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27th International Conference of the TOC Practitioners Alliance ‐ TOCPA www.tocpractice.com
August 16‐18, 2016 Johannesburg, South Africa
Implementing TOC Supply Chain Management rules within a global High‐ Tech Company in record time using SAP and Simulation Modelling CASE STUDY Dr Alan Barnard, Goldratt Research Labs, South Africa 17th – 18th August, 2016
27th International Conference of the TOC Practitioners Alliance ‐ TOCPA
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Dr Alan Barnard Dr. Alan Barnard is one of the leading experts in the world in Theory of Constraints (TOC) and frequently worked with Dr. Eli Goldratt, creator of Theory of Constraints, on large and complex projects around the world. He is the CEO of Goldratt Research Labs (USA), Chairman of African Phosphates (RSA) and The Odyssey Institute (USA). Alan is also a board member of TOCICO and the Dr. Eliyahu M. Goldratt Foundation. In 2009, Alan was awarded a PhD in Management of Technology & Innovation, from the Da Vinci Institute, with a thesis titled “How to identify and unlock inherent potential within organizations (private & public) and individuals?”. Alan is also the author of 2 chapters in the McGraw Hill published Theory of Constraints Handbook and is currently working on a new book. Alan has worked as a strategy advisor for global companies such as ABB, BHPB, Microsoft, Cisco, SAP, Random House, African Explosives and TATA Group in the Private sector and also with UN DP, UN WFP and Utah State Government in the public sector. The common objective of all these projects was to apply Theory of Constraints PRINCIPLES to develop PRACTICAL MECHANISMS (PRACTICES) to help them identify and unlock inherent potential to achieve more with the same resources in less time. Alan is also the chief architect of HARMONY (www.harmonytoc.com), a collaborative web app nominated for the 2013 Silicon Valley Business App awards. It is used by 100’s of organizations around the world to design, validate/communicate, plan, implement and audit their Strategy & Tactics and to resolve strategic and tactical conflicts.
Contact info
[email protected]
27th International Conference of the TOC Practitioners Alliance ‐ TOCPA
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Case Study: The Company…
27th International Conference of the TOC Practitioners Alliance ‐ TOCPA
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Standing on the Shoulders of Giants… Standing on Shoulders of Giants : 4 Concepts Improve Operations / Supply Chains In “Standing on the Shoulders of Giants”, Goldratt identified that both Ford, Ohno (and Goldratt himself) followed four concepts or principles (called the 4 concepts of improving and managing supply chains):
1. Improving Flow (or specifically reducing demand and supply lead time) should be a primary objective of operations 2.
This primary objective should be translated into a Practical Mechanism that guides the operation when not to produce to prevent overproduction (doing things that should not be done) – – –
Ford: Use Space Ohno: Use Inventory (kanbans) Goldratt: Use Time (Buffers)
3. Abolish Local Efficiencies (and other local optima) 4. A Focusing process to continuously balance flow must be in place (to re‐balance demand and supply when changes take place)
27th International Conference of the TOC Practitioners Alliance ‐ TOCPA
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What management decision mistakes do TOC Applications and TOC Rules help to prevent? Effectively and Efficiently meet the demand placed on my Part Continuously Improving & Synchronizing (Balancing) Flow
1. PLANNING
2. EXECUTION
Decisions before we start work
Decisions while we do work
DECISION 1A
DECISION 1B
How to allocate How to make reliable resources and buffers to commitments, prioritize (efficiently) meet work and control WIP demand? release? (OLD RULE) MISTAKE 1A
(OLD RULE) MISTAKE 1B
Ignoring backlog with Cause self‐imposed making commitments & peaks or Misallocate Resources (on Forecast) not controlling release of WIP and/or Local Buffering NEW RULE 1A
NEW RULE 1B
Remove self‐imposed Quoting on Planned Load peaks and Dynamically & Prioritized WIP Release allocate Resources & Control Aggregate Buffers
3. MEASURE & IMPROVE Decisions after we completed work
DECISION 2A
DECISION 2B
DECISION 3A
Should we change priorities and/or do batching/multi‐tasking?
When should we expedite work and/or what should be reported?
What should be measured (and what not)?
(OLD RULE) MISTAKE 2A
(OLD RULE) MISTAKE 2B
(OLD RULE) MISTAKE 3A
Using local considerations for Priorities & Batching or Multitasking
Dishonest or late reporting and/or Too much or Lack of Expediting
NEW RULE 2A
NEW RULE 2B
Single Dynamic Priority System + “Single piece flow”
“Daily” honest reporting and Active Buffer Management (expediting)
DECISION 3B
When and where should improvements / investments be made? (OLD RULE) MISTAKE 3B
Use Local efficiency Local optima metrics & variances to decisions resulting in decide when and where unbalanced demand vs. to improve supply NEW RULE 3A
NEW RULE 3B
Abolish Local Efficiencies Focused improvements ‐ use Pareto analysis of and resize buffers to re‐ flow delays (reds/blacks) balance flow
27th International Conference of the TOC Practitioners Alliance ‐ TOCPA
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How did we DESIGN the TOC based Supply Chain Solution? High Tech Company – S&T
27th International Conference of the TOC Practitioners Alliance ‐ TOCPA
How did we TEST the TOC based Supply Chain Solution?
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27th International Conference of the TOC Practitioners Alliance ‐ TOCPA
www.tocpractice.com
How did we TEST the TOC based Supply Chain Solution?
27th International Conference of the TOC Practitioners Alliance ‐ TOCPA
www.tocpractice.com
How did we TEST the TOC based Supply Chain Solution?
27th International Conference of the TOC Practitioners Alliance ‐ TOCPA
www.tocpractice.com
How did we TEST the TOC based Supply Chain Solution?
27th International Conference of the TOC Practitioners Alliance ‐ TOCPA
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How did we IMPLEMENT the TOC based Supply Chain Solution in SAP?
27th International Conference of the TOC Practitioners Alliance ‐ TOCPA
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Actual Results achieved?
27th International Conference of the TOC Practitioners Alliance ‐ TOCPA
