23rd International Conference of the TOC Practitioners Alliance - TOCPA www.tocpractice.com
21-22 March, 2016, Tennessee, USA
Helping companies on a continuous growth in cases of no decisive competitive edge Oded Cohen, TOC Strategic Solutions, Israel 22 March, 2016
Oded Cohen Oded has over 35 years of experience in developing, teaching and implementing TOC methodology, solutions and implementation processes working directly with Dr. Goldratt all over the world. Among the countries to which Oded brings his expertise are the USA, Canada, Japan, India, China, the UK, Poland, Russia, Ukraine, Colombia, Chile, Peru, Turkey and many others. Oded has authored multiple TOC contributed to numerous TOC books.
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Oded in the is the author of Ever Improve – A Guide to Managing Production the TOC Way, published in June 2010. Oded co-authored the book Deming & Goldratt: The Theory of Constraints and the System of Profound Knowledge – The Decalogue. Together with Jelena Fedurko Oded has co-authored the book Theory of Constraints Fundamentals. Oded is International Director of TOC Strategic Solutions Ltd and Founder and Co-President of TOCPA. www.tocpractice.com
[email protected] www.toc-strategicsolutions.com
23rd International Conference of the TOC Practitioners Alliance - TOCPA
POOGI in cases when DCE is not established Introduction – what is the problem? Some history cases The Direction of the solution Some practical recommendations
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23rd International Conference of the TOC Practitioners Alliance - TOCPA
Introduction The TOC Practitioners Is the collection of TOC practitioners a community? TOC Practitioners have: Knowledge Experience Ability to construct/adapt special solutions Why community? For continuous learning For preserving the knowledge that has been generated For supporting those who want TOC but struggle in implementing and in achieving the expected/desired results 4
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23rd International Conference of the TOC Practitioners Alliance - TOCPA
Successful Implementation Necessary Conditions: A TOC Leader: Capable, Willing and Confident Supportive environment Good and relevant solution TOC Professional for: constructing the solution and for auditing the implementation
Are these conditions sufficient? 5
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23rd International Conference of the TOC Practitioners Alliance - TOCPA
Red Curve, Green Curve and DCE When introduced to TOC people and companies expect to achieve results as per the Red Curve. The danger of the Green curve is well known. The standard S&T trees call for the development of the Decisive Competitive Edge “DCE”. The DCE suggested by TOC is based on logistical excellence – managing flow the Toc way in production, distribution and/or in project management. However, we have experienced situations in which achieving logistical excellence was not enough to provide the company with DCE. In some cases it was not enough even for just a competitive edge. In these cases the desires of the owners and managers to use TOC were not reflected in the bottom line. 6
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23rd International Conference of the TOC Practitioners Alliance - TOCPA
The Joy and the Pain of the Five Focusing Steps The success of the first three steps brings joy and in most of the cases quick bottom line results. The initial results provide stamina to carry on to step 4. Usually, step four for logistical systems deals with elevation of resource capacity. When the output of the elevated capacity can be sold - step 4 is a celebration. However, if the constraint moves to the market – the continuation of the growth of the company largely depends on the ability to capitalize on the improved performance. Whether the difficulties are internal or external – many companies experience : • Slow down in the growth • Unhappiness due to the need to put more (intellectual) efforts 7
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23rd International Conference of the TOC Practitioners Alliance - TOCPA
The reaction to the difficulties in Step 4 Usually, step 4 becomes a conflict area between the operational departments and sales/marketing. This lead to: • Disconnection between operations and sales • Reverting back to the system prior to TOC • Moving to another approach (Lean etc.) However, there have been some “stubborn” and persistent leaders that have not given up and have continued to pursue the continued improvement in spite all difficulties. I want to share with you some of these cases as they represent in my eyes the essence and the spirit of TOC 8
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23rd International Conference of the TOC Practitioners Alliance - TOCPA
Case 1 – Started in 1989 Triumph – UK 1989 – Jonah Program and Manual DBR 1990 – Sales and Marketing, TP 1993 – Implementing “Disaster” , the SW package 1999 – Upgrading Disaster – Replenishing Internal Buffers 2004 – Lack of Subordination 2005 – Solutions for Sales 2007 – Government Contracts and A&D Projects 2010 – Implementing Symphony for wood plant 2011 – The New Triumph Presented by Andrew Jackson - 21st TOCPA Conference, 2015 UK 9
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23rd International Conference of the TOC Practitioners Alliance - TOCPA
1/1/1979
1/1/1983 1/1/1984 1/1/1985 1/1/1986
1/1/1990 1/1/1991 1/1/1992
1/1/1994
1/1/1996 1/1/1997 1/1/1998
1/1/2000 1/1/2001 1/1/2002 1/1/2003 1/1/2004
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1/1/2005
99
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1/1/2006 1/1/2007
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1/1/2008 1/1/2009 1/1/2010
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1/1/2011 1/1/2012 1/1/2013 1/1/2014 1/1/2015 1/1/2016
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21st International Conference of the TOC Practitioners Alliance - TOCPA
1/1/1995
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Sales Profile 1979-2016 Good Years and Bad Years
1/1/1989
TOC 1989
1/1/1988
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Year with a Loss
1/1/1982
Presented by Andrew Jackson - 21st TOCPA Conference, 2015 UK
1/1/1981
Total Sales 1959 - 2016
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1/1/1980
Case 2 – Started in 2008 TOC Applications: TA, DBR, TP, Flow management, NPD, Sales Volume 1200
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Sales Volume
Start TOC
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0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
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23rd International Conference of the TOC Practitioners Alliance - TOCPA
Case 3 – Started in 2012 Retail TOC Availability: Stock Availability, TP, Market Offer Steps taken: DTA – Buffers in CWH and in shops Results: dramatic reduction in the overall stock coupled with increase in availability. At the same time the sales increase was just 2% above the inflation rate as compare to the desired 10%. Set the objective to increase the amount of sales per visiting buyer and to increase the amount of traffic. Used UDEs and UDE clouds to develop market offers, as well as ample of ideas (what ever can work in such environment). Results: sales are growing slowly while investment is well managed 12
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23rd International Conference of the TOC Practitioners Alliance - TOCPA
Characteristics of these cases 1. The first phase of the TOC implementation achieved high level of service level for their industries 2. They all have dominant and committed leaders (and in two cases also the owners) 3. The sales people have been supportive (to different levels) 4. The leaders have been willing to listen to the TOC practitioners and to use suggested directions and actions Nevertheless, None of them have managed to turn the logistical excellence into DCE
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23rd International Conference of the TOC Practitioners Alliance - TOCPA
Is there a Problem? No and Yes! Theoretically – no! the role and the responsibility of the leader is to ensure the well being of the company. If the leader cannot find the solution within the TOC the it makes sense to search and employ any other approach that can help achieving improved performance. Practically – Some leaders like TOC, want to use TOC and are frustrated that TOC does not fully work for them. The problem is that for some companies at some times the standard TOC solutions do not answer their needs as per their specific circumstances. 14
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23rd International Conference of the TOC Practitioners Alliance - TOCPA
The Direction of the solution The problem exists only for those that love and want TOC. The direction for the solution is simply:
Do not Give up! 1. Employ every element of the TOC solution. Ensure it is implemented correctly. Even if it does not provide the expected result it will serve as a base for further developments 2. Use TOC thinking processes to refine existing elements of the solution and to develop additional ideas. 15
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23rd International Conference of the TOC Practitioners Alliance - TOCPA
Practicalities Establish a TOC Think Tank that comprised of: The leader Knowledgeable and experienced TOC practitioner(s) Few capable and willing key managers The Thinking Tank should be determined and committed to find a solution. As such to develop, check and revise a solution that fits the specific circumstances of the company. 16
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23rd International Conference of the TOC Practitioners Alliance - TOCPA
Some Recommendations
For the external TOC Practitioners: Carefully conduct the CRS – Current Reality Study Do not overcommit results if there are not enough evidence to establish the improved performance, especially, the financial gains. Check carefully the expectations of the leader and their perception of what can be achieved.
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23rd International Conference of the TOC Practitioners Alliance - TOCPA
