Report on Theory of Constraints

Prepared By-

Name – Ankit Kumar

Subject – Fundamentals of Operations Management

Faculty – Dr. Tanja Mlinar

Topic – Application of Theory of Constraints. (In past work experience)

Introduction
Theory of Constraints is a broadly applicable approach to managing business operations
within an organization. Basically, the theory of constraints is a management philosophy
designed to help organizations achieve their goals.

The idea is to identify the goals of the organization, identify the factors that hinder the
achievement of those goals, and then improve the business operations by continuously
striving to mitigate or eliminate the limiting factors.

The limiting factors are called bottlenecks or constraints. At any given time an organization is
faced with at least one constraint that limits business operations. Typically, as one constraint
is eliminated another constraint will arise. The organization should then focus its attention on
the new constraint. And this process repeats itself continuously.

My Experience
I have worked in petrochemical unit of Reliance Industries. In Hazira manufacturing division
for there are 31 different plants producing different chemicals and requiring different raw
materials.

Identifying the constraint

I have also worked in Tank farm terminal area of hazira unit. There are 51 Tanks and Spheres
in this terminal. Since the storage tanks and spheres are limited and fixed, this is the bottle
neck in the manufacturing unit. Also making a new storage unit is high cost intensive and
unavailability of land are the reason to not setup a new storage unit.
To produce any new product, the first constraint comes of storing the raw material and
storing the finished and run down product. Also these products have different reactive
nature so same storage cannot be used for different material. Cleaning of each storage unit
and flushing of pipeline is required before changeover of material. Typically it takes 3
months to clean and setup a storage unit to make it ready for receipt of new material.

Exploiting the constraint

We are reliance industries maximize the utilization of storage unit so that there is no
downtime of any plant or delay in customer orders.
We typically try to store chemicals of same nature and chemical formula so that setup time
is minimized.

Subordinating around the constraint

This step is to subordinate all other factors in the operation to the bottleneck. This means
optimizing the production process to the pace of the bottleneck. We at reliance industries
have optimize the production rate of plant and supply of material to customers, so that
optimum level of storage is used. This way we are reducing storage cost and also no down
time.
Evaluating the constraint
This step is to increase the capacity of the bottleneck. We have tried to increase the storage
capacity by increasing the safe filling height of tanks. For this we have installed very
advanced tank gauging system so that safety of storage unit is not compromised. Also we
have installed most advanced PLC’s to initiate automatic shutdown in case of any
emergency.

Searching and identifying new constraint

This step is to start the process over with the next bottleneck. There is always at least one
factor limiting the process. When that factor is successfully managed, another bottleneck
will arise as the constraint.
When we managed the storage constraint, our storage capacity increased. But when we
analysed that to increase production, our compressor production rate was new bottle neck.
SO we analysed this bottle neck again and came up with optimum production rate.