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8/12/2019 Simulation and the Realities of Business
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Miichigan Simulation Users Group
Kevin A. Kohls Simulation & the Realities of Business
Annual Conference 2002 2 MSUG MSUG
Agenda• GM’s History & Background
• A Few Products
• “Simulating Reality”• Early Work in TOC
• TOC Basics
• Application to GM
• Using Games and Simulations
• Realizing our Future Reality
• Summary
• Q&A
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Miichigan Simulation Users Group
Kevin A. Kohls Simulation & the Realities of Business
Annual Conference 2002 3 MSUG MSUG
Background•• Founded in 1908, it’s the world's largest automotive corporationFounded in 1908, it’s the world's largest automotive corporation
and full-line vehicle manufacturer.and full-line vehicle manufacturer.
•• In 2001, GM sold more than 8.5 million cars and trucks - moreIn 2001, GM sold more than 8.5 million cars and trucks - more
than any other automaker and 15.1 percent of the world vehiclethan any other automaker and 15.1 percent of the world vehiclemarketmarket.
•• Employs more than 362,000 peopleEmploys more than 362,000 people
•• Largest U.S. exporter of cars and trucksLargest U.S. exporter of cars and trucks
•• Manufacturing operations in 30 countries, has a globalManufacturing operations in 30 countries, has a global
presence in more than 200 countries.presence in more than 200 countries.
•• Has substantial interests in digital communications, financialHas substantial interests in digital communications, financial
and insurance services, locomotives, and heavy-duty automaticand insurance services, locomotives, and heavy-duty automatic
transmissions.transmissions.
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Miichigan Simulation Users Group
Kevin A. Kohls Simulation & the Realities of Business
Annual Conference 2002 4 MSUG MSUG
New Products
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Miichigan Simulation Users Group
Kevin A. Kohls Simulation & the Realities of Business
Annual Conference 2002 5 MSUG MSUG
Simulating RealitySimulation
I’m going to assume
that the vastmajority of you
know more about
Simulation than I’ll
ever know!
Reality
The reality of your
present businesssituation. What are
your problems, and
why do they occur?
Once we understand the causes of our business problems,
how can simulation help us resolve these issues?
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Miichigan Simulation Users Group
Kevin A. Kohls Simulation & the Realities of Business
Annual Conference 2002 6 MSUG MSUG
Using the Theory of Constraints
• One of the ways we have addressed our business
issues is by using the Theory of Constraints (TOC).
Today I’ll specifically look at 2 areas of TOC: – Throughput Improvement
– The Thinking Processes - TP
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Miichigan Simulation Users Group
Kevin A. Kohls Simulation & the Realities of Business
Annual Conference 2002 7 MSUG MSUG
Beginnings - Throughput Improvement
• Working as an engineer (circa 1986) in our Detroit/Hamtramck facility. – Not making rate
– Luxury product that was in demand
– Plant was losing money
– Plant manager was looking into a new software tooldeveloped by GM Research.
• Read Eli Goldratt's Book “The Goal” at the urging of one of thethe developers of this software.
• Software predicted throughput and bottleneck location.
• Took a Theory of Constraints class from Eli Goldratt
• Used this software in the plant to significantlyincrease throughput and reduce overtime.
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Miichigan Simulation Users Group
Kevin A. Kohls Simulation & the Realities of Business
Annual Conference 2002 8 MSUG MSUG
Transitions
•• Moved to Central Office to expand the process, whichMoved to Central Office to expand the process, whichwe called the Throughput Improvement Process.we called the Throughput Improvement Process.
•• But despite our powerful tool and best efforts, weBut despite our powerful tool and best efforts, we
were not satisfied with the rate of our progress..were not satisfied with the rate of our progress..•• We understood the technical solution, but needed toWe understood the technical solution, but needed to
understand how to shift the paradigm.understand how to shift the paradigm.
•• It was apparent that we needed help, so we turnedIt was apparent that we needed help, so we turnedback to the Goldratt Institute.back to the Goldratt Institute.
– – They offered something called “Jonah training”They offered something called “Jonah training”•• Outlines the Thinking Processes, the overall framework of theOutlines the Thinking Processes, the overall framework of the
Theory of Constraints.Theory of Constraints.
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Miichigan Simulation Users Group
Kevin A. Kohls Simulation & the Realities of Business
Annual Conference 2002 9 MSUG MSUG
TOC TP
• Took TOC training
– Jonah training
• Outlines the Thinking Processes
– Jonah's Jonah training
• Allow you to teach the Thinking Processes
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Miichigan Simulation Users Group
Kevin A. Kohls Simulation & the Realities of Business
Annual Conference 2002 10 MSUG MSUG
What is the Theory of Constraints (TOC)?
TOC applies the beliefs, definitions and methodsTOC applies the beliefs, definitions and methods
used by the hard sciences to understand andused by the hard sciences to understand and
manage the material world to human-basedmanage the material world to human-based
systems (individuals and organizations).systems (individuals and organizations).
© Avraham Y. Goldratt Institute, 1999
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Miichigan Simulation Users Group
Kevin A. Kohls Simulation & the Realities of Business
Annual Conference 2002 11 MSUG MSUG
© Avraham Y. Goldratt Institute, 1999
DefinitionsComplexity of a system is defined by the number of points within the system that must be addressed in order
to affect the system (i.e., its degrees of freedom).
Basic BeliefsThere are no complex systems in reality.
There are no contradictions in reality.(i.e., It is assumed that underlying any contradiction there must beat least one erroneous assumption that is being made.)(TOC uses this same approach to resolve conflicts in human basedsystems.)
Theory of Constraints
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Miichigan Simulation Users Group
Kevin A. Kohls Simulation & the Realities of Business
Annual Conference 2002 12 MSUG MSUG
© Avraham Y. Goldratt Institute, 1999
The TOC Thinking Processes (TP) are tools which enable us touse cause-and-effect logic and necessity to, first gain an
understanding of our reality and why it is the way it is, andto then find ways of improving it by altering the currently
prevailing assumptions/causalities.
The 2 basic constructs that underlie all of the TOC TP:The 2 basic constructs that underlie all of the TOC TP:
1.1. Causality:Causality: “If… then…” “If… then…”
2.2. Necessity:Necessity: “In order to… I must…” “In order to… I must…”
TOC
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Miichigan Simulation Users Group
Kevin A. Kohls Simulation & the Realities of Business
Annual Conference 2002 13 MSUG MSUG
Process of Ongoing Improvement
9© Avraham Y. Goldratt Institute, 1999
•• No matter what the subject matter, acceleratedNo matter what the subject matter, accelerated
improvement revolves around answering the followingimprovement revolves around answering the following
three questions:three questions:
1. What to Change?
2. What to Change to?
3. How to Cause a Change?
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Miichigan Simulation Users Group
Kevin A. Kohls Simulation & the Realities of Business
Annual Conference 2002 14 MSUG MSUG
Answering each question means:
© Avraham Y. Goldratt Institute, 1999
1. What to Change?Identifying the Core Conflict
2. What to Change to?Constructing a
Complete Solution
3. How to Cause a Change?Devising Implementation and
Action Plans
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Miichigan Simulation Users Group
Kevin A. Kohls Simulation & the Realities of Business
Annual Conference 2002 15 MSUG MSUG
TOC TP Tools
© Avraham Y. Goldratt Institute, 1999
1. What to Change?Generi c Cloud Process Generi c Cloud Process
Cur rent Reali ty Tree Current Reali ty Tree
2. What to Change to?Evaporating CloudEvaporating Cloud
Futur e Reali ty Tree Futur e Reali ty Tree
Negative Branch Reservations
3. How to Cause a Change?PreRequisite Tree
Transition Tree
TOC Buy-In
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Miichigan Simulation Users Group
Kevin A. Kohls Simulation & the Realities of Business
Annual Conference 2002 16 MSUG MSUG
Undesirable Effects
• The key to coming to grips with a company’s reality isto honestly assess your current problems. Somecommon problems that many businesses have:
• Finger Pointing• Poor Teamwork
• Wasted meeting time
• Distrust between groups
• Divergent efforts
• Empire building
• We know how to do this, they don’t.
• Moving decisions up the chain, wasting more time
• etc.
In the TOC world,these are all called
“Undesirable Effects,”or UDE’s.
© Avraham Y. Goldratt Institute, 1999
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Miichigan Simulation Users Group
Kevin A. Kohls Simulation & the Realities of Business
Annual Conference 2002 17 MSUG MSUG
UDE’s in GM Manufacturing (before TOC)
• New or renovated plants started uppoorly.
• Efforts to improve throughput were
generating results slowly.• Large investments were made in theplants to try and improve throughput.
• Overtime was extensively used to tryand keep up with demand, which was
not being met for many products.• Simulation results did not matchactual performance.
• RONA and profit targets were far below expectations.
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Miichigan Simulation Users Group
Kevin A. Kohls Simulation & the Realities of Business
Annual Conference 2002 18 MSUG MSUG
Example: Current Reality Tree
There isconstantfinger
pointing.
There is alack oftrust.
We run a lotof overtime
to makeschedule.
We’relosingmoney.
Improvementis not
happeningquickly.
We waste alot of time in
meetings.
Simulationdidn’t reflect
actualperformance.
Spending largeamounts to fix
problems.
Poor start ups.
Logically connect theUDE’s together in an
attempt to understandthe Core Conflict!
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Miichigan Simulation Users Group
Kevin A. Kohls Simulation & the Realities of Business
Annual Conference 2002 19 MSUG MSUG
Conflicts
• Business policies
Balance Systems!
Unbalance Systems
Reduce
Inventory! Increase
Throughput!
Serial Lines!
Parallel Lines!
Reduce Program
Budget! Reduce Headcount!
Add Flexibility!Reduce Program
Budget
Commonize your
designs! Innovate your
designs.
• The Current Reality
Tree outlines many
conflicts. Upon
analysis, however, it
usually becomes
apparent that the Core
Conflict is “hiding”
behind these conflicts.
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Miichigan Simulation Users Group
Kevin A. Kohls Simulation & the Realities of Business
Annual Conference 2002 20 MSUG MSUG
There isconstantfinger
pointing.
There is alack oftrust.
We run a lotof overtime
to make
schedule.
We’relosingmoney
Improvement is not
happeningquickly.
We waste alot of time in
meetings.
Simulationdidn’t reflect
actualperformance.
Spendinglarge
amountsto fix
problems.
Poorstartups.
ObjectiveObjective
1. Evaporating Cloud:What is the core conflict
that is responsible for the
UDEs?
Generic
Cloud
Core Conflict
2. Current Reality Tree:
Is the core conflict
responsible for all of the
UDEs?
Looking for the Core Conflict
© Avraham Y. Goldratt Institute, 1999
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Miichigan Simulation Users Group
Kevin A. Kohls Simulation & the Realities of Business
Annual Conference 2002 21 MSUG MSUG
Objective
• Many companies have become so engrossed in the
details, they often lose sight of the big picture.
What’s the overall goal?
– Do the right thing?
– Make your product world class?
– Become “The Best?”
• Relate to Brooks Automation
– Goal to make the best simulation package? – Have the best customer support?
– Etc.
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Miichigan Simulation Users Group
Kevin A. Kohls Simulation & the Realities of Business
Annual Conference 2002 22 MSUG MSUG
The Goal
• Even though you will not usuallyfind it published this way, the folksat the Goldratt Institute wouldargue that ultimate goal of anybusiness is to make money now& in the future. – It comes with Necessary Conditions
• Safety
• Quality
• Laws• Core Values
• etc.
– Doesn’t include non-profitorganizations - they have a differentgoal.
I know the CEOsaid our goal is tomake money, but I
don’t think hemeant off a colorlaser printer!
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Miichigan Simulation Users Group
Kevin A. Kohls Simulation & the Realities of Business
Annual Conference 2002 23 MSUG MSUG
Now that we understand ourNow that we understand our
overall goal, we can begin to boiloverall goal, we can begin to boilour conflicts down a coreour conflicts down a core
conflict, which we can representconflict, which we can represent
in something called a Cloud.in something called a Cloud.
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Miichigan Simulation Users Group
Kevin A. Kohls Simulation & the Realities of Business
Annual Conference 2002 24 MSUG MSUG
Clouds
D
Develop policies that
are focused on each
one of these local
measures.
D'
Develop policies that
are focused towards
Net Profit & RONA.
C
Work to improve the
overall business
metrics, like Net Profit
& RONA.
B
Work to improve all
the measures that we
are being held
accountable for.
A
Make Money now and
in the future.
1
2
3
4
5
Clouds outlined the logical reasons for the conflicts -Clouds outlined the logical reasons for the conflicts -and take a look at the underlying assumptions thatand take a look at the underlying assumptions that
cause each side in the conflict to believe as they docause each side in the conflict to believe as they do.
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Miichigan Simulation Users Group
Kevin A. Kohls Simulation & the Realities of Business
Annual Conference 2002 25 MSUG MSUG
Basic Connections
Goal MeasuresMeasures Policies
Measures are developed to help gauge progress
towards one’s goal.
Polices are developed to improve measures.
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Miichigan Simulation Users Group
Kevin A. Kohls Simulation & the Realities of Business
Annual Conference 2002 26 MSUG MSUG
Common Current Reality
MeasuresMeasures
Goal
Policies
The overall goal was lost in the background, with perhaps, at
best, an indirect logic involved.
Measures and policies often became the goal, or objectives,
themselves. They then found themselves in conflict with
each other, with no logical way of resolution.
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Miichigan Simulation Users Group
Kevin A. Kohls Simulation & the Realities of Business
Annual Conference 2002 27 MSUG MSUG
Global Measures
Net Profit
Inventory & InvestmentRONA =
Net Profit = (Selling Price - Raw Material Cost) * Throughput - Operation Expense
Up to demand
RONA is Return on Net Assets
It became clear that, while difficult, most of theelements of this equation were fairly well
understood -- except Throughput!
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Miichigan Simulation Users Group
Kevin A. Kohls Simulation & the Realities of Business
Annual Conference 2002 28 MSUG MSUG
Throughput
Throughput
• Simulation was suppose to help us predict throughput
for new programs, but there were problems there as
well. Time to document the Current Reality in this
area.
U D E
U D E
U D E
U D E
U D E
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Miichigan Simulation Users Group
Kevin A. Kohls Simulation & the Realities of Business
Annual Conference 2002 29 MSUG MSUG
Current Reality
• Some UDE’s you might see in the Simulation world.
– Ask the same question to two different simulation outfits
results in two different answers
• Due to different tools, processes, etc.
– Lack of data
– Customer wants to change the data to get the right answers
– “Guess-timations” used
– World class targets used, but not World class processes.
– Level of detail concerns
– Customer did not understand variation & dependency
– Technology is the answer - what's the question?Data
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Miichigan Simulation Users Group
Kevin A. Kohls Simulation & the Realities of Business
Annual Conference 2002 30 MSUG MSUG
Simulation Cloud
D
Modify simulation data
to reflect future
improvement.
D'
Use simulation data
that reflects actual
performance.
C
Prevent losses in profit
by assuring new
systems will perform.
B
Set agressive targets
that the plants must
strive to reach.
A
Make Money now and
in the future, while
meeting our necessaryconditions.
1
2
3
4
5
We found our problems stemmed from how weWe found our problems stemmed from how welooked at the data that drove our simulationslooked at the data that drove our simulations.
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Miichigan Simulation Users Group
Kevin A. Kohls Simulation & the Realities of Business
Annual Conference 2002 31 MSUG MSUG
Core Conflict
• The Customer’s Conflict on Throughput - Specify the
Target vs. Predict Throughput using Simulation.
– Difficult to calculate.
• Needs those expensive simulation software.• Needs those expensive simulation engineers.
– Includes all that probability stuff.
• “I pulled an all-nighter for the prob/stats final - I don’t
remember a thing.”
– Dependency not understood. – Considered a plant or operating problem when problem
arose in production.
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Miichigan Simulation Users Group
Kevin A. Kohls Simulation & the Realities of Business
Annual Conference 2002 32 MSUG MSUG
What To Change To?What To Change To?
• Realistic view of future– NOT ideal
– Must be logical
Performs as anoverall system.
One overallgroup
working onThroughput.
Has acommon data
collectionmethod.
Usescommontools.
Simulationsare done inone place,one way.
ThroughputEngineer atevery plant.
Use NP &RONA for
systemoptimization.
Interactivedesign with
ourcustomers.
Uses training tohelp shift the
paradigms aboutThroughput.
Injection
3. Evaporating Cloud:What assumption(s) are we
going to challenge? Objective
Generic
Cloud
Injection!
4. Future Reality
Tree:Will the injection lead to
all desired effects
without creating new
UDEs?
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Miichigan Simulation Users Group
Kevin A. Kohls Simulation & the Realities of Business
Annual Conference 2002 33 MSUG MSUG
Defined Future State
Performs asan overallsystem.
One overallgroup
working onThroughput.
Has acommon data
collectionmethod.
Usescommontools.
Simulationsare done inone place,one way.
ThroughputEngineer atevery plant.
Use NP &RONA for
systemoptimization.
Interactivedesign withour
customers.
Uses training tohelp shift the
paradigms about
Throughput.
• Realistic view offuture– NOT ideal– Must be logical
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Miichigan Simulation Users Group
Kevin A. Kohls Simulation & the Realities of Business
Annual Conference 2002 34 MSUG MSUG
How To Cause the Change?How To Cause the Change?
I.O.I.O.
I.O.
I.O.
Obst.
Obst.
Obst.
I.O.
5. PreRequisite Tree:What currently prevents the
implementation of the
injection(s)?
I.O. I.O.
Obst.Obst.
Obst.
InjectionInjection
Initiator’s Action
(which deals with
obstacle)
I.O.
6. Transition Tree:What actions does the initiator
have to take to effectively
implement the injection(s)?
Initiator’s
Action
Initiator’sAction
I.O.
© Avraham Y. Goldratt Institute, 1999
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Miichigan Simulation Users Group
Kevin A. Kohls Simulation & the Realities of Business
Annual Conference 2002 35 MSUG MSUG
One part of that Tree
Injection
Our customers understand the impact
of throughput on the bottom line.
Intermediate Objective
Our customers understand the
impact of variation & dependency
on Throughput.
ObstacleOur customers do not
understand why it is difficult to
predict throughput.
– Management doesn’t understandvariation.
– Each area capable of 60JPH -should get 60 JPH!
– Role buffers play in absorbing variation.
– Impact due to dependencies betweenmachines.
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Miichigan Simulation Users Group
Kevin A. Kohls Simulation & the Realities of Business
Annual Conference 2002 36 MSUG MSUG
One part of the Transition Tree
Intermediate Objective
Our customers understand the
impact of variation & dependency
on Throughput.
TAS action
Develop & administer training
sessions based on the TOC to teach
about Throughput.
Our customers want to
understand throughput in order to
make sure their designs aresuccessful.
Use a game environment to help learning.
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Miichigan Simulation Users Group
Kevin A. Kohls Simulation & the Realities of Business
Annual Conference 2002 37 MSUG MSUG
The Dice Game• 5 operations, parts per hour ranges
from 1 to 6, determined by the roll of a
dice.
• What is our average production per
machine?
• What should the average production of the line be?
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Miichigan Simulation Users Group
Kevin A. Kohls Simulation & the Realities of Business
Annual Conference 2002 38 MSUG MSUG
The Dice Game
After 10 throws,how many chips
will we have after
the last station?•1 •2 •3 •4 •5 •61/6
1
6
1
6
1
6
1
6
1
6
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Miichigan Simulation Users Group
Kevin A. Kohls Simulation & the Realities of Business
Annual Conference 2002 39 MSUG MSUG
The Dice Game
5 3 4 2 6
Last machine rolled a 6. But there only 3, so
move the 3 out, leaving the buffer empty for
the moment
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Miichigan Simulation Users Group
Kevin A. Kohls Simulation & the Realities of Business
Annual Conference 2002 40 MSUG MSUG
The Dice Game
5 3 4 2 6
Last machine rolled a 6. But there only 3, so
move the 3 out, leaving the buffer empty for
the moment
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Miichigan Simulation Users Group
Kevin A. Kohls Simulation & the Realities of Business
Annual Conference 2002 41 MSUG MSUG
The Dice Game
5 3 4 2 6
With each step we move parts through the
operation to the next machine.
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Miichigan Simulation Users Group
Kevin A. Kohls Simulation & the Realities of Business
Annual Conference 2002 42 MSUG MSUG
The Dice Game
5 3 4 2 6
And with that, the first “hour” is done, and our
system made 3 parts.
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Miichigan Simulation Users Group
Kevin A. Kohls Simulation & the Realities of Business
Annual Conference 2002 43 MSUG MSUG
The Dice Game
Serial Line
Roll Buffer Roll Buffer Roll Buffer Roll Buffer Roll Result
1 0 4 0 3 0 4 0 3 0 0
2 0 4 0 3 0 4 0 3 0 0
3 0 4 0 3 0 4 0 3 0 0
4 0 4 0 3 0 4 0 3 0 0
5 0 4 0 3 0 4 0 3 0 0
6 0 4 0 3 0 4 0 3 0 0
7 0 4 0 3 0 4 0 3 0 0
8 0 4 0 3 0 4 0 3 0 0
9 0 4 0 3 0 4 0 3 0 0
10 0 4 0 3 0 4 0 3 0 0 0
0
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Miichigan Simulation Users Group
Kevin A. Kohls Simulation & the Realities of Business
Annual Conference 2002 44 MSUG MSUG
TIP game
Overall Game Screen
Objective: To demonstrate how
using bottleneck analysis everyweek will give improved bottomline results as compare to our
present methods.
Objective: To demonstrate how
using bottleneck analysis everyweek will give improved bottomline results as compare to our
present methods.
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Miichigan Simulation Users Group
Kevin A. Kohls Simulation & the Realities of Business
Annual Conference 2002 45 MSUG MSUG
TIP game
Players choose which workstationto improve with one of 4 types of
standard repairs.
Players choose which workstationto improve with one of 4 types of
standard repairs.
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Miichigan Simulation Users Group
Kevin A. Kohls Simulation & the Realities of Business
Annual Conference 2002 46 MSUG MSUG
TIP game
Bottleneck Analysis is used for
the Second Round of play. Thischart shows the impact of thepredicted bottleneck.
Bottleneck Analysis is used for
the Second Round of play. Thischart shows the impact of thepredicted bottleneck.
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Miichigan Simulation Users Group
Kevin A. Kohls Simulation & the Realities of Business
Annual Conference 2002 47 MSUG MSUG
TIP game
Players typicallyhave significantly
improvedthroughput
performance byfinding and fixing
the bottleneck.
Players typicallyhave significantly
improvedthroughput
performance byfinding and fixingthe bottleneck.
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Miichigan Simulation Users Group
Kevin A. Kohls Simulation & the Realities of Business
Annual Conference 2002 48 MSUG MSUG
Design Game
Challengethose
involved indesign to
question themethods we
are usingtoday.
Challengethose
involved in
design toquestion themethods we
are usingtoday.
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Miichigan Simulation Users Group
Kevin A. Kohls Simulation & the Realities of Business
Annual Conference 2002 49 MSUG MSUG
Design Game
Design forRONA & Net
Profit -
understandhow our localmeasurement
effortsimpact thebottom line.
Design forRONA & Net
Profit -
understandhow our localmeasurement
effortsimpact the
bottom line.
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Miichigan Simulation Users Group
Kevin A. Kohls Simulation & the Realities of Business
Annual Conference 2002 50 MSUG MSUG
Basic Transitions
• Make the goal clear
• Global measure emphasized
– Net Profit – RONA
• Emphasize Throughput
– Hugh impact on Profits
– Requires Simulation
– Requires accurate data
• Focus Analysis tools on Throughput
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Miichigan Simulation Users Group
Kevin A. Kohls Simulation & the Realities of Business
Annual Conference 2002 51 MSUG MSUG
Transitions - Data
• Data collection
– MCBF, MTTR, Speeds needed
– Install data collection in the PLC's
– Install servers to prepare data – Post results on internal web
• Phase 0 Database
– Data collected by style
– Represented averages created by station type.
– Can now be used in simulation
– Prevented us from changing the data to meet targets. If we arerequested to “improve” the data, we require proof of actualperformance in GM at production volumes.
Data
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Miichigan Simulation Users Group
Kevin A. Kohls Simulation & the Realities of Business
Annual Conference 2002 52 MSUG MSUG
Transitions - Process & Tools
• Common tools
– Arena
– Simul8 with front end
• Syncs to Visio
– AutoMod for 3D
• Too complex for other programs
• Application required third dimension
– 80-20 rule
• Speed
– Conference room simulation analysis
• Common process
– Going for ISO 9002 certification
• RONA analysis
– Develop tools to allow painless financial analysis.
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Miichigan Simulation Users Group
Kevin A. Kohls Simulation & the Realities of Business
Annual Conference 2002 53 MSUG MSUG
Realization
Our web page logodemonstrates the realizationof our Future Reality Tree.