One of the fundamental decisions in production logistics is the selection of the appropriate production planning and control system. This choice has a direct impact on the achieved inventory levels and the level of customer service – and consequently – on the company’s financial results. Among the many known methods, one should mention the traditional Reorder Point (ROP) method, the Material Requirements Planning (MRP) method, or finally the Just-in-Time (JIT) method along with the Kanban system. A noteworthy alternative can also be the Drum-Buffer-Rope method, which is a solution consistent with the Theory of Constraints (TOC) in the area of production. The choice of the right production planning and control method depends on many parameters, such as: the complexity and diversity of the products offered, the repeatability of production, or finally market conditions, such as the volatility and nature of demand.
Comparative characteristics
A comparison of the traditional Ford production system, the Toyota Production System, and the system based on the Theory of Constraints (Drum-Buffer-Rope) highlights the fundamental differences in the organization of production flow (Table 1). The traditional Ford system, with its roots in the early organization of the production process in the form of lines, is a representative of the mass production concept. Traditional manufacturing is based on the paradigm of economies of scale, where batch size is subject to economic evaluation and the number of changeovers is minimized. Large production batches generate long lead times, and consequently, high work-in-progress inventories. Inventories effectively buffer production process disruptions, but the flow takes place in large batches, and most of the time is spent on parts waiting for processing (batch and queue). The Toyota Production System organizes the flow of material streams to achieve continuity (flow) without queues and waiting. Unlike the traditional system, changeovers are not avoided, but steps are taken to minimize their duration by implementing the SMED (Single Minute Exchange of Dies) practice. A radical reduction in changeover times allows for the implementation of the flow concept based on the principle of an economic batch size equal to one. The system based on TOC (The Theory of Constraints production solution) assumes variability in batch sizes with a general tendency to reduce them. Machine changeovers are not treated as waste unless they concern critical resources. Changeovers on a critical resource are subject to strict limitations in accordance with the assumption that idle time of a critical resource means an irreversible loss for the entire enterprise. Differences in the analyzed concepts can also be found in the field of concentration of optimization activities (Table 2). In the case of the traditional system, there is strong economic pressure to reduce operating costs. For Just-in-Time systems, the priority is to focus efforts on eliminating waste (muda), the most obvious manifestation of which is the accumulation of unnecessary inventory. The TOC system, on the other hand, concentrates its action on increasing throughput limited by the production capacity of the constraint. Further comparative analyses, focused on the functioning of MRP, JIT, and TOC systems, reveal their further differences (Table 3).
The fundamental difference here is the way the flow is organized. In the MRP system, the flow of material streams is initiated at the input by issuing material to the first workstation. The flow through subsequent workstations takes place on a push basis through the system, up to the final operation. Such flow organization is the reason for the system’s high inertia to product mix variability and low resistance to disruptions, which generate an increase in work-in-progress inventory. In the JIT system, the flow is initiated at the last workstation and then transmitted further up the value stream using a “kanban” signal. In contrast, the TOC system is a specific combination of push and pull flow principles. The work of the system constraint is initiated on a pull basis and then transferred on the same principle to the material issuance process. The remaining flow to individual workstations follows the push principle with FIFO priority.
The article comes from the magazine “Logistyka” 6/2007.