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School of Business | Department of Information and Service Economy | Logistics | 2014
Thesis number: 13489
Using Theory of Constraints to increase control in a complex manufacturing environment - Case CandyCo: Make-to-stock production with a broad product offering and hundreds of components
Author: Nieminen, Jorma
Title: Using Theory of Constraints to increase control in a complex manufacturing environment - Case CandyCo: Make-to-stock production with a broad product offering and hundreds of components
Year: 2014  Language: eng
Department: Department of Information and Service Economy
Academic subject: Logistics
Index terms: logistiikka; logistics; teollisuus; industry; investoinnit; investment; suunnittelu; planning
Pages: 62
Full text:
» hse_ethesis_13489.pdf pdf  size:2 MB (1473993)
Key terms: Theory of constraints; TOC; Goldratt; bottleneck; complexity; control; throughput
The objectives of this Thesis are to describe the complex manufacturing setup faced by a case company, CandyCo, and to develop suggestions for the case company to increase control and throughput in the factory. CandyCo operates in the confectionery industry and offers several types of products. The motivation for the study for the company's part is to analyze and improve its mixed-component candy bag production. Mixed-component bags are products which contain various types of components, i.e. candies, as opposed to just one type. The production process is analyzed using the Theory of constraints (TOC) -framework. The bottleneck in the production process has been defined as being in the mixing-packaging phase. The Thesis adds to the existing pool of studies on complexity as well as to the pool of case studies using TOC to improve performance. The methods used in this Thesis could be applied by companies facing similar challenges in similar industries, e.g. the snack food industry.

The production process at CandyCo was modeled using the flowchart method. The throughput of the bottleneck resource was analyzed based on the data provided by the case company using Microsoft Excel. The two key analysis techniques were based on TOC: offloading and idle time analysis. The Thesis examines, if offloading possibilities for the bottleneck resource exist and also if the bottleneck resource is ever idle. To determine the root causes for idle time, root cause analysis alongside the five-why method were used. A small simulation model was also built to illustrate the effects of reducing idle time in the bottleneck on throughput and inventory. Finally, the company was involved in generating and assessing improvement ideas for the factory based on initial suggestions.

The analysis revealed that there were offloading possibilities in the bottleneck: around 14% of the end products, i.e. candy bags, handled by the bottleneck were single-component products. This means that the mixing resource of the bottleneck was used to handle components that do not require mixing. The idle time analysis revealed that the bottleneck was idle 52% of the time. 22% of the year was spent on waiting time, of which most consistent of either personnel or component shortages. Together with CandyCo's staff, ideas were generated to reduce component and personnel shortages.

The theoretical result of the Thesis is that the underlying principles of TOC remain sound and applicable in the modern manufacturing environment. The managerial implication is that using TOC-techniques, factory throughput can be increased using small investments and changes in the way things are done instead of resorting to heavy investments in machinery.
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