Production Management and Planning. Management Case Study

Running head: PRODUCTION PLANNING AT THYSSENKRUPP1
Production Planning at thyssenkrupp: Case Analysis
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PRODUCTION PLANNING AT THYSSENKRUPP

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Abstract


This mini report addresses a challenge presented in an assigned case study: “Solid as Steel: Production Planning at thyssenkrupp.” Guided by Theory of Constraints (TOC), current report applies main concepts in TOC to a chosen case in order to show how TOC could be applied to achieve a certain objective and, ultimately, boost overall productivity. The report is made up of five sections: (i) Introduction, (ii) Challenges & Barriers, (iii) Discussions, (iv)
Recommendations and (v) Conclusion. The “Introduction” section offers a broad overview of current case and points to what is at issue. The “Challenges & Barriers” section offers an in-depth description of major challenges and barriers thyssenkrupp is facing and, more importantly, identifies one constraint, a policy constraint. The “ Discussions” section offers a succinct analysis of current situation by enumerating a number of seminal observations. The “Recommendations” section suggests four recommendations in order for thyssenkrupp to remediate current situation. The “Conclusion” section wraps up main argument and offers a close to current report.
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Production Planning at thyssenkrupp: Case Analysis


I. Introduction
Typically, companies are constrained by and in resources. To deliver, companies adopt differentiated methods in order to workaround existing limitations. This is particularly applicable in industrial production context. Often, equipment is one major constraint industrial manufacturers face prior, during and after delivery. Theory of Constraints (TOC) is, for current purposes, is central to analysis. To eliminate constraints, industrial manufacturers adopt one form or another of TOC. For analysis purposes, “Solid as steel” case (Schmedders & Schulze, 2016) case study is discussed.
In “Solid as steel,” thyssenkrupp, a major steel European country formed in 1999 as a merger between Thyssen and Krupp (p. 3), faces a fairly typical TOC challenge. Specifically, thyssenkrupp, constrained by a limitation in push pickling line (PPL) is, as presented in case, cannot match production capacity to customer demand. The limitation, or constraint, identified in more specificity in next section, results in a throughput (in TOC language) consistently deviating from company's planned output over a span of 10 years except for only one year – only to result in under usage of production capacity (meaning, expensive input costs) and, ultimately, lower profit margins, if not in negative figures (pp. 6-7). Tasked to explain such deviation, as is customary in company’s monthly meeting, Markus Schulze, production manager at thyssenkrupp, is expected to deliver a prediction model to inform future decisions by thyssenkrupp’s management to generate reliable planning figures accurate enough to meet agreed-on deliverables to customers.
II. Challenges & Barriers
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From a TOC perspective, at least one constraint, or barrier, underlies a problem a given complex industrial system faces. In current case, a face value constraint might be identified as one of a meters-per-ton (MPT) ratio whereby lower thickness and/or lower width carry a lower weight per meter (pp. 7-8). That is, given additional production requirements for PPL (and hence more processing time and, ultimately, more delays due to different process speed required for all steel grades of PPL compared to remaining non-PPL steel grades), PPL production per se could be assumed to be a constraint making thyssenkrupp unable to lag behind schedule, unable to fulfill orders and, ultimately, incur loss of income. More specifically, lacking discrete equipment to process PPL could be identified as a constraint in current case. A deeper analysis, informed by TOC, shows, however, a different story.
There are significant reasons, first of all, TOC is applied widely in industrial production and beyond. Primarily, TOC is shown to provide a holistic framework to challenges in complex operating systems such as in industrial production (Ikeziri et al., 2019). In current case, applying TOC gets at a major root cause, or constraint, at heart of current production prediction challenge. Performing a Five Focusing Steps process (identify, exploit, subordinate, elevate and repeat) and Thinking processes (Current Reality Tree, Evaporating Cloud Tree, Future Cloud Tree and Strategy & Tactics Tree) show a deeper root cause beyond symptoms including, but not limited to, unmatched production capacity and order fulfillment, inadequate production production models, lack of equipment to specifically process PPL and, not least, unsatisfying year-on-year revenue. The major constraint in current case is, instead, one of policy.
At thyssenkrupp, a conscious decision has been made to “build a PPL in 2000 because increasing demand for high-strength steel made it profitable to invest in such a production line”
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(Schmedders & Schulze, p. 5). This is a decision informed by and consistent with wider business practice to improve corporate competitiveness in one or more m...