The Goal: Optimized Production Technology

Optimized Production Technology (OPT) is a production improvement concept used to reduce bottlenecks, increase throughput, reduce inventories and hence reduce overall manufacturing costs.  It is mostly used in manufacturing assembly companies.  First introduced by Eliyahu M. Goldratt as Theory of Constraints (TOC) in his book The Goal.

The fundamental theory is that the manufacturing assembly line can only produce at the rate of its bottlenecks.   Three key performance indicators are used to monitor the results of performance in an assembly line,

  • Throughput
  • Inventory
  • Operating Costs

There are 9 implementation rules in OPT:

  1. Balance the production flow to a consistent rate, to a drum beat. The benefit of this is to minimize the work-in-process inventory.   Use Takt Time to determine this rate.   Takt Time is the rate at which a product produced in order to meet with the market demand rate for the product.
  2. Optimal rates that the assembly line produces, the drum beat, should be at the rate the bottleneck rate is at. The non-bottleneck assembly stations should not be running at 100% their operating rate/speed.   These non-bottleneck assembly stations should be rescheduled for less operating hours or their extra capacity redeployed for other uses or shutdown.
  3. Effectiveness (activation) and Efficiency (utilization) are not the same. What Should We Do” and “What We Can Do” are not the same.   Hence, optimal production scheduling should be done based on the constraints of the total assembly system’s bottle-necks.  The benefit from this is reduction in work-in-progress inventories and tied up money in non-moving parts.
  4. Production downtime at bottlenecks reduces the total production rate of the assembly line. Hence, by improving the rate of productivity of bottleneck stations improves the total production rate of the assembly line.  And vice versa, downtime at bottlenecks stations reduces total productivity rate of the assembly line.
  5. Improving productivity at non-bottleneck stations is useless effort unless; as this does not make the total productivity rate better. Instead it increases more ideal time and/or WIP inventory.
  6. WIP inventory should be maintained for the bottleneck workstations to process. This is to ensure bottleneck workstations have enough material to process and prevent it from shutting down due to lack of material to process.   Hence, bottlenecks are affected both by its productivity and WIP Inventory.
  7. The transfer batch size should be smaller than the process batch size. Reduced in work-in-process inventory and better throughput is obtained when this is practiced.
  8. The process batch size should not be fix size. The process batch size at bottleneck workstations should be larger and the process batch size at non-bottleneck workstations should be smaller.
  9. Production scheduling should plan both on capacity and priority at the same time.

It is found that it would be best for small/medium size assembly companies to embark on using OPT to improve their assembly throughput, inventories and operating costs before deciding to implement Lean Manufacturing or Lean Six Sigma.   It will also help the company to embark on getting certified to ISO9001 to put in place a document system and have a reliable quality system in place to ensure the benefits of OPT is properly documented and realized.   Implementing OPT without proper quality management processes and documentations in place can lead to an implementation failure.