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Kuo-Wei Lin and Chein-jen Kang
Department of International Business
Hsuan Chuang University
Hsinchu, Taiwan R.O.C

The production model for a galvanizing transmission tower produces a Limited quantity of
various products. This model was very difficult to plane the schedule of production base on the
theory of constraints. This study builds a new, unique and effective management process for
production. After applied by the new production model, the loss of false production has reduced
while the unit productivity has increased; the overtime rate has decreased while employees have
been inspired. Finally, the study has accomplished a breakthrough by unblocking the production
bottleneck and achieving on-time delivery. These improvements definitely ensure the
profitability of business.
Key Words: Theory of constraints, Toyota production system, Drum-Buffer-Rope, Process of
Ongoing Improvement

As a traditional niche manufacturer who has often faced challenges such as constant
technological advancement, orders for small quantities of various products, and a volatile order
The International Journal of Organizational Innovation Vol 5 Num 1 Summer 2012


A normal tower structure consists of an 80% steel angle. The aim of this study is to understand how to overcome all its operational challenges to become a key supplier which fulfills customers’ demands with highly competitive products. evaluation. 75% of steel angles are imported from Japan. all the steel parts are finally galvanized in the company’s galvanizing shop to protect them from surface corrosion. The structural designs are totally different for towers which carry electric Lines at different voltages. This approach suggests that an appropriate amount of buffer storage should be placed in front of the bottleneck station to avoid the waste of manpower due to an untimely supply from the previous station. and 5% bolting set. and placing of order to receive the materials. Thus this study applies Goldratt (2000)’s constraint theory of production management based on the Drum-Buffer-Rope (DBR) approach by Schragenheim (1991).demand. and it often takes a minimum of 6 months from the required raw material prediction. 15% steel plate. the company overcame these obstacles and finally succeeded in providing a pivotal infrastructure of a transmission tower production for power generation as the foundation of the industry. In fact. The steel tower structure transmits electricity at a voltage between 33KV to 345 KV. while retaining profitability and long-term sustainability. both the appropriate purchasing of raw material and the utilization of the minimum inventory are crucial for on-time-delivery. which are firstly produced in a steel structure shop. Subsequently. The International Journal of Organizational Innovation Vol 5 Num 1 Summer 2012 204 . quotation. Therefore.

usually forces a firm to be ineffective in achieving its goal of maximizing profits. management philosophy etc. the first of which is the method to deal with practical production constraints. while physical constraints are usually visible bottlenecks.Theory of Constraints (TOC) In a rapidly changing and competitive environment. such as rhythm-buffer-binding or drum-buffer-rope (DBR) is combined with the five specific steps and properly applied in the process of highly different products with Limit production capacity. including the changing market. However. Tseng & Wu (2003) and Huang (2004) divide the constraints in TOC into two categories. Policy Constraints and Physical Constraints. namely. the integration of resources and a focused strategy is extremely important. many firms have applied the thought and management model of Goldratt’s Theory of Constraints (TOC) for process improvement in the hope of breaking bottleneck constraints. this approach is capable of offering a solution by reducing production time The International Journal of Organizational Innovation Vol 5 Num 1 Summer 2012 205 . and effectively enhancing the operational performance and achieving the firm’s goal.. actual production capacity and raw material situation. etc.. the impact of external changes and uncertain factors in an organization. When the identification and elimination of the constraint. in recent years. Policy constraints are invisible. production process. while the second is the general tools for resolving the problems. Therefore. such as employees. Tseng & Wu further classified the constraint theory technology into two groups. company operational system. such as the organizational culture.

In fact TOC calls these three changing steps the Process Of On-Going Improvement (POOGI). it needs to The International Journal of Organizational Innovation Vol 5 Num 1 Summer 2012 206 . are the true key to continuous improvement. TOC management thinking Li & Chang (2005) suggests that TOC is an operation management solution with its origins in both logic and common sense. This is also the very framework proposed by the TOC thinking procedure. In addition. TOC Thinking Procedure Goldratt (2000) used his thinking procedure on his proposed TOC. and provides the following fundamental assumptions for organizations: (1). An organization has at least one goal to achieve: The goal of any profit-making organization is to earn more money. based on process management procedures.and achieving a maximum yield. which enables both the individual and the organization to adopt a strict cause and effect relationship to ensure a significant achievement by continuous improvement. both now and in the future. This approach implies a scientific thinking procedure (P→D→C→A) as the basis. Besides knowing “What to Change?” a true understanding of the core problem further requires knowledge of “What to Change to” and “How to Cause the Change?” The exact answers to these three questions in detail.

but may rather hinder its pace. The chains are locked to each other by the Linkage. An organization is a connected chain (Li. 2005) When the pace to achieve the organization’s goal is accelerated. improve the entire chain. It also simultaneously exists between organizations. such as suppliers.e. An organization comprises many departments or units. (2). This is also widely accepted as being the common guidance of the organization and management. and supply a good service to the market now and later on. The interdependent relationships of an organization can be described as the connected chain and Linkage shown in Figure 1. clients. etc. Figure 1. the chain The International Journal of Organizational Innovation Vol 5 Num 1 Summer 2012 207 . and every chain has its own function. TOC suggests that the focus should be placed on the Linkage between the chains. The improvement of each chain or unit alone cannot accelerate the achievement of the organization’s goal.provide both its current and future employees a steady and satisfying working environment. Furthermore. i. Any activity or decision which effectively enlarges yield or reduces investment and operational costs contributes to the organization’s goal. which form an interdependent system: Interdependency not only exists among the functions and resources of an organization.

and it should be determined whether it is related to the organization’s own policy. performance evaluation. this constraint should be located. i. A good overall performance does not automatically equal the total sum of good local performances. constraint. A good overall performance equals the total sum of a good local performance when there is no Linkage problem. When focusing on entire chain improvement.e. Goldratt (2000) calls this the Cost World View. Therefore. (3). Anything that prevents it from producing a better performance is called a constraint: Theoretically. Strengthening the chain’s weight alone often incurs an increased cost for the organization. When an organization is unable to achieve its goals. or the organizational structure. management thinking. only one weak Link exists in the entire chain. and Goldratt (2000) calls this concept the Throughput World View. the chain’s intensity needs to be improved rather than its weight. A local constraint prevents the entire chain from creating a larger The International Journal of Organizational Innovation Vol 5 Num 1 Summer 2012 208 .improvement can be measured by weight and intensity. the overall improvement of the organization. where the organization’s weakest Link determines the final yield output.e. Linkage improvement is also considered to be a necessary step for improving the entire chain. The intensity in an organization refers to yield output. i. Each organization has its own constraints. the chain intensity improvement concept considers that the improvement of one chain or each unit does not equal that of total chain improvement.

detailed piece drawings are used to clearly indicate the working sequence and ensure that all the materials The International Journal of Organizational Innovation Vol 5 Num 1 Summer 2012 209 . Site scheduling and a management technique were proposed by Goldratt (2000). According to Murphy's Law: “Anything that can go wrong. all complicated issues must be carefully evaluated and suitable protection measurements introduced in the right place. Site scheduling is actually a constraint-driven production scheduling. Real C ase Appli cati on A galvanized steel tower production is a multi-station continuous process. In order to deal with Murphy’s Law and system uncertainty. and is purposely established for effective system control. (4). He used TOC thinking from the Throughput World View to establish a DBR production management. The stations work closely with each other according to the tower structure member material flow. Therefore. Goldratt (2000) & Fox and Schragonheim further classified this technique as site scheduling and control. while the site control method is eventually buffer management. This technology provides key principles for site scheduling and management thinking. and it usually occurs in the most unwelcome situations. will go wrong”. This protection mechanism is known as buffer management.output. Any mistake will create confusion and chaos in this established production Line. Murphy's Law or uncertain factors exist.

Management Goal Table In the past. the closing date of the case was forced to be extended.are moved correctly. Then the material flow in the process was unknown. and the production cost increased. material amount. the case used to apply planned scheduling based on the predicted tower type. the required materials could not be found. Table 1. A working plan is established strictly based on the delivery date of each received order. which very often led to unnecessary products and shop confusion. After taking the new production model. The work order scheduling is then carefully prepared to uphold the smooth operation of this small batch production Line. as shown in Table 1. and multi-case production approach. a buffer zone was prepared in front of the bottleneck station according to the The International Journal of Organizational Innovation Vol 5 Num 1 Summer 2012 210 . the percentage of delayed delivery surged.

and each product flow path and parts quantity were also visible. and as a result. The effectiveness of the proposed model to deal with this small batch tower production was well proven. This enabled the production process to be visible and controllable. Therefore this study was based on the in-time concept of Toyota Production System (TPS) to replace the estimated planning production model. However. Then there were virtually no excess products in the production Line. Results and Discussion Womack and Jones (1991) revealed that Toyota could only conduct small batch production. this small batch production forced Toyota to develop a technique which could quickly change the mold. There was no bottleneck in the production Line. the best use was made of the constrained capacity of the process.actual job type and material amount. and continuously developed new types of cars to satisfy the market. Product maximization was finally realized. On-time delivery to customers was firmly secured. Consequently. and then introduce a much more flexible and effective production process.357. and at the same time. the amount of loss was reduced. the annual cost lost was NTD 5. Process productivity was enhanced and the delayed delivery percentage was reduced. This enabled the production Line to be operated smoothly without any bottleneck station. excessive products and shop confusion were avoided.792 The International Journal of Organizational Innovation Vol 5 Num 1 Summer 2012 211 . The in-time production originated from customers’ firm orders.

The net cost loss reduction was NTD 3. Table 2.548.636.10% drop as shown in Table 2. Comparison of Productivity before and after introducing the production model The process improvement can be simply seen by comparing the unit manpower productivity before and after the introduction of the new production model (Table 3.429 after the application of the new production model. Annual cost loss comparison before and after the introduction of the new production model Table 3.809.) and by The International Journal of Organizational Innovation Vol 5 Num 1 Summer 2012 212 .before and NTD 1. or 71.

). Table 5 shows the production amount from January to September. the study produced a total of 6575.77 tons.comparing the reduction in the delayed percentage before and after introducing the production model (Table 4. an average of 390.93 tons per month. This is clear evidence of the verification of the performance of the new production model. Comparison of reduced delayed percentage before and after introducing the new production model In 2007. From January to July. with an average yield of 547. 2008. Table 4.1 tons. The International Journal of Organizational Innovation Vol 5 Num 1 Summer 2012 213 .11 tons/month. the total production was 2730.

Production statistics: January~September. multi-function employees were gradually induced in deal with the abrupt changes in the production and sudden orders. Table 5. an average of 1139. and outsourcing manpower was also introduced in the non-constrained steel plate work station. equaling an increase of 192. The constrained stations were finally overcome by focusing more employees and extending the working hours.78T in September. organized in three shifts. 2008 Based on the management goal planning of 600T/month for calculation. in a 24-hour work assignment. As a result.22 tons can be introduced into the production Line every month. In order to enable the constrained stations to reach full capacity.whereas in July and August the production was 2278. an additional amount of 749.05%.33 tons/month. At the same time. In comparison.65 tons. CNC punching and bending. in a 16-hour work assignment. whereas the bending station was arranged into two shifts. the exceeding amount was 482. additional manpower was introduced in the CNC drilling and punching stations.87T in August and 595. the delivery date for almost every order was secured. By using the five focused steps in the Throughput World View of TOC. The introduction of more effective process thinking and various efforts of improvement The International Journal of Organizational Innovation Vol 5 Num 1 Summer 2012 214 . this study found that the system’s constraints were in three work stations: CNC drilling.

References Goldratt. USA. zero unnecessary storage. continuous improvement was introduced to achieve zero defect products. and the active willingness to change eventually also inspired the workers in the production Line. false cost loss was reduced. The production pattern finally added value to the product and brought core competition advantages to the firm. and late delivery was reduced.eventually ensured highly competitive products and profitability. Conclusion This study created a new model where a small batch production was based on unstable customer orders to decide its production amount and process pace. North River Press. unit productivity was enhanced. shop capacity was increased. Moreover. (2000) Theory of Constraints. Eliyahu M. Great Barrington. while traditionally rigid production was replaced by flexible production. This study really offers a valuable reference on TPS and TOC for application and study. Therefore. North River Press. The International Journal of Organizational Innovation Vol 5 Num 1 Summer 2012 215 . Buffer storage was purposely designed and placed to eliminate process constraints. Goldratt. The TOC thinking and approach were applied to the production Line.. (2003) Production the TOC Way with Simulator. and cost reduction. MA. Eliyahu M.

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