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27th International Conference of the TOC Practitioners Alliance ‐ TOCPA www.tocpractice.com
August 16‐18, 2016 Johannesburg, South Africa
Growing a reliable and stable company in a fast changing world ie a growth Cpy ....... the TOC way
Albert Visser, Goldratt Group, South Africa 17th – 18th August, 2016
27th International Conference of the TOC Practitioners Alliance ‐ TOCPA
www.tocpractice.com
Albert Visser I am a director of the Goldratt Group and the MD of Strategic Corporate Assessment Systems. I am a certified TOC expert and have been involved in many TOC projects leading and implementing TOC for the last 15 years ranging from Viable Vision projects, Supply chain and manufacturing and project management projects. I have been implementing maintenance and maintenance spares strategies using expert systems for the last 20 years I have spent the last 12 years in better understanding the limitations that is blocking TOC from becoming the main way of managing companies and developing a potential solution (Never say you know)
[email protected] 083 6547821
27th International Conference of the TOC Practitioners Alliance ‐ TOCPA
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Setting the objective
A Growth Company A growth company is any Cpy whose business generates (significant) positive cash flows or earnings, which increase at (significantly) faster rates than the overall economy. A growth company tends to have very profitable reinvestment opportunities for its own retained earnings. 27th International Conference of the TOC Practitioners Alliance ‐ TOCPA
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Necessary Conditions
• In order to do that we must grow Throughput faster than OE now and in the future • You can only achieve this if you have • Sufficient Market to expand in • You have a validated DCE
But • But even if there is growth capability we could probably release 30% capacity for growth from inherent potential thereafter the company needs to expand into the capacity and beyond • Lets look at how enablers helped companies to grow in the past 27th International Conference of the TOC Practitioners Alliance ‐ TOCPA
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The industrial Revolution
27th International Conference of the TOC Practitioners Alliance ‐ TOCPA
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Division of labor • This is probably the one most miss understood process or not understanding of the full implications on the organization • Lets discuss this through an example • My steel gate cpy • Start • Growth • Lets look at companies that has been successful in implementing Division of labor
27th International Conference of the TOC Practitioners Alliance ‐ TOCPA
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Industry that has successfully implemented Division of labour
• Motor Car industry – Next level of efficiency
• Television and cell phone industry • They all implemented the flow line
Chrysler Viper assembly Plant
Taiwan's contract electronics maker Hon Hai employs about one million workers at factories in China, to make products for the world’s top electronics brands
27th International Conference of the TOC Practitioners Alliance ‐ TOCPA
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Growing Pains • Division of labor
Unavoidable Effect: Creating a flow line/Value stream (A flow line/value stream is a series of dependent value adding activities with clear accountability and responsibility)
• Increase in functional capacity or mechanization of functional capacity
Unavoidable effect: We have to manage the assignment of work
In both cases we have to manage the limiting resource in the flow line • Adding new functionality/new flow lines/value streams So a company develops a number of integrated value streams, to deliver a product or service to the market. This now creates the fertile ground for TOC, Lean, 6Sigma, BPR and many others 27th International Conference of the TOC Practitioners Alliance ‐ TOCPA
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Growth Pains We all end up somewhere in between One man company (all value streams exist in his mind. No division of labor) No flow line A large portion lies in between in a mixture of sizes and levels of formal designs of the flow lines Huge company (That would fail to exist ie they cannot afford not to do it right) Flow lines exist and is formally designed Lets look at the outcome of two different Cpy’s
What is the effect of a our current value stream creation? The Human’s best characteristic is becoming our worst enemy. Informal and unwritten local policy is developed
27th International Conference of the TOC Practitioners Alliance ‐ TOCPA
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Evolution vs Design Single resource Cpy
• • • • •
Transition Tasks are given to people seeing as being reliable and competent rather than considering the flow Functions are done by managers Functional boundaries is not always considered Employees are left to themselves to deal with the flow issues We deal with it in isolation. Nobody has the overall process responsibility. Designed Cpy
27th International Conference of the TOC Practitioners Alliance ‐ TOCPA
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Summary Insights/Learnings from understanding Company Growth
• All the value streams that exist in a large cpy – exists in a entrepreneur? (It is only the way we divide the work that makes it different) • Most organizations do division of labor in an unstructured way which leads to: • overload of competent resources • Higher wage bill and sometimes • Burnout of resources and management becomes the constraint • Frequent fire fighting • No one responsible for value streams • Hierarchy Management and very little value stream management • Slow response to market changes 27th International Conference of the TOC Practitioners Alliance ‐ TOCPA
What are the problems we have in companies due to the current evolvement of Cpy’s Our Cpy is at risk • Resignation of key resources has negative effect on operations – • We resolve local issues in value stream rather than correcting the flow of the value stream • Changes to improve the value stream flow is less successful • Change management becomes a timely and costly exercise and hence people implement at a much lower pace • Most of Current KPI’s is not focused on ensuring that the value stream is optimal • Companies employ and pay more management than they should • The True value is not extracted from Management • Engines of disharmony is very active
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27th International Conference of the TOC Practitioners Alliance ‐ TOCPA
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Is there a solution? • What if we can find a mechanism to document all the business processes of an existing company of say 300 people to the execution level in 2 months. (ie clear accountability and responsibility for each resource in the company) – All value streams • At the same time we remove all non value adding processes (release capacity) • At the same time we assign process and sub process owners (Leverage Management) • Now lets grow the company!! 27th International Conference of the TOC Practitioners Alliance ‐ TOCPA
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Example
Order to delivery VS Customer Order
Customer Delivery
DC
Imp RMS VS Proc Imp
Planner
Factory Warehouse
Replenishment VS
DC RMS
Proc Loc
Loc Proc RMS VS
Manufacturing FG VS Buyer Local procured FG VS
27th International Conference of the TOC Practitioners Alliance ‐ TOCPA
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The Future Company • Have to move to joint ownership if you want to keep your Human capital • This can be done more successful if we have clear accountability and responsibility defined
27th International Conference of the TOC Practitioners Alliance ‐ TOCPA
www.tocpractice.com
First Puzzle Game
• Single person build a Puzzle • Market is buying an assembled puzzle
• Observe Discussion • This is simulating the start of a business – Entrepreneur • How is the job getting done • What positions is he filling in the company • How long did it take
27th International Conference of the TOC Practitioners Alliance ‐ TOCPA
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Second Puzzle Game • Company build a Puzzle •
Increased demand for assembled puzzle
•
Most reliable resources gets more work
•
Work is distributed between resources
• Observe Discussion •
Interaction between resources
•
They look and feel busy but a lot of time idle
•
Engines of disharmony Tell me how you measure me and I will tell you how I will behave”. People need to understand where and how do they and their peers contribute to the organization. Never underestimate the power of inertia. Gaps between responsibility and authority.
•
How long did it take?
•
Are we making money? 27th International Conference of the TOC Practitioners Alliance ‐ TOCPA
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Third Puzzle Game
Your logo
• Company implement flow management • • • •
How do I reduce the complexity How do I reduce the Skill level required What determines the TP Based on the new approach How do I increase the flow
• Observe Discussion • • • • •
Interaction between resources They look much more utilized Engines of Disharmony How long did it take? Are we making money? 27th International Conference of the TOC Practitioners Alliance ‐ TOCPA
