FOM is a “methodological hybrid” bringing together the strength of two management philosophies: Constraint Management (Theory of Constraints – TOC) ensures that improvement efforts focus on the bottlenecks restraining the productivity and profitability of the whole company. Lean Management principles are applied then to detect resource efficiency savings, focusing on waste reduction along the production process and supply chain.
Main features and components
FOM is a “methodological hybrid” bringing together the strength of two management philosophies: Constraint Management (Theory of Constraints – TOC) ensures that improvement efforts focus on the bottlenecks restraining the productivity and profitability of the whole company. Lean Management principles are applied then to detect resource efficiency savings, focusing on waste reduction along the production process and supply chain.
Implementation / work steps
Theory of Constraints (TOC) follows five focusing-steps:
• Step 1: Identify the active constraint.
Even though there are many constraints in a system, usually there is only one constraint at a given point of time that limits the whole system. This weakest link is called the active constraint and must be identified before being able to take further actions.
• Step 2: Exploit the constraint to its maximum.
In many cases the constraint is not working to the maximum of its capacity. In such a situation action has to be taken to reach the required maximum to the point where it is no longer a constraint. This can be achieved, for example, through additional operating time. Exploitation does not require investments in the constraint.
• Step 3: Subordinate the non-constraints to the constraint.
The resources which are not a constraint must work at the pace of the active constraint since otherwise unnecessary inventories will build up in front of the constraint. The non-constraints must be subordinated or synchronized to the constraint. This step must go together with step 2. Only if these 3 initial steps will not get rid of the constraint, then we should go to step 4.
• Step 4: Elevate the constraint. While the exploitation step 2 did not require investments, step 4 will require investments to elevate or expand the capacity of the existing constraint. Elevation usually implies investment in technical changes or new / additional equipment.
• Step 5: Go back to step 1 and do not let inertia become the new constraint. Once the constraint has been elevated, according to the chain analogy of figure 5, a new constraint will appear sooner or later. Then one has to go back to step 1 and identify the new active constraint and start the process all over again. If this is done again and again it will become a process of ongoing improvement.
The tools used in Lean Management are heavily focused on reducing seven wastes:
• Transport
• Waiting
• Overproduction
• Defects
• Inventory
• Motion
• Extra processing
Requirements
Open-minded, well trained and experienced facilitators.
Lessons learnt
Resource efficiency cannot be taken for granted! As long as business is going well, there is limited pressure to change the business-as-usual way. If the business goes down, there is usually not enough time and money for longer lasting improvements, because short-term crisis management is needed.
Even those companies that recognize the potential, sooner or later are confronted with the fact that some of the savings can only be attained through substantial investments in process improvements resulting in long pay-back periods. Lacking own financial means, such companies depend on loans at high interest rates or are frequently not even bankable so that they will refrain from investments.
Another lesson learnt from management concepts focusing primarily on savings in energy, material, and water is that after capturing the low hanging fruits, improvement become more difficult and even resistance comes up when cost reduction policies are applied to the personnel.
As TOC helps to use the available resources (including personnel) in an optimal way, it combines economic, environmental and social benefits. Properly applied, it motivates workforce to participate actively in a continuous improvement process and to bring in the problem solving capacities that are frequently ignored.
Output
• Increased productivity and profitability
• Production following the real demand, avoiding overproduction
• Avoidance of waste (material, energy, time etc.)
• Delivery on time
• Higher profits make investments easier in resource efficient technologies (and occupational health and safety)
• Higher profits make company more creditworthy
• Workforce identifies itself more with the company
