM)
One of the tools which are used for ensuring reliable functioning of the equipment is
Total Productive Maintenance. It is an essential element of the modern production systems,
which are usually based on the production flow. In such conditions, virtually every
breakdown means losses for the company
According to J. Mikler, maintenance is a daily, systematic work done on the
realisation of the planned one-time or periodic tasks in order to prevent degradation in the
quality of the equipment and the occurrence of accidents or, if they occur, in restoring their
functionality. The duties of the Maintenance Department include organizing, planning,
supervision, coordination and control of supporting functions necessary to ensure the full
capacity of the production. It is important to note that these tasks should be realised with
the effective use of time, equipment and materials.4
To be more specific one can say that the tasks performed by Maintenance
Department include:
repairing machinery and equipment,

planning and realising preventive activities,
planning and realising parts and components replacements when necessary,
monitoring working conditions of the equipment,
cleaning and lubricating the equipment,
adjusting and calibrating the machines,
detecting and disposing fault machinery.
The structure of the tasks has changed with time. In the beginnings of the XX century
Maintenance Departments were more focused on repairing machines when they broke
while nowadays companies try to prevent from breaking by conducting a range of activities.
There are three main maintenance strategies:
Reactive maintenance rely on fixing broken equipment, restoring usability. It is quite
expensive way of conducting such activities. Breakdowns are unpredictable, labour and
materials necessary for fixing may not be available at the moment or may require paying
extra. What is also important, equipment life can be shortened this way. Usually the
elements of low value are subject to this kind of maintenance.
Preventive maintenance involves conducting periodic tasks that help avoiding unplanned
breakdowns and ensure proper operation of the equipment. The intervals of the activities
are -determined by machines manuals, industry standards, handbooks, environmental
conditions, location, safety standards, past experience. The Preventive Maintenance tasks
are for example spare parts replacements, lubrication, adjustments, cleaning, inspections
and testing. It is usually applied to more expensive or critical elements.
Predictive maintenance involves the improvement of reactive and preventive practices
by forecasting when the element ought to be maintained in order to assure maximum
utilization and usability period. The prediction is based on gathered data concerning the
condition and performance of the element. The examples of Predictive maintenance
activities include infrared testing, vibration and oil analysis, engineering surveys and leak
detection.
4
http://eison.pl/en/home/12-polski/zasoby/10-techniki-utrzymania-ruchu, retrieved: 02.06.2013

PAGE
29
Companies achieving 80% or higher overall equipment efficiency spend just

approximately 10% of all maintenance time on repairs. They plan and realise preventive and
predictive activities, if possible in the technological breaks time, that allow them to achieve
such a high efficiency. It would be very difficult without a computer system which
coordinates and manages the activities.
Total Productive Maintenance
TPM is a part of Lean Manufacturing system and sometimes is also referred as a part
of Total Quality Management. What makes TPM and TQM similar is the convergence of
rules, for example both concepts contain the employee empowerment, individual
improvement and quality maintenance postulates. All eight pillars (main ideas) of TPM are
presented on the picture below.
The main ideas are to engage all employees in the process of ensuring the technical
efficiency of machinery, equipment and tools to enable them to maximise productivity. TPM
bases on the delegation of responsibilities for the maintenance of technical equipment to
the direct users. These obligations are primarily cleaning, lubrication and daily control as
well as observation of the unit during operation. The aim is to prevent faults and failures
instead of removing their effects, so move from reactive to preventive and proactive
maintenance strategy.
Figure 12.1. TPM Pillars
The ideas of each pillar are then explained below.

1. Autonomous maintenance. It is realised by training of production staff in order to
strengthen mutual cooperation with maintenance personnel. It relies on
introducing procedures and auxiliary equipment (e.g. information system) to help
the employee identify abnormalities that could lead to loss of control over the
process. Normally, the implementation is divided into seven steps:
Cleaning and inspection,

Prevention against the causes and effects of pollution,
The introduction of standards of cleaning and lubrication
Conducting a detailed inspection of equipment,
Introduction of standards of autonomous maintenance,
Quality assurance process,
Continuous improvement - independent supervision.
PAGE
30
2. Individual improvement. Costs are reduced through the introduction of a number

of low-cost improvements yielding increased efficiency. The improvements are
proposed by workers as they know the specific stage of the process well, working
on it every day.
3. Planned maintenance. That is an introduction of preventive and predictive
maintenance system for the machinery. Maintenance Department is then
responsible for the achievement of the longest possible life cycle of machines by:
Properly performed work,

Appropriate setting,
Cleaning,
Lubrication
Re-sealing,
Repairing small defects,
Good quality spare parts.
4. Quality maintenance. It relies on identifying and controlling parameters of

machines and devices that affect the quality of the product. The aim is to
determine the parameters which produce satisfactory quality of products keeping
the price at a reasonable level.
5. Education and training. This pillar can be divided into two areas training
concerning team work and practical skills connected with machinery
maintenance.
6. Safety, health and environment. Ensuring safety and preventing negative effects
on the environment is a priority for all the actions undertaken within the TPM.
7. Office TPM. The main tasks of maintenance office staff are collecting, processing
and distribution of information. That is the element which differs modern systems
from the old ones. The most important aim of all the system is cost reduction. To
achieve it, they have to be collected and processed in order to identify cost
centres and reduce them.
8. Development management. Involves methods that a company uses in order to
help its employees in developing skills. That includes trainings, rotations,
coaching, promotions and mentoring.
The desired result of introducing TPM in the enterprise is to increase productivity by
reducing the maintenance costs of manufacturing equipment, as well as reducing losses due
to under-efficient equipment (caused by defects, production of deficiencies, the
prolongation of production cycles and an increase in inventories due to breakdowns and
repairs). It is in line with the aims assumed by analysing the case of Rockford. By including
production workers in the maintenance processes an increase in their skills and in overall
safet is o tai ed. These ai s a e sho tl fo ulated as ze o eakdo s, ze o defe ts a d
ze o o k a ide ts .5
No doubt, all of these points are important, although in case of Rockford Motor
Company, Autonomous Maintenance and Planned Maintenance seem the most necessary to
implement.
J. Lewandowski, Decision making processes in reliability and operation of continuous running technical
objects, MARKUS, d
, p. 134-138
PAGE
31
The measure of the effectiveness of the machines, being also the measure of the
success in introducing TPM is called Overall Equipment Effectiveness (OEE). As depicted
below it takes into account availability and efficiency of the piece of equipment or whole
production and the quality of goods produced. The result around 60% is believed to be an
average for all the population and higher than 85% is a world-class effectiveness.
Figure 12.2. OEE depiction
In the case of Rockford, the OEE coefficient was calculated only for the Mechanical
Department, as its value describes effectiveness of equipment. Then, it does not make much
sense to calculate it for Assembly Department. The current and projected results are
presented further.
Implementation of Total Productive Maintenance elements
Autonomous Maintenance is a pillar that has high importance for the actions
undertaken and described further. It involves 7 steps which would be described below.
1. Cleaning and inspection
Relies on performing thorough cleaning of the machinery while disassembling it. It
lets the workers see the construction so they know it better. At the same time the
problems which were not visible can be solved.
2. Prevention against the causes and effects of pollution
In this step the crew thinks of the improvements eliminating the causes of pollution
and the places where it can settle.
3. The introduction of standards of cleaning and lubrication
The step is vital because it introduces standards of visual control. Basing on such
control there is cleaning and lubrication performed. It helps achieve longer life of the
equipment. In this step also the supplies necessary for doing such activities are
signed in order to make it easier to distinguish them.
4. Conducting a detailed inspection of equipment
This step develops the idea of the previous one. While previously it relied rather on
daily or weekly activities, here the inspections are more complex. Maintenance
Department workers train production workers to perform such inspection, which
requires creating instructions of the inspections. The aim of this stage is to establish a
preliminary schedule of inspections and determine time needed for its
implementation.
PAGE
32
5. Introduction of standards of autonomous maintenance

This step combines the cleaning and lubrication standards developed in the third
point and the standards for inspection of machines from the phase 4 into a
comprehensive standard for equipment inspection. Operators acquire knowledge
a out a hi es egulatio , set up a d ha geo e .
6. Quality assurance process
Involves establishing standards that help in maintaining high quality, for example
systems counteracting making mistakes.
7. Continuous improvement - independent supervision
Is a de elop e t of all the p e ious steps. e ui es e plo ees i ol e e t i o de
to continuously make the process better.6 7
The ways in which aims of Planned Maintenance are achieved were already listed. To
achieve these goals, however, there is also some predefined procedure invented. It involves:
1. Creating cooperation between production and maintenance departments
Under this step, the employees from Maintenance Department train the production
workers on how to diagnose the problems typical for the equipment they use. It
allows for eliminating the causes of such problems. Another important point is that
the equipment should be continuously improved as the result of cooperation of both
mentioned departments. Practically, this stage of the process involves the transfer of
knowledge to operators in order to identify weaknesses of machines, prevent
problems by performing inspections, and the use of technology to detect future
problems.
2. Analysis of the current situation
This step basically involves analysis of the current maintenance situation intervals
between breakdowns, their times and costs. An important part of the analysis is also
the preparation of the classification of machinery. They should be classified in order
of importance, priority based on the impact they have on quality, continuity of the
process, safety and costs of repairing them.
3. Removing the sources of failures
At this stage the most significant actions should be taken. It is about moving from
reactive maintenance to preventive maintenance. When the machine breaks down it
is still repaired but the thing that differs the procedures is that here from each failure
some conclusion has to be drawn. It is done in order to prevent a similar problem
occurrence in the future.
4. Creating the database
The database is used to collect the complex data on maintenance. Nowadays, the
ready systems Computerised Maintenance Management Systems (CMMS) can be
purchased which cover all range of data necessary for the Maintenance Department.
The company can, on the other hand, create its own simple system to track just the
data that it decides that are important.
5. Controlling results
An important activity in every management system. Performing no control, the
performance of the implemented changes cannot be reliably assessed.8 9
6
Auto o ous Mai te a e T ai i g Pa k , Beyond Lean,

files/autonomous-maintenance.pdf, retrieved: 02.06.2013
7
J. M. Brzeski, M. I. Figas, Auto o ous Mai te a e , Visio Lea ,
PAGE
http://www.beyondlean.com/support-
33
Planned actions
The way of thinking justified above resulted in the following order of actions to be
undertaken:
1. Preparation of control, cleaning and lubrication instructions based on the
do u e tatio p o ided
p odu e s a d adjusted to the fa to s o ditio s;
preparation of the checklists of the elements subject to the periodic inspections.
2. Consulting the instructions with the operators that use the equipment, revising the
instructions.
3. Training about the control, cleaning and lubrication standards provided by the
instructions and on removing sources of failures.
4. Preparation of a prevention plan containing the detailed periodic inspections of
equipment on the base of the possessed and obtained documentation and inquiries
to producers. Creation of the maintenance inventory control system based on
kanban concept and breakdowns registry.
5. Preparation of the computer system supporting maintenance as a part of the new
information system.
6. Trainings on the use of the new system.
7. Controlling the functioning of the improvements and making changes if necessary.
J. M. Brzeski, M. I. Figas, Planned Maintenance , Visio Lea ,

J.
Venkatesh,
An
Introduction
to
Total Productive
maintenance.com/articles/tpm_intro.shtml, retrieved: 28.05.2013
PAGE
Maintenance,
http://www.plant-
34
Schedule and costs

Activity
1 Announcement of TPM
Time
[days]
Number
of
workers
12
Man Rate per

hours hour []
Date begin
Date end
15
1 January 2013
2 January 2013
11 January 2013
Launch a formal education

program
108
15
2 January 2013
Create an organizational
support structure
108
15
Establish basic TPM policies,

4 working systems and
quantifiable goals
16
288
15
20 January 2013 5 February 2013
Outline a detailed Master

Deployment Plan
16
192
15
5 February 2013
21 February
2013
45
810
15
21 February
2013
23 March 2013
45
810
15
23 March 2013
22 April 2013
45
1350
15
22 April 2013
22 May 2013
45
1620
15
22 May 2013
21 June 2013
60
26
9360
15
21 June 2013
20 August 2013
16
384
15
20 August 2013
5 September
2013
6 TPM kick-off
7
Improve effectiveness of
each piece of equipment
Develop an autonomous
8 maintenance program for
operators
Develop a planned or
9 preventive maintenance
program
Conduct training to improve
10 operation and maintenance
skills
Develop an early
11 equipment management
program
PAGE
35
Total workers cost during 8 months of implementation is

. For maintenance
purposes there is a need for spare parts warehouse equipped with consumables like: oils,
greases, self-service sets. Cost of this part of infestation is 100 000 .
Conclusions
The above plan ought to solve most of the problems indicated on the Ishikawa
diagram (Diagram 7.1). By implementing the prevention plan the reliability and availability of
the equipment would grow. Together with the inventory control system, it would decrease
the overall costs so each product unit costs would also be lower. The breakdown registry
would allow for adjusting the maintenance system to the real conditions instead of
theoretical intervals and ranges of the inspections, some of them would be performed less
frequently. It will minimise costs while not sacrificing reliability of the machinery. The
database can also be used to control maintenance costs.
The already discussed new communication system would enhance both vertical and
horizontal information flow. Thanks to this fact, not only managers would benefit but also
line workers would be capable of having contact with their superiors. This contact can be
used to signal problems with the workplace or to propose improvements.
Another significant point is employee empowerment. By delegating some
responsibility and some tasks to line workers, basic maintenance activities are performed
more frequently than the inspections so the inspections can be performed less often. It is
possible thanks to new workplace instructions and trainings. The instructions cover both
introductory health and safety guidelines and a list of periodic every day, week or month
activities to perform. The activities are checking, cleaning and lubricating the pieces of
equipment. Trainings would be aimed at showing the workers how to control the machinery
and perform such basic activities.
PAGE
36
Table 12.1. Table 12.1. OEE Calculation
100%
90%
Hours available
Failure/Idle time
Availability
Actual value
4800
560
88.33%
Expected value
4800
230
95.21%
Theoretical production
Real production
Performance
15300
12200
79.74%
21150
19449
91.96%
Good products
Quality
8020
94.25%
19060
98.00%
OEE
66.39%
85.80%
88%
95%
94% 98%
92%
86%
80%
80%
66%
70%
60%
50%
40%
30%
20%
10%
0%
Availability
Performance
Actual value
Quality
OEE
Expected value
Chart 12.1 OEE and its components
The table and chart above present the values of OEE and its components currently
and the projected outcome of the introduced changes. As it can be seen, there is a
significant growth expected in all of the components and so the OEE as such. Practically, it
means that the equipment is more reliable, there are more slowdowns and less scrap.
Apart from the changes included in TPM, there are also some other improvement
concerning maintenance costs reduction. This is for example division of the Maintenance
Department currently it deals with both motion maintenance and supplying the
production. That is also changing type of tools from the elements made of fast-cutting steel
into more durable material. The Production and Assembly Departments are not equipped
with any instrumentation for avoiding errors, which is desirable to be implemented.
The measurable effect of the success of the newly implemented solutions would be
longer MTBF Mean Time Between Failures, indicating less frequent breakdowns and higher
equipment availability which is connected with MTBF. It is a direct measure of the time
available for production which in turn impacts the output and so financial results.
PAGE
37
Potential obstacles:
Lack of knowledge of the equipment,
La k of o ke s o
it e t,
Lack of management engagement,
Improper scope of trainings,
Unrealistic plans concerning time or scope of implementing,
Inconsistent and unclear expectations.
PAGE
38
13.
Just-in-time (JiT)
Is an inventory management strategy used to improve return on investment by

reducing inventory levels throughout the process of production and storage and the
associated costs. In fact JIT, as it is a part of Toyota Production System and Lean
Manufacturing aims to reduce also the other types of waste transport, workers motion,
waiting, overproduction, over processing and defects. However, inventories are the most
important type and it causes other types to arise.
The main idea of JIT is to minimize the main type of waste and other assumptions
result from this one. All raw materials and components are delivered only at the time they
are needed, to the right place and in the exact quantity. The signal for the start of
production is the emergence of demand for the product. This avoids the long-term storage
of raw materials, semi-finished and finished products. This results in a reduction of operating
costs of the company, which does not need to maintain a large warehouse space.
The use of JIT implies the application of process flow. It relies on designing the
production process in such a way that on each position there is only one product which is
processed at a time. It is the contrary of batch production in which there is a series (batch) of
products, for example 10 pieces, processed at a time. It means that maybe one piece is
processed as well but the other 9 pieces are waiting to be processed on this position. They
elo g to
o k-in-p og ess atego , aiti g fo thei tu a d o up i g pla e, so
according to lean philosophy they constitute waste. The process flow system has numerous
advantages. The most important are:
Reducing the time of order realisation,

Increasing flexibility of production control,
Reducing the number of operators,
Reducing transport (distance) and number of transport staff,
Reducing the risk of destruction or damage of the product,
Quick and easy identification of mistakes.
All of these advantages result in reduced production cycle time, reduced amount of
work-in-progress and costs connected with defects. However, achieving one-piece-flow is
not easy and requires huge effort, made on detailed planning, implementation and control
of the system.10
Another element characteristic for JIT systems is a presence of pull approach. Its
main idea is that the client of each process is the next process, so the customer is not at the
end of the production, but at the beginning.
Traditional production cycle starts with the suppliers and ends with the final
customer. In the pull system the order comes from the client. The information about the
demand comes to the producer and from the producer to its subcontractors and suppliers.
At the moment they get the information about the demand, the manufacturing process
starts.
The "pull" s ste is the opposite of t aditio al push ethod, i hi h the goods a e
produced, sent to the selling place and wait for the customer to buy them.
The ad a tages of pull s ste a e si ila to those ha a te isti fo o e-piece-flow. Also
10
Toyota Production System Basic Handbook, Art of Lean, Inc., www.artoflean.com, retrieved 28.05.2013, p.
19-28
PAGE
39
this system allows planning production more accurately, because the produced goods are
only those which are demanded by the client.11
How it looks like in practice depends on the type of product. For instance, in case of
cars, where there is a wide variety of options to choose, it looks more or less like mentioned.
If the product is more uniform (for example beverages or snacks) it is enough to set some
predefined minimum level. When reached, the final seller places the order or the
information is sent automatically to the producer and then goes to its partners.12
The conditions of applicability
The conditions of applicability of just-in-time are that the suppliers and recipients
should be located in small distances from the plant, which allows for faster delivery of
currently required materials in small batches that meet current needs.
The second condition is that the delivery should be prepared so that at the time of
arrival it is ready for use and to be unloaded directly to the production line (sequencing).
Therefore, to meet the requirements concerning the supply, the supplier should be involved
in the process of design and production. It allows for avoiding unexpected problems or
constraints in the future.
Also some of the assumptions connected with the implementation of JIT system are
worth mentioning. For example, to assure proper functioning of the system, it is better to
use more flexible and elastic machine than the one offering higher efficiency and being more
specialised. It is then easier for changeovers and for fixing.13
Rockford case
As it can be deducted, in case of Rockford Motor Systems, the introduction of such
elements is a must. If the company wants to cooperate with the corporations such as Nissan,
Honda or Ford, it has to obey their rules. Rockford obviously can stick with the present
system but certainly sooner than later it would have unsolvable problem with inventories
and production capacity.
The benefit of cooperating with such companies as the mentioned is that they usually
offer help in introducing and proper maintaining the solutions like just-in-time. It is
inevitable if the company wants a communication with its partners to be successful. This in
turn influences whole production process because if any, even the smallest, part used to
build a car is missing, in JIT it would probably mean stopping whole line.
Essential elements of just-in-time system are the new information and
communication systems. Without them, the communication and so the cooperation with the
new customers would be impossible. It would be applied for receiving orders, signals for
starting production and to control the processes.
11
http://www.bgc.com.pl/blog/erp/?p=1573, retrieved: 8.05.2013

J. Womack, D. Jones, D. Roos, The Machine that Changed the World, Macmillan Publishing Company, New
York 1990, p. 138-152
13
N. Slack, Operations management, Pitman Publishing, London 1995, p. 588-612
12
PAGE
40
Implementation of JIT requires introducing a number of changes inside and outside

the organization. In a production system the company aims to:
design products which are easy to manufacture and convenient for logistics,
providing high quality of products,
ensuring a certain level of production,
ensuring short time of machines set up,
ensuring the ability to eliminate emerging interference,
striving for standardization of the production,
ensuring the flexibility of the production system,
concentration of production on a narrow range of products.
Obviously not all of the assumptions would be possible to implement in Rockford. For
example, the range of products is not too narrow. The company can either try to standardise
the products or outsource them. Another problem is ensuring flexibility of production which
depends on machines and on the design of the production process and production flow.
Some of the points would be already achieved thanks to the implementation of ISO, TQM
and Kaizen, which lay the basis for JIT. More specifically, the implementation can be divided
into seven steps:
Making quality improvements

Implementing layout changes
Reorganizing workplace
Reducing setup times
Reducing lot sizes & lead times
Switching to pull production
Develop relationship with suppliers
As the quality improvements were already done, the first step would now be
providing new layout. This should take into account all the previously discussed factors and
the character of production. Then the workplaces can be reorganized in accordance with the
layout. Reducing setup times is then the task for the maintenance and production
departments. Next steps would be tasks also for other departments they involve
cooperation with the recipients and these are probably the most difficult parts. The
company is dependent on the outside organizations in introducing these points.
PAGE
41
Schedule and costs

Activity
Time
[days]
Number
of
workers
Man
hours
Rate per
hour []
Date begin
Date end
Setup time reduction
30
360
15
1 January
2013
31 January 2013
Quality Circle
30
360
15
31 January
2013
2 March 2013
Smooth flow
production
25
150
15
2 March 2013
27 March 2013
Decrease lot size
21
126
15
27 March
2013
17 April 2013
Education and
training
30
22
3960
15
17 April 2013
17 May 2013
Employee
involvement
14
168
15
17 May 2013
31 May 2013
Total preventive
maintenance
21
378
15
31 May 2013
21 June 2013
Process and
workers flexibility
19
228
15
21 June 2013
10 July 2013
Uniform workload
20
240
15
10 July 2013
30 July 2013
10 Supplier relationship
21
126
15
30 July 2013
20 August 2013
11 Kanban
13
78
15
20 August
2013
2 September 2013
14
84
15
13 Pull system
14
168
15
14 Eliminate waste
12
144
15
12
Top management
commitment
PAGE
2 September
2013
16
September
2013
30
September
2013
16 September 2013
30 September 2013
12 November 2013
42
Total cost of investment can be estimated on cost of workers involved in

implementation process. During 10 months of implementation company need to provide 98
. To complete this process, company needs to invest in new software which will control
information flow. Software has to be compatible with all elements installed during ISO
standardization process. Estimated cost of program itself and adaptation to current situation
is
.
Results of implementation
The implementation of JIT is a difficult and long-term process (3 to 5 years). However,
the benefits, if introduced successfully are worth the effort. These are amongst others14 15:
Higher productivity,
Lower inventories,
The production process becomes more flexible and factories are smaller and more
efficient,
Fewer improper and unnecessary movements of personnel,
Reduced time when the product waits for transport or processing,
Reduced need for space for production and warehousing,
Releasing part of working capital previously allocated to finance inventories.
The concept of JIT enables managers for reducing the unit cost and improving
customer service level. The main difference between the concept of a JIT more traditional
approaches, like economic order quantity, lies in the fact that the JIT seeks to shorten and
stabilize the cycles of the contract and to minimise or eliminate stocks. As a result, Rockford
saves by reducing expenditures for inventory in the initial part of the logistics system and
focuses on improving the responsiveness and flexibility of their system. Ideally, the use of
14
J. K. Like , The To ota Wa , op. cit., p. 169-179

http://www.toyota-global.com/company/vision_philosophy/toyota_production_system/,
02.06.2013
15
PAGE
retrieved:
43
just-in-time allows for the synchronization of the system in such a way that its operation is
no longer dependent on the stocks accumulated at various strategic points in the logistics
system. When implementing the JIT system what is important is the efficiency and reliability
of manufacturing processes. Since such systems require the provision of parts and
components at the right time and place, they are largely dependent on the accuracy of
forecasts of demand for finished goods. Moreover, punctual operation of the system
requires effective and reliable communication and information systems, as well as highquality transport service.
Summing up, the improvements implemented under this point and before should
enable the company to benefit from all the discussed elements. They ought to make the
company far more competitive and to satisfy the demand, even as high as projected.
The potential risks of the implementation are:
Interruptions in supply flow
If the part of the supplies is not in good condition, the production would have to wait for
fresh supplies, as there is no backup inventory.
A fault in inventory forecasting methods can cause huge financial losses.
The advantage of stocking inventory when prices go down is also lost, as JIT means
getting supplies for the present market value.
Trade discounts on big orders are lost.
PAGE
44
14.
Intelligent Organization
In intelligent company knowledge and use of it is crucial. When managing knowledge,

organization is trying to best use it internally and externally to customers and stakeholders.
Because the environment is growing in complexity, continuing to be on market requires
company to learn enough about the current and likely future conditions of the environment,
and to apply this knowledge to change their own behaviour and positioning in time.
There are two distinct meanings to the concept of intelligence: the possession of
knowledge and the creation of knowledge. The possession of knowledge provides a pool of
knowledge that can be called upon to solve problems and give understanding. The creation
of knowledge takes place when new information are generated to solve new problems for
which adequate solutions cannot be found in the knowledge base. The context of intelligent
behaviour is problem solving, and problem solving implies the pursuance of goals and
objectives. The requirement for new information is linked to the appearance of new
problems, situations, and experiences. We see therefore that intelligent behaviour is both
goal-directed and adaptive, and it will be the capacity of organizations to possess, create,
and apply knowledge that will make the crucial difference.
The main idea is to create process of valuing the organization assets in order to fully
exploit this knowledge. It deals with creating, securing, capturing, coordinating, retrieving,
and distributing of knowledge. Best way is to create sharing environment. All management
has to be aware of this process. When it comes to competition company realized that their
main advantage is brainpower and intellectual capital. It happens often that company is
hungry of knowledge with a lot of hard to analyze data. First necessary step is to create
knowledge infrastructure which can consist of: web-based and intranet connection
technologies. It can be achieved by employees active contribution and use of knowledge in
repositories, all of this has to be done of daily basics. Second step is value the knowledge in
order to show some relationships. Unless this steps are developed company management
can be sceptical about intellectual capital in company. After this company has to change
approach to information. Each information is valuable knowledge only with some analyzing
process applied. Appling process to data is strictly connected to IT department but in this
case managing knowledge draws from many other disciplines.
Diagram 14.1. Organizational Intelligence and its five components as defined by Jay Liebowitz.
PAGE
45
Efficiency, quality, flexibility and availability are the foundations for success for users
of machine tools, irrespective of where they locate their production operations. Tiny cost
advantages are often crucial in determining whether an order will be placed or not and
these are achieved by means of intelligent production technology.
Improving machine concepts, control technology, software, tools and processes are
always the core concerns. Continuous innovation in every area develops the functionality of
intelligent production systems.
Toda s usto e e ui e e ts, su h as ha gi g at h olu es, i u e a le
product variants and sustainable production demands are additional innovation drivers.
Solving these complex tasks also increases demands on communication. Making vast and
complex sets of data simultaneously available to all business areas, from development and
construction to production planning and order management, requires the unhampered flow
of data. Efficient modern companies therefore employ integrated overall communication
systems using appropriate planning, control and testing software. Modern production
systems also need to be o ti uousl i p o ed, as pa t of the o pa s e ti e IT u i e se.
Intelligence in Production ensures that machines communicate autonomously with
their supervisory management and control systems.
Standing out in the market with advanced technology is not enough for
manufacturing technology providers. They must also contend with extremely varied
customer needs. Requirements for machine operators are generally becoming more
extensive and more complex. Quality assurance, documentation, machine monitoring and
maintenance and ensuring energy efficient operations are just a few of the issues in play.
Intelligence in Production helps machine operators to reliably fulfil every task. The
tools used include multi-media elements in the control system, web-based diagnostic
systems, remote servicing, innovative hotline concepts, and more. Tailored training also
supports the necessary skills for customers over the long term.
Adapting these intelligent assistance functions to machine operators in each market,
alone or in conjunction with local vendors, is also itself a valuable and unique selling point
for a vendor.
PAGE
46
Implementation
Intelligent manufacture consists of reporting and analysis tools, interfaces and
dashboards designed to deliver contextual, localized, role-based information to help
improve system or process.
Reporting & Analytics
To improve manufacturing performance there is need for reliable data collection, but
also accurate and streamlined reporting.
Data is puttend into context and allows to more easily monitor the key factors that
impact performance, efficiency and quality. Displaying metrics in graphical representations
and easy to read reports provides powerful insight into performance history and can then be
used throughout the plant to support continuous improvement.
Dashboards & KPIs
Dashboards can be a key driver of performance improvement initiatives by providing

a simple and graphical way to make key performance indicators (KPI) visible throughout the
enterprise. That's why there is need for software tools that not only gather data, but format
it into easy toread, fully customizable dashboards. Presented in visual charts and graphs,
from them we can start putting data into context. Which leads to making better and faster
decisions by providing localized information.
With current possibilities plant-floor is huge information warehouse, organizing it and
making it usable is a key. For example. When operator performs some simple repair action it
takes him time. He knows what happens from his experience and he resume production
almost immediately. For maintenance services this information is gone, they don't know
about the break so they don't look for it. It seems that this tiny little break want cause any
harm but at the end it does.
With every implemented system working every failure has to be reported and that
information is spread across company for further analysis. Maintenance can plan action for
this inconvenience, which leads to shorten production time.
Energy and Raw materials Intelligence
To accurately account for the cost of producing each individual product, company
has to change approach to energy and raw materials calculation, from firm to flexible and
intelligent. Using implemented software company will gain information about usage of raw
material and energy combined with context. Combining information will enable us to remote
monitoring, capture, historize, report and analyse the of flow data, correlate it with
disparate data sources within the plant, and enable monitoring and optimizing energy usage.
Emissions-monitoring capabilities allow you to leverage rebates, energy incentives, off-peak
purchasing plans, and other cost savings measures.
Manufacturing Performance & OEE
Performance metrics like equipment and material use and overall equipment
effectiveness (OEE) provides critical insight into how well production operates.
manufacturing performance and OEE solutions can measure or compare the performance of
plants, lines, machines or even individual production teams.
PAGE
47
15.
Overall schedule
31-Dec 4-Feb 11-Mar 15-Apr 20-May 24-Jun 29-Jul
2-Sep
7-Oct 11-Nov 16-Dec 20-Jan
Diagram 15.1. Overall Gantt diagram
In order to save up man power the implementation of continuous improvement

process was divided into two stages. First stage consists of three systems which can be
implemented simultaneously. It takes about 3 months to fulfil every criterion. Second stage
is implementing TPM and JIT which was predicted to take up to 11 months.
However, the important rule of planning here was that the implementation should be
started as soon as possible. Some of the activities belonging to Kaizen and ToC cannot be
realised without completing certain elements of ISO system so they were placed just after
them. The ISO system had to be designed, planned and accepted so that the other elements
could be set off.
PAGE
48

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Warsaw University of Technology

Operations & Production Management

Maks ilia Kdzie ski

Mission of the company ......................................... 4

Vision of the company ............................................ 5

SWOT Analysis ........................................................ 6

Balanced Scorecard ................................................ 7

Strategy Map .......................................................... 8

Ishikawa Cause and Effect diagram ...................... 9

Strategic Vision ..................................................... 12

ISO/IEC 27001:2005 .............................................. 13

Theory of Constraints (ToC) and SMED ................. 22

Total Productive Maintenance (TPM) ................... 29

Just-in-time (JiT) ................................................... 39

Intelligent Organization ........................................ 45

Overall schedule ................................................... 48

2. Mission of the company

Only highest quality of the products,

These assu ptio s a e the dete

s development and serve as the

3. Vision of the company

No information system (database)

High brand recognition

Possibility of entering new markets

Dependence on parts' suppliers

Learning and growth

Increase market share

expand on Asian markets

Shorten delivery time

redesign ordering method

Increase customer focus on

Increase the value

Reduce costs per unit of

Reduce Mean Time

prepare every process

find processes with highest

Reduce unit production

define process with high

prepare meeting each

Minimise staff turnover

train people with R&D

Reduce CO2 emission

investigate new filtering

Diagram 6.1. Housing Strategy Map

7. Ishikawa Cause and Effect diagram

Diagram 7.1. Ishikawa diagram - poor inventory control

Diagram 7.2. Ishikawa diagram - technology of new products not well-known

Diagram 7.3. Ishikawa diagram - high share of maintenance costs

Diagram 8.1. Model of continuous improvement

Increase market share

PDCA model is commonly used method of continuous improvement of products and

Company will achieve goals by:

Schedule and costs

Meeting with CEO and

4 Design process map

Choosing proxy for ISO

Preparing and spreading

Following and reviewing

19 January 2013 29 January 2013

11 Reducing lead time

Diagram 9.1 Gantt diagram

sort (jap. seiri)