Capacity constraints, “The Goal”, and Tofurky® - A Case Study, Part 2 of 2

By Ronak Shah

This is the second of two articles introducing the Theory of Constraints as a production management framework and describing the experience of a local natural food company in implementing the Theory to improve operational performance.  In the first article we introduced the Theory of Constraints and its applicability to some companies in the food processing industry.

Turtle Island Foods

Turtle Island Foods is the maker of Tofurky®, a vegetarian turkey replacement or meat analogue made from wheat protein and tofu.  The majority of their product sales are vegan deli slices, sausages, and tempeh – all of which exhibit less seasonality than vegan holiday roasts and associated products.  All processing is done by a staff of approximately 40 employees.  The operations manager initiated this project to

1. better understand the plant’s true capacity,
2. increase production efficiency, and
3. reduce the day-to-day variation in production resulting from processing to order to daily shipments

The Theory of Constraints approach was chosen as it was the only approach likely to achieve tangible results in the one month budgeted for the project.

The manufacturing process

The following diagram shows the manufacturing process for deli slices and sausages, which together comprise the majority of Turtle Island’s demand.  Process steps are shown as squares, and inventory holding points as triangles.  Tofu is mixed and then extruded into either a 12lb chubb (2’ cylinder in casing) or individual links.  These are then cooked and cooled, and the sausages are peeled from their casing and placed into totes.  The racks of chubbs wait to be sliced, vacuum packed and pasteurized.  The sausages go through the same vacuum packing and pasteurization process.  Bins of packaged deli slices and sausages then wait in the cooler to be individually packaged into sleeves , cased and palletized at the Adco™.

Step 1 – Identify the Constraint

At most facilities the bottleneck operation is easily identified since it has the most inventory built up immediately upstream.  At Turtle Island Foods, the freezers and coolers were full of chubb racks indicating that the slicer was the constraint.  

To confirm this, an analytical approach was applied.  For each operation, the average daily demand for all products processed by that operation was multiplied by the unit cycle time.  The result is the total hours that operation needs to run in order to support demand for the company’s products.

Surprisingly, this approach identified the Adco packaging machine as the constraint.  The difference was due to three factors:

1. The Slicer -> Multivac -> Pasteurize -> Adco packaging processes were often run in a continuous hand-to-mouth process due to nearly matched cycle times.  This explained the lack of work-in-process inventory upstream of the packaging machine.
2. There was an overall policy of holding safety stock in chubb form, and
3. The slicer was very close to being the constraint

Step 2 – Exploit the Constraint

The next step of the Theory of Constraints process involved improving the efficiency of the Adco packaging operation in order to dramatically improve throughput.  Observation indicated that a large proportion of the downtime at this operation resulted from coordinating the availability of labels, sleeves, packages, pallets and other materials.

As a result, one of the team members was made the “Team Leader,” responsible for ensuring that all materials were available at the appropriate time.  This gopher / runner role often exists in high-volume assembly operations in other industries and is appropriate here.  In addition to this, several other changes were proposed and are in various stages of implementation.  

On the first day these changes were implemented (Dec 16th), production was 40% higher than average and 20% higher than prior peaks.  This was a very visible change.  However, since the Adco packaging line still operated as build-to-order operation,  production generally only achieved the targeted goal, which was often well below capacity.  In other words, the work expanded to fill the eight hours in the shift.  In order to fully institutionalize the Theory of Constraints, the third step of the process was necessary.

Step 3 – Subordinate everything else to the constraint

The existing production scheduling process for the facility was entirely created by Turtle Island Food’s experienced production supervisor, using only the shipping schedule as a guide.  While this process has many advantages, it is limited in its ability to

• Smooth production across multiple days to compensate for large daily shipment variations
• Set challenging production goals
• Scale as the organization continues to grow

In response, a two-part production scheduling process was created, using an Excel –based production scheduling tool.  The spreadsheet tracked beginning and ending inventory, daily scheduled production and daily shipments for all SKUs.   This allowed the shipping manager to smooth production over eight days, the facility’s demand visibility horizon.  As a result, he could ensure that Adco production targets remained at a level which challenged the team.

The upstream processes warranted a different approach which fulfilled three key characteristics:

1. Provide a buffer of material to ensure that the bottleneck process (Adco packaging) is not starved of material
2. Limit inventory buildup; ie. Over-production of the wrong products
3. Be simple: brainpower is better spent optimizing schedule and performance of bottleneck processes

A Kanban system  -- a visual management system using cards or tokens to track inventory and initiate production (mixer batch) starts – was chosen to meet these needs.

Step 4 and 5 – Elevate the constraint, and repeat

Turtle Island Foods is still in the process of institutionalizing the changes resulting from the first three steps of the Theory of Constraints process.  They are already considering future capital investments which would result in other operations becoming the constraint, necessitating further Theory of Constraints processes.  The continued growth of the company will lead to cultural and organizational changes, and as a result the Theory of Constraints, Kanban System, and build-to-order casing tools will grow with Turtle Island Foods.

Summary and results

At the conclusion of the project, Turtle Island Foods had greatly improved their understanding of plant capacity.  They succeeded in smoothing production, reducing the need for overtime and Saturday shifts.  The simple act of using visible and agreed production goals is expected to result in labor productivity gains in the next few months, allowing them to respond to demand growth with existing staff.

Previously, Turtle Island Foods had attempted to employ other improvement methods, including Lean. However,  these methods did not produce the desired results.  A systems-based approach like Theory of Constraints can be a cost-effective alternative to Lean or Six Sigma, which require a comprehensive cultural change.  Under the right circumstances Theory of Constraints can transform the operational efficiency of a food processing company.