Tag: constraints management

  • How TOC Can Move Your World – and World View

    How TOC Can Move Your World – and World View

    archimedes lever

    Archimedes once said, “Give me a lever long enough,
    a fulcrum, and a place to stand, and I shall move the world.”
    Learn how production professionals use Constraints Management to meet negativity head – on to manage meaningful change

     

    Here’s the last part of our three-part series about the Theory of Constraints (TOC). In the next couple of postings I’m going to dig right in to looking at what actually happens when I’ve used TOC at client companies. But there’s more gold to be mined from this topic—and I wanted to make sure I included in this series some common “fulcrums” –or common organizational assumptions that might sound familiar to you.

    I also want to clear up some of what you might think. A common notion about constraints as they are viewed as a “negative.” However, constraints are neither good nor bad; they are just part of any organization. To clarify, try and picture an organization that has no constraints. What would you expect to see from this type of organization? The organization would produce with unlimited growth. In nature and in business, there aren’t any systems that produce at unlimited capacity and exhibit unlimited growth.   So if there are no systems that produce at unlimited growth, then all systems have constraints.

    As people working in systems, we can either acknowledge or deny that constraints exist. Regardless of the choice, constraints will have an effect upon the organization. If we want to grow our organization, then we might as well pay attention, right?

    Too Many Places at Once

    In my last blog posting, (Which Systems is More Complex?) I discussed the complex view of organizations, with the belief that change is incremental. Many changes will equal organizational improvement.

    For contrast, I also discussed that with TOC in that there is only one or very few true constraints within any system. Improve the constraint, and you will make a significant impact upon the system.

    What if you do not have a method to find the weakest link? Random chance allows that every once in a while, one of these actions will touch an organizational constraint and generate an impressive single-event, a growth-oriented action. The opposite might also happen: The same random choice may damage a constraint and produce a single, one-time negative result. If you think about the last 20 years of organizational history, I’m sure you can find a few such cases of one or the other, but more likely the latter. These events will be on the scale of urban legends within the organization. Like New Coke in the 1980’s, a disastrous merger like Daimler/Chrysler, or spinning off acquisitions to conserve cash.

    The Cost Conundrum

    Traditionally, most improvements are efforts to save cost. People think that if cost is removed from the delivery of a product or a service, it will result in higher profits. The vast majority of the U.S. Economy believes this to be true, and that, in conjunction with the high affinity for innovation, creates a compelling mix. But when we compare TOC with other improvement methods, its speed and accuracy bring about significant change – faster. We find our constraints and then we can react.

    The TOC View of Problems

    Traditional view: “A problem is something I don’t like”, or “Something that bothers me”, or the classic “Something that keeps me up at night.”

    TOC view: “A problem is a conflict that prevents a system from reaching its desired objective.”  With this definition, there is a second fundamental belief in physics that “There are no conflicts in reality.”  There are only invalid assumptions about the conflict.

    Assume Control

    TOC translates conflicts as follows: If there is a conflict, then there must be an underlying assumption about that system that created the conflict.  The solution comes from identifying the assumptions about the conflict, validating the existence of the assumptions, and eliminating the negative assumption about the conflict so that a solution can be built that will allow the system to reach its desired objective.

    In every organization, managers face many issues on a daily basis. Typically, most of these issues stem from a single core problem (conflict) that the organization hasn’t been able to previously identify. Many managers are aware that these conflicts exist, however, these type of conflicts are very difficult to solve as most have conflicting objectives that result in compromises.

    Does this sound like you?

    The existence of conflict can be validated by looking back in time for periodic shifts in organizational philosophy. As an example, if in the past, your organization was emphasizing centralized management and now it is emphasizing profit-center autonomy, then these switches indicate the existence of an unresolved core problem. Efficiency is another example of an unresolved core problem. If at the beginning of any reporting period, organizational efficiency is emphasized, and then at the end of the month, all the rules are broken (forgotten) to achieve shipments and revenue targets. This again is a sure sign of an unresolved core problem.

    TOC has a number of system tools that tackle the “new normal” head on. Next time, we’ll look at these tools as they applied to an automotive manufacturer—we’ll uncover their core assumptions and watch how their teams took control with TOC.

    – Rick Denison

    6.0-Rick Which System is More Complex? The Answer is Simpler than You Think                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

    Rick is the “Dr. Who” of manufacturing operations and logistics. And while Rick doesn’t travel through time, he is adept at leading change – and saving time – in a diverse range of manufacturing environments through Lean manufacturing, Six Sigma, and TOC techniques. Rick’s posts address how demand-driven matters and draws from his background in process improvement, change management, project management, information systems implementation, and profitability analysis.

  • Demand-Driven Matters

    Demand-Driven Matters

    Welcome to the Demand-Driven Matters blog. During our conversation in this space, I hope to bring you additional insights on demand-driven manufacturing and/or help in your quest to become a demand-driven, factory of the future. I call this blog a conversation for a reason—your input will enrich what we are trying to do here, which is provide ideas about how you can become more demand-driven, each and every day.

    When I first began instituting demand-driven practices in the late 90s, we were into creating pull, eliminating waste, and getting on a path of continuous improvement. Technology at the time was seen as an inhibitor rather than an enabler. Most people active in Constraints Management and Lean Manufacturing were abandoning their technology and going to purely manual solutions.  I always believed that technology was important to get the most out of the system and to make it scalable, however, in the late 90s, the lack of technologies that enabled pull made manual the only logical choice.

    Convergence

    One of the more fascinating developments in demand-driven enablement has been the shift of demand-driven manufacturing back to technology as an enabler rather than an inhibitor. There is recognition today that technology has to play a significant role in eliminating waste and synchronizing operations and extended supply chains.  Along with this trend, the creation of open ERP systems that are easily integrated with service-oriented architecture allows companies to leverage the system they already have and benefit from today’s best-of-breed, demand-driven solutions through seamless, real-time integration. Finally, the web-based, SaaS revolution has made this process more cost effective, with expensive internal services now “downloaded” to the software provider, freeing up IT and manufacturing teams to focus on what matters. The digitization of demand-driven practices has, in effect, opened up companies’ ability to manage inventory and constraints more effectively; free up capacity; control operating expenses; drive flow; dampen variability; and create innovations to meet customer demand.

    You will see me often weigh in on what’s valuable and not-so-valuable—and you can do the same by commenting or perhaps even writing a rebuttal, just to keep me on my toes! We’ll look at the classic hallmarks of a demand-driven culture and see what kinds of leadership, change management, and employee communications keep such systems alive.  We’ll delve into the challenges and benefits of a demand-driven environment as well as what really happens on the shop floor – for example: what happens when you “choke the release” of inventory. I’ll also invite people from my team to weigh in about their areas of expertise—from implementation to integration to constraints management to new sales and marketing opportunities for a demand-driven business— and I hope you will tune in to hear their proven and exciting ideas.

    Based on decades in this business, I have found that demand-driven manufacturers realize the most benefit when they keep their eyes on the prize: Each day, they stay focused on demand-driven behaviors and remain disciplined in their efforts. It can be a difficult road. But it is my hope that this conversation will validate why demand-driven matters and inspire you on your journey each day. Until next time, keep it Lean!

    – John Maher

     

    John Maher                                                                                                                                                                                                                                                                                                           John’s passion for demand-driven manufacturing is equal to his interest in how this method improves the lives of employees within these environments. “I’m here to help, not to judge” comments John whose posts reflect why demand-driven matters and are based on his experience working in manufacturing environments and expertise in ERP, MRP, APS, supply chain, manufacturing planning and scheduling systems and constraints management.
     

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