29th International Conference of the TOC Practitioners Alliance - TOCPA www.tocpractice.com
11-12 November 2016, Vilnius, Lithuania
How the
TOC Thinking Processes can be integrated in strategic changing and designing systems Oded Cohen & Jelena Fedurko Estonia & Israel TOC Strategic Solutions tocExpert 11 November 2016
Oded Cohen Oded Cohen 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.
articles
and
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.tocexpert.com www.toc-strategicsolutions.com www.tocpractice.com
29th International Conference of the TOC Practitioners Alliance - TOCPA
Jelena Fedurko Jelena Fedurko is a Co-Founder and Co-President of TOC Practitioners Alliance TOCPA and International Director of TOC Strategic Solutions. Jelena has been involved in TOC since 1999. She is a TOC expert, trainer and consultant, and provides TOC implementation support in production, supply chain and project management. Jelena has worked in various countries all over the world, including Japan, Poland, Germany, Switzerland, Turkey, Italy, Russia, Ukraine, India, China, Chile, Colombia, Mexico. Jelena is the author of four advances books on TOC Thinking Processes: Behind the Cloud (2011), Through Clouds to Solutions (2013), Typical mistakes in working with TOC Logical Tools (2014), A Good Strategy & Tactic Tree (2016). Together with Oded Cohen Jelena has co-authored the book Theory of
[email protected] Constraints Fundamentals (2012). She has contributed www.tocexpert.com to a number of books on TOC, and has many www.toc-strategicsolutions.com publications. Jelena translated and edited several www.tocpractice.com major TOC books. www.tocpractice.com
29th International Conference of the TOC Practitioners Alliance - TOCPA
Moving towards Industry 4.0 – looking with TOC tools Industry 4.0: “The term Industry 4.0 refers to the combination of several major innovations in digital technology, all coming to maturity right now, all poised to transform the energy and manufacturing sectors. These technologies include Source: A Strategist’s Guide to Industry 4.0, by Reinhard • advanced robotics and artificial intelligence; Geissbauer, Jesper Vedsø, and • sophisticated sensors; Stefan Schrauf In • cloud computing; strategy+business http://www.strategy• the Internet of Things; business.com/article/A-Strategists• data capture and analytics; Guide-to-Industry-4.0?gko=7c4cf • digital fabrication (including 3D printing); • software-as-a-service and other new marketing models; • smartphones and other mobile devices; • platforms that use algorithms to direct motor vehicles (including navigation tools, ride-sharing apps, delivery and ride services, and autonomous vehicles); • and the embedding of all these elements in an interoperable global value chain, shared by many companies from many countries.” www.tocpractice.com
29th International Conference of the TOC Practitioners Alliance - TOCPA
Industry 4.0 – Developers/Providers, Users, Integrators
It is logical to expect that only some companies will be Developing and Providing Industry 4.0 systems, tools and mechanisms. While absolute majority of companies will be their Users. There is also a third ‘player’ – Integrators. www.tocpractice.com
29th International Conference of the TOC Practitioners Alliance - TOCPA
Source: A Strategist’s Guide to Industry 4.0 by Reinhard Geissbauer, Jesper Vedsø, and Stefan Schrauf In strategy+business http://www.strategybusiness.com/article/AStrategists-Guide-to-Industry4.0?gko=7c4cf
www.tocpractice.com
29th International Conference of the TOC Practitioners Alliance - TOCPA
Adopting Industry 4.0 is the Solution – then what is the Problem?
What to change?
What to change to?
DE UDE
DE UDE
UDE
DE
DE
UDE
NBRs
DE UDE
UDE
D B
D’ C A
www.tocpractice.com
High Performance Measurements
DE
Injections
PIVOT
Direction of solution
29th International Conference of the TOC Practitioners Alliance - TOCPA
Future Reality
Current Reality
Low Performance Measurements
Adopting Industry 4.0 is the Solution – then what is the Problem?
What to change?
What to change to?
DE UDE
DE UDE
UDE
DE
DE
UDE
NBRs
DE UDE
UDE
D B
D’ C A
www.tocpractice.com
High Performance Measurements
DE
Injections
PIVOT
INDUSTRY
4.0
29th International Conference of the TOC Practitioners Alliance - TOCPA
Future Reality
Current Reality
Low Performance Measurements
Adopting Industry 4.0 – major shifts Source: A Strategist’s Guide to Industry 4.0 by Reinhard Geissbauer, Jesper Vedsø, and Stefan Schrauf In strategy+business http://www.strategy-business.com/article/A-Strategists-Guide-to-Industry-4.0?gko=7c4cf
“Making Industry 4.0 work requires major shifts in organizational practices and structures. These shifts include • new forms of IT architecture and data management, • new approaches to regulatory and tax compliance, • new organizational structures, • and — most importantly — a new digitally oriented culture, which must embrace data analytics as a core enterprise capability.”
In TOC Terms “new” as a part of a system means “Injections”. www.tocpractice.com
29th International Conference of the TOC Practitioners Alliance - TOCPA
Adopting Industry 4.0 is the Solution – then what is the Problem? What to change to?
Low Performance Measurements
High Performance Measurements DE
UDE
DE UDE
UDE
DE
DE
UDE
UDE
D B
D’ C A
www.tocpractice.com
-
-
-
NBRs
DE UDE
Future Reality
Current Reality
What to change?
Industry 4.0 Injections:
DE
Injections
PIVOT
INDUSTRY
4.0
-
The full digitization of operations Integration vertically (every function and the entire hierarchy) and horizontally (linking the suppliers, partners, and distributors and transferring data among them) The redesign of products and services to track their own activity and its results, along with other products around them. Industrial manufacturers reaching end customers more directly and tailoring their business models accordingly. Taking advantage of the economics of mass customization – the ability to make products in batches of one as inexpensively as a mass-produced product in the 20th century, while fully tailoring the product to the specifications of the purchaser. Adapted from : A Strategist’s Guide to Industry 4.0 by Reinhard Geissbauer, Jesper Vedsø, and Stefan Schrauf In strategy+business http://www.strategybusiness.com/article/A-Strategists-Guide-toIndustry-4.0?gko=7c4cf
29th International Conference of the TOC Practitioners Alliance - TOCPA
What UDEs do Industry 4.0 Injections address? What to change to?
Low Performance Measurements
High Performance Measurements DE
UDE
DE UDE
UDE
DE
DE
UDE
NBRs
DE UDE
UDE
D B
D’ C
Future Reality
Current Reality
What to change?
DE
Injections
PIVOT
A
INDUSTRY
4.0
Industry 4.0 Injection: FULL DIGITIZATION The full digitization of operations to establish your company, your employees, and your entire ecosystem of suppliers, partners, distributors, and customers as a fully interconnected, integrated digital network, linked to other networks around the world.
If FULL DIGITIZATION OF OPERATIONS is a SOLUTION, then WHAT ARE THE PERSISTENT PROBLEMS that do not allow companies to achieve their strategic targets ?
UDE: Response time to customer enquiry/order is (significantly) longer than customer’s tolerance time. UDE: Time to market is too long. UDE: Too many launched products do not bring expected level of sales. UDE: Too often supply chain is clogged with non-moving SKUs. UDE: Only small portion of Requests For Quotations realize in orders. www.tocpractice.com
29th International Conference of the TOC Practitioners Alliance - TOCPA
What UDEs do Industry 4.0 Injections address?
DE
UDE
DE
UDE
UDE
DE
NBRs
DE
UDE
DE
UDE
Future Reality
Current Reality
Does FULL remove all these UDEs? In the part of quick exchange of What to change?DIGITIZATION What to change to? Industry 4.0 Injection: FULL DIGITALIZATION information (provided the data is correct and updated instantly) and instant Low Performance High Performance Measurements Measurements The full digitization of operations to transactions – it should. establish your company, your employees, and But what about the content? What would be the practical mechanisms to your entire ecosystem of suppliers, partners, • Stop overproduction and pushing into the supply chain? distributors, and customers as a fully Injections • Speed up new product/new features development? interconnected, integrated digital network, D D’ operating on forecasts (in case of physically long transportation times)? • Stop INDUSTRY B C linked to other networks around the world. PIVOT 4.0 to RFQ, especially in highly customized environment? • Speed up responses A DE
UDE
If FULL DIGITIZATION OF OPERATIONS is a SOLUTION, then WHAT ARE THE PERSISTENT PROBLEMS that do not allow companies to achieve their strategic targets ?
UDE: Response time to customer enquiry/order is (significantly) longer than customer’s tolerance time. UDE: Time to market is too long. UDE: Too many launched products do not bring expected level of sales. UDE: Too often supply chain is clogged with non-moving SKUs. UDE: Only small portion of Requests For Quotations realize in orders. www.tocpractice.com
29th International Conference of the TOC Practitioners Alliance - TOCPA
What UDEs do Industry 4.0 Injections address? What to change to?
Low Performance Measurements
High Performance Measurements DE
UDE
DE UDE
UDE
DE
DE
UDE
NBRs
DE UDE
UDE
D B
D’ C
Future Reality
Current Reality
What to change?
DE
Injections
PIVOT
A
INDUSTRY
Industry 4.0 Injection: VERTICAL AND HORIZONTAL INTEGRATION - Integration vertically (every function and the entire hierarchy) and horizontally (linking the suppliers, partners, and distributors and transferring data among them)
4.0
If VERTICAL AND HORIZONTAL INTEGRATION is a SOLUTION, then WHAT ARE THE PERSISTENT PROBLEMS that do not allow companies to achieve their strategic targets ?
UDE: DDP/OTIF is significantly lower than high 90s. UDE: A lot of SKUs have overstock. UDE: Materials, parts, FG, tools, drawings, machines, human resources, permissions, approvals are not always available when needed. UDE: Priorities constantly change. UDE: Too much rework. UDE: Corrective actions significantly increase Operating Expense. www.tocpractice.com
29th International Conference of the TOC Practitioners Alliance - TOCPA
What UDEs do Industry 4.0 Injections address?
DE
UDE
DE
UDE
UDE
DE
NBRs
DE
UDE
DE
UDE
Future Reality
Current Reality
What to change? Does VERTICAL AND HORIZONTAL INTEGRATION remove all these UDEs? In the What to change to? Industry 4.0 Injection: VERTICAL AND Low Performance High Performance of information and instant transactions – it should. part of quick exchange Measurements Measurements INTEGRATION But what about the HORIZONTAL content? How will INTEGRATION help - Integration vertically (every function and the • Identify what needs to be SUBORDINATED to what? entire hierarchy) and horizontally (linking • Synchronize production planning among the participants of the value chain the – Injections often in different partners, countries?and distributors and suppliers, D D’ • Manage individual capacity? transferring data among them) INDUSTRY B C PIVOT 4.0 A • Provide availability? DE
UDE
If VERTICAL AND HORIZONTAL INTEGRATION is a SOLUTION, then WHAT ARE THE PERSISTENT PROBLEMS that do not allow companies to achieve their strategic targets ?
UDE: DDP/OTIF is significantly lower than high 90s. UDE: A lot of SKUs have overstock. UDE: Materials, parts, FG, tools, drawings, machines, human resources, permissions, approvals are not always available when needed. UDE: Priorities constantly change. UDE: Too much rework. UDE: Corrective actions significantly increase Operating Expense. www.tocpractice.com
29th International Conference of the TOC Practitioners Alliance - TOCPA
What UDEs do Industry 4.0 Injections address? What to change to?
Low Performance Measurements
High Performance Measurements DE
UDE
DE UDE
UDE
DE
DE
UDE
NBRs
DE UDE
UDE
D B
D’ C
Future Reality
Current Reality
What to change?
DE
Injections
PIVOT
Industry 4.0 Injection: REACHING END CUSTOMER MORE DIRECTLY - Industrial manufacturers reaching end customers more directly and tailoring their business models accordingly.
INDUSTRY
4.0
A
If REACHING END CUSTOMER MORE DIRECTLY a SOLUTION, then WHAT ARE THE PERSISTENT PROBLEMS that do not allow companies to achieve their strategic targets ?
What are the UDEs
www.tocpractice.com
?
What are the mechanisms that will remove these UDEs?
29th International Conference of the TOC Practitioners Alliance - TOCPA
What UDEs do Industry 4.0 Injections address? What to change to?
Low Performance Measurements
Future Reality
Current Reality
What to change?
High Performance Measurements DE
UDE
DE UDE
UDE
DE
DE
UDE
NBRs
DE UDE
UDE
D B
D’ C
DE
Injections
PIVOT
INDUSTRY
4.0
A
Industry 4.0 Injection: PRODUCTS/ SERVICES TRACK THEIR OWN ACTIVITY - The redesign of products and services to track their own activity and its results, along with other products around them.
If PRODUCTS/ SERVICES TRACKING THEIR OWN ACTIVITY is a SOLUTION, then WHAT ARE THE PERSISTENT PROBLEMS that do not allow companies to achieve their strategic targets ?
What are the UDEs
www.tocpractice.com
?
What are the mechanisms that will remove these UDEs?
29th International Conference of the TOC Practitioners Alliance - TOCPA
What UDEs do Industry 4.0 Injections address? What to change to?
Low Performance Measurements
High Performance Measurements DE
UDE
DE
DE UDE
UDE
DE
UDE
NBRs
DE UDE
UDE
D B
D’ C
Future Reality
Current Reality
What to change?
DE
Injections
PIVOT
INDUSTRY
4.0
A
Industry 4.0 Injection: MASS CUSTOMIZATION: - Taking advantage of the economics of mass customization – the ability to make products in batches of one as inexpensively as a massproduced product in the 20th century, while fully tailoring the product to the specifications of the purchaser.
If MASS CUSTOMIZATION is a SOLUTION, then WHAT ARE THE PERSISTENT PROBLEMS that do not allow companies to achieve their strategic targets ?
What are the UDEs
www.tocpractice.com
?
What are the mechanisms that will remove these UDEs?
29th International Conference of the TOC Practitioners Alliance - TOCPA
Recommendations from Industry 4.0 experts to companies on what to do: 6 steps 1.
2. 3.
4. 5. 6.
Map out an Industry 4.0 strategy up front. Evaluate your own digital maturity now, versus where you need to be. Start with pilot projects. Use them to establish proof of concept and demonstrate business value. Define the capabilities you need. Foster a digital culture: All your employees will need to think and act like technologically adept natives, willing to experiment, learn new ways of operating, and adapt everyday processes accordingly. Become a virtuoso in data analytics. Transform into a digital enterprise. Adopt an ecosystem perspective. Develop complete product and services solutions for your customers. Use partnerships or align with platforms if you cannot develop a comprehensive offering on your own.
The listed 6 steps is ‘WHAT’. In transition of companies to Industry 4.0, TOC Thinking Process and logistical solutions can be of great value to help with “HOW”.
Source: A Strategist’s Guide to Industry 4.0 by Reinhard Geissbauer, Jesper Vedsø, and Stefan Schrauf In strategy+business http://www.strategy-business.com/article/A-Strategists-Guide-to-Industry4.0?gko=7c4cf
www.tocpractice.com
29th International Conference of the TOC Practitioners Alliance - TOCPA
Recommendations from Industry 4.0 experts to companies on what to do: 6 steps 1.
Map out an Industry 4.0 strategy up front. Evaluate your own digital maturity now, versus where you need to be. TO DO THIS STEP THE COMPANY MUST ALREADY HAVE THE SOLUTION – IT MUST KNOW WHAT TO ACHIEVE AND HOW MUCH OF IT. WHERE WILL THE COMPANY TAKE THIS SOLUTION FROM? HOW CAN TOC HELP? 2. Start with pilot projects. Use them to establish proof of concept and demonstrate business value. TO DO THIS STEP THE COMPANY MUST FIRST DEVELOP THE CONCEPT OF THE NEW OFFERING TO THE MARKET. WHAT IS THE MECHANISM TO DEVELOP IT? HOW CAN TOC HELP? 3. Define the capabilities you need. 4. Become a virtuoso in data analytics. 5. Transform into a digital enterprise. Foster a digital culture: All your employees will need to think and act like technologically adept natives, willing to experiment, learn new ways of operating, and adapt everyday processes accordingly. WHAT ABOUT RESISTANCE TO CHANGE? HOW CAN TOC HELP? 6. Adopt an ecosystem perspective. Develop complete product and services solutions for your customers. Use partnerships or align with platforms if you cannot develop a comprehensive offering on your own. HOW TO MAKE THE CHOICE? HOW TO JUSTIFY THE DECISION? HOW TO DEAL WITH DILEMMAS? HOW CAN TOC HELP? The source of the 6 steps: A Strategist’s Guide to Industry 4.0 by Reinhard Geissbauer, Jesper Vedsø, and Stefan Schrauf In strategy+business http://www.strategy-business.com/article/A-Strategists-Guide-to-Industry-4.0?gko=7c4cf
www.tocpractice.com
29th International Conference of the TOC Practitioners Alliance - TOCPA
Integrating the TOC algorithms • Detecting gaps in performance – UDEs, UDE Clouds, Consolidation, Core Cloud • Solving dilemmas – Dilemma Clouds • Addressing contradicting tactics – UDE Clouds • Assessing risks - NBR • Identifying conditions - CRT, FRT, S&T, logical clusters • Developing justifications in the systems – Logical Clusters, Assumptions in Clouds, three types of Assumptions in S&T Tree steps.
www.tocpractice.com
29th International Conference of the TOC Practitioners Alliance - TOCPA
OPT: HISTORY AND LOOKING AHEAD
www.tocpractice.com
29th International Conference of the TOC Practitioners Alliance - TOCPA
OPT Optimized Production Technology • OPT was developed in 1975 in Israel, Introduced to the US in 1978 and brought to Europe in 1982 • OPT was an advanced planning system for manufacturing companies. It was Finite Forward Capacity Planning System. • The Need for such system was raised by large manufacturing companies that installed MRPII systems trying to achieve fully integrated systems (MIS) • MRPII planning was based on Infinite Capacity Planning. • Many companies had bottlenecks in their production and hence experienced lousy delivery performance (DDP) and high inventories in WIP and FG www.tocpractice.com
29th International Conference of the TOC Practitioners Alliance - TOCPA
OPT Optimized Production Technology The uniqueness of OPT: • It established the purpose of production system – to contribute to the financial performance of the company by providing systematic approach to managing production. • It put the reliability of delivery at the highest priority • It set up the concepts and mechanics for managing production by establishing: FLOW – PLANNING - EXECUTION • It created a breakthrough approach to sifting the relevant managerial information from the oceans of data provides by the computerized systems (the IT of today) www.tocpractice.com
29th International Conference of the TOC Practitioners Alliance - TOCPA
OPT The Throughput Chain For Production: Collecting and presenting the relevant data to ensure the fast and complete production flow from raw material (or components) to the completion of the customer orders ready to be shipped On Time In Full (OTIF). Stocks
Routings
BOM Orders
T
Purchasing
Distribution
Calendars
www.tocpractice.com
Resources and Capacity
Financials
29th International Conference of the TOC Practitioners Alliance - TOCPA
OPT The Throughput Chain For Extended Supply Chain (internal and external): Using the same concept for Pre-Production (such as design) and Post Production (Transportation, Distribution, Installation, Service etc.)
T
T
T
www.tocpractice.com
29th International Conference of the TOC Practitioners Alliance - TOCPA
OPT Planning Planning Finite Froward Planning – Algorithms to determine the planning of each step in the Throughput Chain. Producing analytical reports and instructions for actions Rough Cut Capacity
T
Purchasing
Material Release www.tocpractice.com
What IF Analysis
Detailed Planning
Expected Completion
Financial Outcome
29th International Conference of the TOC Practitioners Alliance - TOCPA
OPT Execution Control OPT did not have a built in mechanism for controlling the execution of the planning. The Control was done manually by the OPT Analyst . The concepts of managing the execution through Buffers were developed by TOC from 1986, but by then OPT was decoupled from TOC. In early 1990 OPT was “killed” and disappeared from the market. In 1991 Goldratt Institute developed a simplified software to replace OPT – it was called DISASTER (and later The Goal System). This system contains Buffers and early developments of Buffer Management . www.tocpractice.com
29th International Conference of the TOC Practitioners Alliance - TOCPA
OPT The Future OPT can provide conceptually and technically a viable base for managing production in line with Industry 4.0 The use of advanced digitation and computerized decision making can support execution control, initiate recovery actions, suggest improvements and continuously update and upgrade the quality of data needed for Flow, Planning and Execution Control. Updating DB
Buffers Status
Recovery Actions
Continupus Improvement
T www.tocpractice.com
29th International Conference of the TOC Practitioners Alliance - TOCPA