6 - Chikara Nakagawa(Taika)_26 TOCPA_Japan_19 May 2016_Eng-Upgr

26th International Conference of the

TOC Practitioners Alliance - TOCPAwww.tocpractice.com 19-20 May 2016, Fukuoka, Japan

TOCによる競合の真似できない競争優位性の獲得

Competitive Edge that no competitors

can imitate, gained by TOC

中川中川中川中川智加良智加良智加良智加良

Chikara NakagawaTaika Industry

19th May, 2016

26th International Conference of the TOC Practitioners Alliance - TOCPAwww.tocpractice.com 2

中川智加良Chikara Nakagawa

太華工業株式会社専務取締役2001年より⽇本アイ・ビー・エムの人事部門の勤務を経て、2007年にステンレスのコイルセンター・研磨を主⼒事業とする太華工業株式会社入社。2013年より現職。TOCに関しては、2011年よりジュントスの⽀援のもと、コイルセンター事業にSDBR、MTAを導入し、大きな成果を上げる。現在は、研磨事業においてもMTAを導入し、TOCの活用を通じてさらなる⾶躍を模索している。

[email protected]

Chikara Nakagawa is Managing Director of Taika Industry Co., Ltd,who had worked for HR Department of IBM Japan.

In 2007, joined to Taika Industry, Coil Center business and PolishingStainless Steel business.

In 2011, he implemented SDBR and MTA into Coil Center business,with support from Juntos, and achieved great results.

Currently, he is working for implementing MTA into Polishingbusiness as well, and seeking further growth through using TOC.


Company and Business Overview

SDBR Implementation

– Background

– Implementing MTO Injections 1-4

– Exploitation of Internal Constraint

– Results

MTA Implementation

– Background

– Implementing MTA Injections

– Results

Agenda


Company Overview

• Name: Taika Industry Co. Ltd.

• Founded in 1957

• Head Office: Yayoi-cho 2-18, Shunan City, Yamaguchi

• 2 plants in Japan

• # of Employee: 153 people

• Sales: 50 million Euro


Design Steel Sheet Div.

(Polishing Business)


(Polishing Business)

Stainless Sheet Div.

(Coil Center Business)

Stainless Sheet Div.

(Coil Center Business)

Taika IndustryTaika Industry

On-site Work Service Div.On-site Work Service Div.

本社

意匠鋼板部（南陽工場）

ステンレス部（下松工場）

構内業務部

大阪営業所

東京営業所

Business Overview –

Organization & Products


Supply Chain Overview

Coil Shearing(CS)

Sheet Shearing(SS)

Polishing

RM

Distributer

FG

User

User

Distributer

Other Supplier

Stainless Sheet Div.(Coil Center)

Design Steel Sheet Div.(Polishing)


Coil Shearing

CSCoil Shearing

SSRM FG

� Modes of Supply: Mainly MTO� 20% of work orders are released by MTS for short delivery to

specific customers

� Holding some FG stock because of minimum batch policy from quality aspects

� Production Flow: “V” Type

� High TVC: % of the cost of raw material is >80%

Distributer


User

Coil Center Business –

Manufacturing Process



SDBR Implementation

– Background



– Results

MTA Implementation

– Background


– Results

Agenda


Implementation Scope

Coil Shearing(CS)

Sheet Shearing(SS)

Polishing

RM

Distributer

FG

User

User

Distributer

Other Supplier



Scope of implementation


2010 2011 2012

10月月月月Oct

11月月月月Nov

12月月月月Dec

1月月月月Jan

2月月月月Feb

3月月月月Mar

4月月月月Apr

5月月月月May

6月月月月Jun

7月月月月Jul

8月月月月Aug

9月月月月Sep

10月月月月Oct

11月月月月Nov

12月月月月Dec

1月月月月Jan

2月月月月Feb

Design

SDBR

mechani

cs/proce

dures

Open Seminar

Introduction to TOC

(1day)

Implementation

Set-up Workshop

(2days)

Management

Workshop

(1day)

Execute SDBR/

Implement

BM

SDBR Workshop

(2days)

2nd TOC Project

Launched

Current

Reality

Study

Implementation Timeline


However… as we got stuck in seeking for local effici ency, we could not meet market needs.

• Market conditions of the stainless business:– Violent fluctuations of prices– Shrinking sales volume due to the stainless “bubble” and the

financial crisis in 2008

• Our business strategy:– To increase sales of small sheet products– To respond to customer orders with small size, small lots and

short delivery

The Objective：：：：To become a business entity that can generate money continuously

without being subject to economic/market conditions

Background


• Uneven load (starvation and overload)

• Too much overtime of SS resources

• Often do not have sufficient capacity to meet short delivery orders

• There are too many items with slow moving inventory

• It takes too long time to make a production plan

• Raw materials are not always available when needed

• Constant shift in priorities

– Often expediting happens – Negotiations between foremen

happens

– “Extra” set-ups are required

• Shipping persons have many difficulties on dispatch– Negotiations with truck drivers

In order to meet market needs, we have to improve our response time. However, in the reality…

Undesirable Effects


Core Conflict Cloud

D’

Do not take actions to

decrease yield rate

C

Control cost

D

Take actions to

decrease yield rate(Ex. Accept orders with a short

delivery time/small quantity)

B

Ensure flexible

response to

customers’ demandA

Manage

production well


WHAT to Change?

� Our primary concern is to improve local efficiency.

� Yield ratio is prime measures.

� Each process has its own safety.

� Release raw materials as soon as possible.

� WO priority is set based on local due date.

� Improving Flow is our No.1 consideration.

� Production LT is prime measures

� Each order has one Buffer.

� Choke the release.

� WO priority is set based on Buffer status

WHAT to Change TO?

WO – Work Order

Direction of Solution


Time

Production Buffer （（（（**days ））））

Release DateDue Date

Release date is determined by the formula of DD minus PB

PB is prescribed elapse time given for a customer order

As time passes, Buffer changes its color from Green, Yellow, Red, to Black.

WO priority is determined automatically according to the following color status:

Black＞Red＞Yellow＞Green

Early release is not allowed!

Production Buffer (PB) ＝ Production LT

� Each customer order has its own Production Buffer (PB).� Material release date is determined based on PB and Due Date.� WOs are prioritized according to Buffer status.

Three Rules of SDBR


Initial Results, But…

• MTO Injections 1-4 are implemented and therefore:• The flow is improved.

� No excess WIP and reduced Production Lead Time (PLT) from 4.8 days to 1.5 days

• Open work orders (WOs) are controlled.

� The management monitors Length of Stay (LoS) and the number of Red and Black WOs

• The flow was improved. However, the following capac ity problems (UDEs) still existed while there was no in crease in sales at that moment:

• Often do not have sufficient capacity to meet short delivery orders• Too much overtime of SS (Sheet Shearing) resources


Observations

• Revealed hidden excess (protective) capacity of the CS resources (as Non-CCR) while the SS resources had n o excess capacity.

• We can improve the flow by choking the release. But , it does not always bring higher productivity.

• Little’s Law: TP = WIP/CT

• We had given a quotation of delivery date with consideration for the available capacity of the pro duction. Yet, the market wants for the company to meet stand ard lead time all the time.


1. Identify (choose) the system’s constraint

2. Decide how to exploit the system’s constraint

3. Subordinate everything else to the above decision

4. Elevate the system’s constraint

5. If the constraint is broken go back to step one but do

not allow Inertia to cause the system’s constraint

Five Focusing Steps


Coil Shearing

CSCoil Shearing

SSRM FG

Distributer


User

Step 1 –

Identify the Constraint

Capacity Constraint!

We saw that many Red work orders were piling up in front of SS work station. We have to investigate the situation .


• Started implementation of MTO Injections 6-7 with t he CCR – the operators of Sheet Shearing (SS)

• The team conducted a work analysis for the CCR and found some activities that could be offloaded.

5% 7%

43%

10%

19%

2%

4%

10%

Machine Set-up

Roughing Cut

Cut Process

Material Preparation

Packing

Shipping

Material post-preparation

Other

Step 2 –

Decide how to Exploit


Distributer

UserCS SSRM

• The production had stock of fixed-scale items in fr ont of SS that was directly shipped to customers (as finish ed goods) and also served to SS as a material.

• These stock items were produced by MTS work orders.

Stock of fixed-scale items

Step 2 –



CS

Roughing Cut

Cut Process

SS

SS

CS

Cur

rent

way

Sugg

este

d w

ay

Fixed-scale Cut

MTO WO

MTO WO

Roughing Cut

Cut Process

Case-by-case Cut

MTS WO

• The team suggested the following idea with the aim of exploiting the capacity of the CCR (SS).

Step 2 –



IF…

is implemented…

SS’s capacity will be ensured

Load on CS will

be increased

FG stock of Fixed-scale

items will be redundant

Our responsiveness for short

delivery times will go down!

Yield rate

will be

decreased!

CS will be overloaded!

FG stock of

Fixed-scale items

will be reduced

Yes, BUT…


IF…

is implemented…

SS’s capacity will be ensured

Trimming NBRs

CS has excess capacity.AND

Mechanics to monitor the load/ CS’s capacity is in place

Mindset:Flow is no.1 consideration

Load on CS will

be increasedCS will be overloaded!

FG stock of Fixed-scale

items will be redundant

Our responsiveness for short

delivery times will go down!

Yield rate

will be

decreased!

FG stock of

Fixed-scale items

will be reduced

Production LT is reduced significantly


• We decided to stop placing MTS work orders for buil ding FG stock of fixed-scale items.

• Resources of CS have enough protective capacity. Bu t, the suggested idea demands load increase on them.

• When exploiting the capacity of a CCR, we need to e nsure enough protective capacity of Non-CCRs.

• Therefore, in order to fully focus on the internal constraint, we have to monitor and manage the load on Non-CCRs to prevent them from being overloaded.

Step 3 –

Subordinate to Decision


Monitoring the Load


2011 2012 2013

8月 9月 10月 11月 12月 1月 2月 3月 4月 5月 6月 7月 8月 9月 10月 11月 12月 1月 2月 3月 4月 5月 6月

FG

WIP

Total

Injection

6-7

Injection 1-4

Results –

Inventory Reduction


Results –

Overtime Reduction



SDBR Implementation

– Background



– Results

MTA Implementation

– Background


– Results

Agenda


Implementation Scope

Coil Shearing(CS)

Sheet Shearing(SS)

Polishing

RM

Distributer

SFG FG

User

User

Distributer

Other Supplier



Scope of implementation


Why MTA?

• The improved performance of the production is recog nized by the market, and it led to receiving more custome r orders.

• However, the increased demand started to cause the CS resources to become CCR.

• Design Steel Sheet Div. gave purchase orders (POs) to Stainless Sheet Div., and hence semi-finished produ cts were supplied by MTO.

• Due to the fact that our supply lead time was longe r than customer’s tolerance time, most POs were placed by using a forecast.

• Consequently, Design Steel Sheet Div. had both shor tages and excess of semi-finished, and it caused urgent o rders killing CS resources’ capacity of Stainless Sheet D iv..


2013 2014

8月月月月Aug

9月月月月Sep

10月月月月Oct

11月月月月Nov

12月月月月Dec

1月月月月Jan

2月月月月Feb

3月月月月Mar

Prepare MTA

• Select MTA items

• Set Target Levels

• Develop

procedure of

releasing WO

• IT file developed

• Explain to people

CRS

(1 day)

MTA Training

Workshop

(2 days x 2)Management

Workshop

(2 days)

MTA Pilot/

Roll-out

• Replenish to

consumption

• Exception mgmt

• Add MTA items

• Execute DBM

• Monitor results

10 weeks

Implementation Timeline


WHAT to Change?

� Holding stock at SFWH* is BAD.� Availability of purchased stock is

under responsibility of purchaser.

� Produce to forecast� Produce to order according to PO

that is based on sales forecast.

� No clear or common way of changing stock levels

� Hold enough stock at SFWH and establish it as regulator of replenishment system� Supply link should manage

availability of stock at next link.

� Replenish to consumption� Consumption from SFWH

triggers production.

� WO priority is set according to Buffer status.

� Dynamic Buffer Management

▪ Adjust to the trend.

WHAT to Change TO?

SFWH – Semi-finished goods Warehouse

Direction of Solution


RULE 3: Dynamic Buffer Management

Adjust Buffer size to significant changes of demand and supply

RULE 1: Establish SFWH as regulator of replenishment system

Build Stock Buffer and commit to Availability

RULE 2: Replenish to consumption

Get daily consumption and release WO based on Buffer status

Three Rules of MTA


• Stock Buffer (Target Level) is set per every SKU-location. Stock Buffer defines the TOTAL AMOUNT of stock to be hold in the replenishment system and includes stock in the three stages:– On Hand in the stock (warehouse)– On The Way from upstream– To Be Ordered – stock that has been consumed but ha s been

transformed yet into replenishment order yet

� Stock Buffer is drawn as a bucket divided into three parts. The top part – Green , the middle – Yellow , and the bottom part – Red.

Production Warehouse

On-hand

WO WO WO WO

0-33% penetration

34-66% penetration

67-99% penetration

Replenishment System

WO

MTA Rule 1:

Stock Buffer


Get daily consumption and release WO for replenish to WH

WO released according to production plan based on forecast

� Production is subject to demand

fluctuation.

� Requests for WOs are based on

sales forecast.

� Production does not need to

monitor on-hand status at WH.

� Production is “decoupled” from

demand fluctuation.

� Requests for WOs are based on

consumption report.

� Production has responsibility to

monitor on-hand status at WH.

DownstreamRaw

Materials

DemandRequests for WOs

WO

release

Production

Raw Materials Downstream

Demand

Consumption

WH

WO

release

Replenish

Production

Requests for WOs

MTA Rule 2: Replenishment to Consumption


Green = Too much stock

Yellow = Adequate stock

Red = Too little stock

Target Level

手持在庫

-10

0

10

20

30

40

50

60

70

80

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

手持在庫

Increase by 1/3

Reduce by 1/3

0

10

20

30

40

50

60

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

手持在庫

MTA Rule 3:

Dynamic Buffer Mgmt


• Achieved the following results after 2 months of implementation：– Had kept 100% of Availability at SFG warehouse. – Reduced SFG inventory from 30 days to 18 days (40%↓)– Reduced urgent orders at Stainless Sheet Div.

Results


Results –

SFG Inventory Reduction


• Against common sense of the stainless coil center:– In our industry of the stainless coil center business, most people have

strong mind of “improving a yield ratio of CS machines is THE ONLY way to generate profit”. But, we are opposite. We are doing a seemingly contradictory initiative.

• Unique market segment where major competitors can not enter:

– The bigger competitors, the greater mind of “improving a yield ratio of CS machines is THE ONLY way to generate profit”. As these competitors don’t want to sell the small sheet products that jeopardize a yield ratio of CS machines, we can get all the demands for these products.

As a result – we became a business entity that can g enerate money continuously without being subject to economic/market conditions.

Our Competitiveness

Documents

6 - Chikara Nakagawa(Taika)_26 TOCPA_Japan_19 May 2016_Eng-Upgr