Improving a Productive Process- The Amorim & Irmãos Case

Module 4. TOC Operations Management

The cork sector has a great relevance in the Portuguese industry, but is increasingly subject to new pressures in the market where it operates. Amorim&Irmãos, company where this study is conducted, is the world leader in this sector and gives a continuous focus to the improvement of its processes and products. Consistent with this strategy, this study aims to improve the production process of one Amorim&Irmãos products, the agglomerated corks produced in the factory of Coruche (Equipar).

To achieve the proposed objective, the application of Theory of Constraints (TOC) was identified as appropriate. A literature review of TOC was conducted and it was concluded that it has been widely studied and applied in different industries with very positive results. TOC says that improving a manufacturing process is possible by identifying the constraint and improving it. In this work two cycles of the Theory of Constraints were performed. In the first cycle, Mechanical Finishes was identified as the constraint and several improvements have been proposed to solve it, which were promptly implemented.

Results:

Module 3. TOC Inventory and Supply Chain Management

Sport Zone is a leader in Portugal in the retail sport market with hundreds of shops and had a problem of excess stock on its shops, but at the same time the shortages where high because the customers complaint for not getting the right articles. The distribution process from central warehouse was descentralized and due to these problems the shops had no confidence in this process. The main issue was how to supply correcty the shops with a portfolio of several thousand sku's.

It was defined a diferent approach based on TOC, with Goldratt Consulting and it was launched a pilot on 5 shops to be escalated to others. The process considered the constraint in the shop and a pull system was implemented through the shops until the central warehouse. This was critical to improved the flow of products in SZ supply chain. The process considered several weekly based routines to re-supply and allocate the stocks to each store.This allowed an improved supply of articles specially between seasons. The results were more sales, less left overs and specially a better buying experience to the customers.

The new process has a lot of advantages, the shops have a greater confidence in it, people are focused in what is really important. 

Results:

  see Video (link below)

International Cases

Improving a Productive Process- Ecuador - Grupo Berlin Case (Bosch Batteries) 

Module 4. TOC Operations Management

Grupo Berlin (GB) is in Ecuador market for more than 50 years and has 3 divisions. The present case focus on the industrial division, in the production of batteries licensed by Bosch.

Goldratt Consulting was called to improve GB profitability and improve at the same time service levels because there was a lot of complaints from customers in procuct availability.

By aplying TOC, GB culture based on forecasts was changed to work on a market demand base (market pull) acording to customer consumption. This was an important paradigm shift and at the same time plant constraint (bottleneck) was determined. Buffers were implemented in the bottleneck and a dinamic buffer management was implemented to readjust levels according to consumption. At the same time sales was focused not on selling a product but in selling concepts and solutions for customer problems.

The improved system had several beneficts (see results) but people realize that operating a system according to TOC principles its simpler, more focused and in the end of the day put everyone with the same language and focused which results in a much better time management for the leading team.

Results:

Improving a Productive Process- Brazil - Itambé Case (Milk Products)

Module 4. TOC Operations Management

Itambé is the 3rd milk processor in Brazil, with 3,000,000 L/day and one of the biggest portfolios in the industry. It has pasteurized produtcts, bags, desserts, yogurts, etc.

The objective of the project of Goldratt Consulting has to improve the problem of shelf life which is very small for refrigerated products (45 days), and improve stock management and shortages in a very seasonal and fluctuating market. Service to customer should improve too specially to more demanding customers that diddn't accept products with >30% of its shelf life. There was also a misalignment between areas of the company.

Goldratt implemented a process based on real consumption and not in forecasts as Itambé used to work because it used forecasts to produce weekly big product batches in order to improve efficiencies. It was defined a production system that worked visually for everybody because it was based on a priority colour code system. Batches also needed to be reduced in order to pursue actual demand. With the code system it was possible to have a unique priority language to everybody from planing, to production, to sales, to management. 

TOC model has according to people simple and used practical solutions to manage bottlenecks. There is a focus on what is important for the company and the customer. The model also challenges actual paradigms like forecasts, efficiencies and priority definition.

Results:

Improving a Productive Process- Brazil - Starrett Case (Cutting Tool and Measuring Instruments)

Module 4. TOC Operations Management

Starrett is an american base company and is in Brazil for 60 years. It is the leader in cutting tools and in measuring device equipments. It has world class processes, equipments and quality products according to the state of the art. 

But its problems are in service areas, the reason why Goldratt was called - to improve service, but planning also needed to reduce stocks because Starrett had too much stock on non rotating items and frequent shortages due to a forecast based system.

The project begun with a pilot line and it was clear that in order to improve the product portfolio had to be revised. This was very important to have higher stock rotation. Also the processes and paradigms had to change in order to produce according market demand. Each order was put in a priority system to define the production schedulle and a report with colour priorities was available to everybody. The process was then extended to all lines to work according demand.

Goldratt experience with other companies proved to work in a diferent environment like the Starrett lines. TOC focus on what is really important to do and not what is possible to do. The flow is always a point to worry and to follow. There was a global involvement of every area of the company in the project. The priorities were much clear and the consequence was increased speed and effectiveness of the actions taken by everyone involved.

Results:

see Video (link below)

https://www.youtube.com/watch?v=x2Go4cLo_GM&list=UUTNNs2-ZaYz3fI7AUtELp-w&index=15