Theory of Constraints
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VCG employs the 'Theory of Constraints’ philosophy to

bring about quantum jump in

performance of organizations in

its target industry clusters.

We partner with clients till they

realize the targeted benefits.

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Listen to Niranjan Kirloskar

CEO of Fleetguard Filters.

Presenting how his company

got dramatic improvements using

the theory of constraints.

Complaints

of material

unavailability

despite having

very high

inventory

High skew

of month

end sales

Frequent

expediting in

production

and logistics

Pressure

from dealers

on discounts

Much less

than target

sales from

new products,

despite good

potential


Having the right

inventory at the right

time and at the right

place.

Client:   Fleetguard Filters


The aftermarket sales of

Fleetguard has grown by

about 50% year on year since

last 3 years of implementation.

Finished goods inventory

dropped from 40 days

to 20 days...

                                              more...

Client:    Liberty Shoes


The production lead time has

dropped from 45 days to 25

days; 33% reduction in WIP

and FG inventory. This has

released cash...

 

 

                                              more...

Client:    Top1 Lubricants


More than 50% drop in inventory

while availability has improved

to near 100% in all warehouses

  

  

  

  

                                              more...

100% availability at less than half the current inventory

Many sales people believe

that having huge inventory

at the point of sales or at

the distributors can avoid

unavailability.

 

As a matter of fact, in cases where many SKUs are to be

managed, high inventory at distributors and retailers leads

to unavailability.


Size Does Matter!

The fashion industry has a holy grail

of “size sets” or “ratio packs”.

 

Though the over all population distribution may follow the

normal distribution curve for variation in sizes, the sales of

a particular retail shop do not necessarily obey that distribution!

Reality tells us that at a shop and at a day to day level

the arrival can be very erratic. The fluctuations at a shop level

much more than what is seen at a large population level.


TOC Replenishment
in a wholesale-
dominated market,
an oxymoron?

Now imagine the plight of those

companies whose sales are dominated

by wholesalers. I know of one such

FMCG company who sells only 20%

directly into retail and 80% through

wholesale. They do as much as 60%

of the entire month’s sales on the last

day of the month!

 


Who creates slow

movers?

 

A company deals with two products – A

and B. A sells 50 units a week; B sells

250 units and which is a fast mover?

Think, answer, and read on...

 

 

 

 

 

I’ve met enough distributors and

scores of executives and

managers...

 

  

 

Preventing the demise of a store


Storai, Aug 2009


How is that a store opened by a

retail company with due analysis of

market potential and costs closes

down after few years of operations?



 

 

 

Many retail managers blame it on

costs, store location, competition...

 

 

Power of Availability

Retail Images, Sep 2008

The common approach adopted by

companies to meet their targets is to

'dump' distributors and retailers with

very high stocks. It also serves the

purpose of 'locking the capital' of

these entities to prevent him from

buying other brands. Contrary to common

belief, the approach actually increases

unavailability and lost sales!

 

A better forecasting

tool or a new supply

chain optimiser...

Poor on-time

delivery

performance

even in

periods

of under

load

High level of

expediting and

associated

costs

Month end

skew of

dispatches

Pressure to

reduce

manufacturing

costs

Frequent

customer

complains

Rework

and quality

problems

High work

in process

and finished

goods

inventory

Frequent

problems on

raw material

availability

The

constraint

resource

keeps

shifting


Delivering on-time

with much lower

lead time

Client:    Godrej Interio


The Office Furniture Division

(OPOS) of Godrej Interio

achieves on-time delivery

of 99%+, on the original

committed customer dates,

with capacity release

of 30%

                                              more...

Client  :    A Leading Switchgear                  manufacturer


Record Production Levels month

on month from the third month,

achieved more than 50% rise

in plant output

  

  

                                              more...

Client:    Tool and die cast                die manufacturer


Die Cast Dies and Panel Tools

manufacturing major increases

on time delivery from below 8%

to more than 90%, while

reducing lead time by 25%

  

                                              more...

Standing on the Shoulders of Giants

Article by Eli Goldratt, published with due permission.

© Eli Godratt

Given that Toyota is the flagship of

Japan’s industry, one should expect

that Lean would be widely implemented

in Japan. Surprisingly, this is not the

case. It is commonly known in Japan

that less than 20% of the manufacturers

have implemented Lean. How come? It

is not because they did not try to

implement it...

 

Planning Improvement Projects

Planning WHAT TO improve is as important as

planning WHEN TO and WHAT NOT TO improve

Last month, I made a trip to 2

different plant locations of a

company. Both the locations

produced the same range of

SKUs with almost the same

volume but the difference

between 2 plants was

striking...

 

 

Implement MRP or

Lean Techniques

Most projects

delayed

significantly

with budget

overruns

Very high

number of

design

iterations

Low

productivity of

design

resources

Frequent

demand to add

resources.

Frequent

rework at

site

Time to

time,

there are

significant

cash flow

issues

Right

material

not

available

for erection,

while many

material

arrive much

ahead of

time

Delays

by

suppliers

Inadequate

resource

deployment

by

contractors

Customer

complaints

and

expediting

requests.

Top

management

gets

project

delay

information

very late

in the

project


Delivering the full

scope of project within

budget as per initially

committed time.

Client:    TRF


The bulk material handling

systems division delivered

30% more output as

compared to last year, from

existing resources. The

design lead time has come

down to 3 months from an

average of 8 months...

                                              more...

Client  :   Tata Metaliks


Tata Metaliks sets an industry

benchmark in executing Blast

Furnace relining shut down

using CCPM. Blast Furnace

relining shut down completed

in record 23 days (as compared

to typical 40 to 50 day)...

                                              more...

Client:    Abhishek industries


Using CCPM, Abhishek Industries

(Trident Group) erects spinning

plant of 30,000 spindles, a green

field project, in record time of

9 months as compared to industry

benchmark of 12 months...

  

                                              more...

Stop digging if

you are already

in a hole!

One of the biggest problems

impacting the engineering

industry, in India, is retention

of experienced engineers in

the design department. Organizations

are dealing with the situation by forcing

the designers to stretch beyond the official

working hours which in turn is causing burnout

of designers and aggravated problems of

talent retention.

Part 1:

Part 2:

Caught in a Time Wrap!

Light at the End of the Tunnel

Accelerated construction projects

using the Theory of Constraints

  

Large construction and erection projects

seem to have a dubious record - most

of them are delayed with significant

cost overruns. The problem of delayed

projects is well documented in statistics

released by various government agencies,

not only in India but also in countries like

US and Japan...

  

Enabling Resource Productivity

in Project Environments

The fact that a person was late as per

planned duration does not necessarily

mean that he was inefficient. At same

time a  resource completing work on

planned time does not necessarily mean that

he is efficient.Managers are intuitively

aware about these biases in decisions. So

in many cases, they rely more on their

experience about resources to rate them rather

than just relying on the numbers.

Right for Accounting. Wrong

for Project Management

If we look from accounting point

of view, the relative importance

of tasks is based on the

costs associated with

doing the tasks. From

project management point

of view, the relative importance

depends on location of task along

various paths of project...

  

Deadline Culture - does it help?

  

Interestingly, a deadline provides an important piece of information to the resources - How much delay can they afford in starting the task!

  

  

  

"When are you going to finish this task?"

Every person in the corporate world will

relate to the above question as a boss or

a subordinate. The bosses love questioning

while the subordinates don't quite enjoy

answering...

  

A better planning

tool

© 2010 Vector Consulting Group