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Constraints Management of a Continuous-Batch Process University of Pretoria – Macmillan, S (2004) CONSTRAINTS MANAGEMENT OF A CONTINUOUS-BATCH PROCESS by STANLEY MACMILLAN Submitted in partial fulfillment of the requirements for the degree of MASTER OF ENGINEERING (TECHNOLOGY MANAGEMENT) in the Faculty of Engineering, Built Environment and Information Technology University of Pretoria April 2004 University of Pretoria – Macmillan, S (2004) ACKNOWLEDGEMENTS I would like to express my sincere gratitude to Dr. Pieter Pretorius for his assistance and guidance. As my advisor he has provided the constructive critique to refine the content of this thesis. Further, I would like to acknowledge the contribution of my former SAB colleagues, specifically Terrence Naik, …and last, but not least, my wife Mieke, family and friends for their support and prayers during this period. University of Pretoria – Macmillan, S (2004) SUMMARY Constraints Management of a continuous-batch process Stanley Macmillan Supervisor: Dr PJ Pretorius Department: Department of Engineering and Technology Management Degree: Master of Engineering (Technology Management) In 1984, Eli Goldratt published his novel “The Goal – a process of ongoing improvement”. Constraints Management has since evolved into a field of study, still widely debated and written about today. Most companies soon realized that the principles of Constraints Management could no longer be ignored to stay competitive. The South African Breweries (now SABMiller plc) is the world's leading brewer in developing markets. The company has dominated the South African liquor market for years and is currently the second largest brewing company in the world, operating in Africa, China, Europe and the USA, yet even a company with this reputation can still be ignoring the basic principles of Constraints Management. This dissertation concentrates on the application of Constraints Management in a selected brewery in South Africa. The measures used in one of SAB’s most successful breweries will be tested against Constraints Management principles, illustrating how the practice of driving performance measures without focusing on the constraint can lead one away from the goal of the company. Rosslyn Brewery is a brewery driven by traditional brewing industry performance measures. The key drivers of the brewery have always been to increase factory efficiency and reduce costs. Rosslyn set the benchmark for packaging efficiency within SAB. The problem is that the packaging operation is not the constraint in the brewery. The throughput of the brewery is determined by the operation feeding into packaging, i.e. filtration. i University of Pretoria – Macmillan, S (2004) The end result is that even though the packaging lines have the best efficiency, they still have to stop and wait for beer to become available from filtration, resulting in downtime, frustration and eventually costly overtime and weekend work. The core conflict of the brewery is the trade-off between running all the resources as efficiently as possible, and thereby decreasing product cost, and running only the constraint as efficiently as possible, resulting in an increase in throughput. The Thinking Process was used to evaluate the conflict and a solution developed. The solution consists of the following: 1. The brewery has to adopt Constraints Management using the 5 step process of ongoing improvement. The capacity constraint has to be exploited and all other operations subordinated, to ensure that products are not produced for the sake of improving efficiency. 2. The operational measures of the brewery have to be changed from increasing factory efficiency and reducing R/hl to increasing throughput, decreasing inventory and decreasing operating expense. 3. The production schedule and raw material release for the whole plant need to be determined by filtration. This requires a change in the current advanced planning solution to incorporate the principles of Drum-Buffer-Rope. If the decision is made and actions taken, the brewery will be able to survive the next decade, even if there is a further decline in the market. If not, the focus will still be on reducing product cost, whilst improving the efficiency of all operations. This will lead to further line closures and retrenchments, doing nothing more but reducing SABMiller’s potential future capacity and flexibility. ii University of Pretoria – Macmillan, S (2004) Key terms: 1. Brewery 2. Constraints Management 3. Continuous-batch process 4. Core Conflict 5. Drum-Buffer-Rope 6. Planning 7. Scheduling 8. Theory of Constraints 9. Thinking Process 10. World Class Manufacturing iii University of Pretoria – Macmillan, S (2004) TABLE OF CONTENTS 1. Introduction........................................................................................................ 1-1 1.1. Background................................................................................................ 1-2 1.2. Scope of the Study ..................................................................................... 1-5 2. Background to the brewing industry.................................................................. 2-1 2.1. Purpose....................................................................................................... 2-1 2.2. Sales ........................................................................................................... 2-1 2.3. The Brewing Process ................................................................................. 2-3 2.3.1. Malting............................................................................................... 2-4 2.3.2. Milling................................................................................................ 2-4 2.3.3. Mashing.............................................................................................. 2-4 2.3.4. Brewing.............................................................................................. 2-4 2.3.5. Cooling............................................................................................... 2-5 2.3.6. Fermentation ...................................................................................... 2-5 2.3.7. Racking .............................................................................................. 2-5 2.3.8. Maturation.......................................................................................... 2-5 2.3.9. Filtration............................................................................................. 2-6 2.3.10. General Observations......................................................................... 2-6 2.4. The Packaging Process .............................................................................. 2-6 2.4.1. Filling................................................................................................. 2-7 2.4.2. Crowning and Seaming...................................................................... 2-7 2.4.3. Pasteurization..................................................................................... 2-7 2.4.4. Labelling ............................................................................................ 2-8 2.4.5. Other processes .................................................................................. 2-8 2.4.6. General Observations......................................................................... 2-9 2.5. Interdepot and Distribution processes...................................................... 2-10 2.6. The Value Chain ...................................................................................... 2-10 2.7. Production Process Classification............................................................ 2-11 2.8. Conclusion ............................................................................................... 2-12 3. World Class Practices in South African Breweries ........................................... 3-1 3.1. Purpose....................................................................................................... 3-1 i University of Pretoria – Macmillan, S (2004) 3.2. Background to Integrated Management Practices (IMP) and Best Operating Practices (BOP)...................................................................................................... 3-1 3.3. South African Breweries’ Strategic Performance Measures ..................... 3-5 3.3.1. Financial Performance ....................................................................... 3-6 3.3.2. Market Share and Volume ................................................................. 3-6 3.3.3. Production Performance..................................................................... 3-7 3.3.4. Customer Service............................................................................... 3-7 3.3.5. Organisational Culture....................................................................... 3-8 3.3.6. Community Relations ........................................................................ 3-8 3.3.7. Equity................................................................................................. 3-8 3.4. Conclusion ................................................................................................. 3-8 4. The Theory of Constraints ................................................................................. 4-1 4.1. Purpose....................................................................................................... 4-1 4.2. What is the Theory of Constraints? ........................................................... 4-1 4.3. The
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