As the market continues to become more competitive, many manufacturing companies are struggling to reduce their operational costs. This finding is startling in light of today’s market. If companies are not consistently improving performance and are failing to reduce operational costs by the ideal 5-7%, they are in danger of closing.

Company-wide closures, however, can be prevented. In order to stay in operation, companies must find a way to increase their throughput while, at the same time, working with the same (or less) resources.  Luckily, Eliyahu Goldratt introduced a theory 20 years ago that can help companies do just that. The Theory of Constraints, in conjunction with lean manufacturing principles, makes it possible for manufacturing companies to achieve this goal and improve their efforts and performance in a matter of weeks.

The Theory of Constraints focuses on identifying and eliminating hold-ups in the manufacturing process in order to increase productivity and to measure and control the flow of materials. While the principle behind the theory is beneficial, many companies have trouble actually identifying these constraints. Lean manufacturing, however, focuses on maximizing the amount of net good parts. Excess parts (or inventory) are eliminated between each point of the manufacturing process, making it easier for companies to identify and make adjustments to the underperforming processes.

Companies who wish to improve their performance and reduce operational costs will find value in combining the two approaches. By merging The Theory of Constraints with lean manufacturing principles, companies can generate the highest possible return and streamline production efforts by focusing their resources on the true barriers found in the production process.

The constraint-based approach maximizes the flow of product through the manufacturing plant, resulting in less data that has to be sorted through and, instead, providing upper management with an influx of decision-enabling information directly from the floor. These approaches work together to limit and prioritize data collection and identify the problem areas in production that need to be corrected in order to meet specific production targets. When used in conjunction with each other, the constraint-based approach and the lean manufacturing approach enable floor personnel to focus on making the corrections that will directly result in improving the overall performance of the manufacturing plant.

Companies will see outstanding benefits when they apply the principles of lean manufacturing and The Theory of Constraints to their organization. Not only will they improve their clarity and focus by identifying key constraints in their production process, but they will also spend less time collecting data and more time solving the problems that prevent companies from achieving optimal performance.

As the competition between businesses continues to rise, companies need to focus their efforts on making the necessary improvements to guarantee their success. By adopting these principles, companies can reduce costs, create a more efficient production process, and increase their throughput. This will ensure that they have a place in the global market for years to come.

Discover the lean benefits of a true manufacturing ERP system by attending one of our Live Webcasts in September:  Manage Manufacturing Operations with Greater Success using Infor Visual. Learn more.