The VAT factory types are the Theory Of Constraints’ classification system of the different kinds of industrial manufacturing systems, they determine how plants should be analyzed and how they should be managed.
This video is an extract of the course “Theory Of Constraints in production” by Philip Marris, the CEO of Marris Consulting.
The VAT system was developed in the 1980s when Eliyahu Goldratt and his team were selling a scheduling software system called OPT based on differentiating between bottlenecks and non-bottlenecks.
TOC solutions in manufacturing are different for V-plants, A-plants, and T-Plants.
The letters represent the Bill Of Materials but where the flow is from bottom to top (the opposite of most representations of flow). The raw materials and purchased components are at the bottom and the Finished Goods are at the top. Products flow upwards.
The V-Plant has few different kinds of raw materials compared to the wide range of finished goods that it produces. These are often continuous or semi-continuous process industries. For example, in a steel plant, different types of steel are transformed into different thicknesses, different hardnesses and different widths of sheets of steel. Or in the food industry milk will be transformed into different kinds of milks and yogurts.
The second type is the A-Plant. It is the opposite of the V-plant. Many different raw materials and purchased components are assembled to produce a limited range of finished goods. These can be Original Equipment Manufacturers for instance (OEMs). A manufacturer of windscreen wiper engines for cars for instance. Or the Apple iPhone manufacturing: many different components but a limited range of end products offered to the market.
The third kind of production model is the T-plant, or the “modern assembly plant”. It has emerged because an A-plant cannot personalize its products, so the market offering is limited in its range. So this has led to the T-plant. The vertical bar of the T-plant makes some of the components (via a combination of V and A plants) and the horizontal bar of the T represents the assembly. The assembly is based on a logic of options and variants. It assembles components built in-house and purchased components (or sometimes only purchased components). The best-known example is the production of a car. The engine and other key components will be manufactured (A-Plants) the sheet metal of the doors will be produced (V-Plants) and then the final assembly plant will offer a nearly infinite combination of cars with different engines, different colours, different seats, different entertainment systems, etc. So, a T-Plant can offer a wide variety of products with a short lead-time. That is why the T-plant has become the dominant model for assembled p
00:00Let's talk now about the VAT factory models, the different types of factories according to the theory of constraints.
00:16The VAT typologies of manufacturing were developed back in 1980 in the times of creative output, and that's where I discovered them.
00:27More recently, people have added a fourth letter, I, so V-A-T-I. I think that I is just a sub-part of V, so I'm sticking to the traditional presentation of V, A, and T plants.
00:40These are presentations, the letters chosen are to try and show the bill of materials, if you wish, of the products.
00:49So the V plant, like this, considers that raw materials come in at the bottom, and finished goods go out the top.
00:58In all these letters, the world is upside down, because normally we let flow go down from the top to bottom.
01:03Here the flow goes from bottom to the top.
01:06So a few raw materials, just a few raw materials at the bottom, are then transformed to give many, many different types of finished goods.
01:14And this is a kind of process industry, where you're going to have, I don't know, different kinds of steel that you're going to turn into different thicknesses, widths, and stuff.
01:23And that's going to be so different.
01:24Just a few different kinds of steel will become a lot, millions of different references.
01:28Or in food business, milk, which will become lots of different types of milk and yogurt and whatever.
01:33They're basically process industries with few different kinds of raw materials and a huge range of finished goods.
01:40The second one is A, the A plant.
01:42It's the opposite, of course.
01:44That's to say that, like the letter A, it has many, many different kinds of raw materials and purchase components.
01:52But it has very few finished goods.
01:55These are often original equipment manufacturers, OEMs.
01:59People who, for instance, make, I don't know, windscreen wiper engines for the automotive industry.
02:05You would have, of course, in an organization such as Apple with its iPhone, where there are very few different kinds of iPhones compared to the number of components that go into making an iPhone.
02:15These are assembly-dominated organizations.
02:19And this leads to the tea plant, which is also called the modern assembly plant.
02:24Because the problem with the assembly plant that I've just described is it's not capable of personalization.
02:29It has a very limited range of finished goods.
02:31So this has led to the modern assembly plant or the tea plant in this model, which is very, very common.
02:39Because what it's done is it's got the leg of the tea, where all sorts of things are happening.
02:44And they are manufacturing components, sub-assemblies or components.
02:48And then these go into the top of the tea, where some of them are manufactured in-house, the bar of the tea.
02:53Some of them are purchased.
02:54And so you have many of these different components that are then assembled according to an order to be able to make a very large range of finished goods, right?
03:02The most well-known example of this is a car, quite simply, right?
03:05Because a car, if you're ordering your own car from a manufacturer, you can decide the color, you can decide the kind of radio you want.
03:12You can decide the kinds of seats and so forth, right?
03:15So you're going to be able to personalize your car.
03:17And that's going to be done by, on the assembly line, taking the components and variants that you've chosen.
03:23And so you can offer a huge range of finished goods personalized while maintaining or limiting the internal complexity, right?
