Theory of Constraints Consulting India
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.News Highlights
Vivek Ltd -The Unlimited One Stop Shop, partners with Vector Consulting Group to revamp its supply chain
Economic Times: Fleetguard Filters is one of the biggest success stories of TOC in India
Sourcing Electrical and Lighting: Bajaj is redesigning its distribution supply chain so that channel partners invest less and earn more, faster.
Retailer Magazine rates Vector Consulting Group as one of the top solution providers for Indian retail industry
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Case study in Apics Magazine A Viable Vision : Making profits a reality in a global recession |
The Problems
High skew of month end sales
Frequent expediting in production and logisticsPressure from dealers on discounts
Much less than target sales from new products, despite good potential
The Core Challenge
Having the right inventory at the right time and at the right place.The Solution which isn't
A better forecasting tool or a new supply chain optimiser...New Paradigm
An SOS for the OEMs
Auto Monitor, July 2011
The reason for the mess in the supply chain is lag in reaction to the change in market demand. The higher the lag in response, bigger is the damage. The lag in response is triggered because of a push mode of operations between the distributors and the OEMs.
The ‘Delhi Effect’
AFTERMARKET Sep 11
The stark reality for many distribution companies is the dominant presence of wholesalers who buy in large bulk and sell them to the lowest bidder without any territory allegiance. Enhancing Profitability of Retail Chains: Using the Fundamental Principles!
Most chains operate with about 3 to 6 months inventory and a significant portion of inventory is non- moving. Free cash is an issue for most chains. If chains learn the science of managing their supply chain, they can at least double their current inventory turns.
Old is no longer Gold - Applying theory of constraints to improve freshness of products
With growing consumer awareness, companies in the Perishable Goods industry are finding it increasingly difficult to live with the problem of low freshness of stocks at the point of Sale. Companies in Food and Beverages sector are facing non negligible bottom-line erosion due to the need for discounting to get rid of near-expiry stocks as well as write-offs of expired stocks.
100% availability with less than half the inventory
Many sales people believe that having high inventory at the point of sales or with the distributors will prevent stockouts.
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!
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
100% availability leads to substantial increase in profits only if achieved with high inventory turns!
How come a retail store (displaying and selling regularly required essential items such as a food and household products) opened by a retail company with due knowledge of the potential sales in an area close down after some time? Susscess Stories
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Client: Fleetguard Filters The After Market distribution now operates at 17 inventory turns, as compared to 3 to 4 average turns of industry, with over 98% availability at all stocking points, including distributors. The distributors have this availability at 10-12 days inventory. |
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Client: Liberty Shoes The company has achieved over 95% availability in its central warehouse. The production lead time has dropped from 45 days to 25 days with 30% reduction in WIP and FG inventory. |
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Client: Top1 Lubricants TOP1 reduced its inventory from 7 months to 2 months in its warehouses in Indonesia, while improving availability to near 100%. |
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Client: JK Files and Tools Within 2 months of start of TOC journey, the lead time was reduced by 40%. Plant output has gone up by35%, across 5 locations. One of the plants has shown an increase of over 70%. |
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Client: Filtrum Polymer When the TOC implementation started in Oct 2009, the company was at 6% PBT. Now the company is at 15%PBT with 60% increase in sales. It has 100% delivery performance to all its auto parts customers |
The Problems
High level of expediting and associated costs
Month end skew of dispatches Pressure to reduce manufacturing costsFrequent 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
The Core Challenge
Delivering on-time with much lower lead timeThe Solution which isn't
Implement MRP or Lean TechniquesNew Paradigm
Dealing with Emperor’s new clothes
How does one optimize in an environment of changing product mix coupled with variability in resource loading, while at the same time, maximize plant output along with delivery performance? Looks like a hopeless situation for a plant manager but an exciting problem for a theoretician and hence a great market for an IT product.
Reliability of delivery: brand positioning opportunity for custom manufacturing organizations
The only performance which can make a perceptual difference to a customer is when a supplier has on-time delivery performance of near 100% as per originally committed date to the consumer...
How bad are local efficiency measures?
Plant managers are torn between the chronic conflict of pushing specific orders in full out of the plant versus taking actions to maximize plant output. If in a time period, they get the best output, the immediate next is followed in much reduced output as order completion takes the front seat. The conflict manifests itself in various inter-departmental meetings...
Standing on the shoulder of the giants
Article by Eli Goldratt, published with due permission. © Eli Godratt
Standing on the Shoulders of GiantsGiven 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. Less than 20% of the manufacturers in Japan have implemented Lean. Planning Improvement Projects
Knowing WHAT TO improve is as important as knowing WHEN TO improve 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 of production per month. Susscess Stories
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Client: Godrej Security Solutions The physical securities division has achieved on time performance of more than 90%, while reducing lead time by 43% and increase in plant output by more than 50%.... |
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Client: Godrej Interio The Office Furniture Division (OPOS) of Godrej Interio achieves on-time delivery of 98%+, on the original committed customer dates, with capacity release of 30%. |
Client: A Leading Switchgear manufacturer Record Production Levels month on month from the third month, achieved more than 50% rise in plant output |
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%. |
The Problems
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
The Core Challenge
Delivering the full scope of project within budget as per initially committed time.The Solution which isn't
A better planning toolNew Paradigm
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.
Part 1: Caught in a Time Wrap! Part 2: Light at the End of the Tunnel
Accelerated construction projects using the Theory of Constraints Light at the End of the Tunnel
Large construction and erection projects seem to have a dubious record - most of them are delayed with significant cost overruns. 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.
Getting it right in accounting…
Financial accounting is a challenge in project organizations involved in delivering large construction projects for its clients. The activities can start in one financial period and end in another. Unlike regular production, where we wait till dispatch of completed goods to recognize revenue, we cannot wait till the delivery of complete project for revenue recognition. 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...
Susscess Stories
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Client: Tata Bluescope Steel With implementation of flow principles of CCPM, the lead-time of projects has reduced by 25%, with 15% more output from manufacturing facility and 30% more output from engineering resources. |
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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... |
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Client: Tata Metaliks Tata Metaliks sets an industry benchmark in executing Blast Furnace relining shut down using CCPM. The shut down was completed in record 23 days (as compared to typical 40 to 50 day)... |
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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... |