Blog Posting Index Up To Part 388

Post #                    Subject Discussed

Each of the following postings can be reached by searching for the number designation below.  For example:  1 is Focus and Leverage or 2 is Focus and Leverage Part 2 and so forth.  The link to the first blog posting is: 

http://focusandleverage.blogspot.com/2010/08/focus-and-leverage.html

 

1. Introduction to TOC – Lean – Six Sigma

2. Why Improvement Initiatives Fail

3. The Basic Concepts of TOC

4. Throughput Accounting

5. The Process of On-Going Improvement (POOGI)

6. The 3 Cycles of Improvement

7. Combining TOC, Lean and Six Sigma Graphically

8. Step 1a Performance Metrics

9. Planning Steps 1b and 1c Reducing Waste and Variation

10. Developing a Constraint’s Improvement Plan

11. This number was skipped

12. Steps 1b and 1c Reducing Waste and Variation plus an intro to DBR

13. Drum-Buffer-Rope

14. The Final Steps of UIC

15. How do I start the UIC?

16. The 10 Prerequisite Beliefs

17. Comparing Lean, Six Sigma and TOC

18. Types of Constraints

19. The Logical Thinking Processes

20. Undesirable Effects (UDE’s)

21. Categories of Legitimate Reservation

22. Current Reality Trees

23. Constructing Current Reality Trees

24. Conflict Diagrams Basic Principles

25. Constructing Conflict Diagrams

26. Intro to Future Reality Trees

27. Constructing Future Reality Trees

28. Prerequisite Trees

29. Constructing Prerequisite Trees

30. Transition Trees

31. Constructing Transition Trees

32. Book Announcement

33. Project Management Failures

34. Project Management Negative Behaviors

35. Critical Path Management (CPM)

36. Critical Chain Project Management (CCPM)

37. Tracking Projects In CCPM

38. Final Posting on CCPM

39. Intro to the TOC Parts Replenishment Model versus the Min/Max System

40. The TOC Parts Replenishment Model

41. Interview with Joe Dager from Business901

42. Deming, Ohno and Goldratt Commonality

43. Dedication to Dr. Eliyahu Goldratt

44. How processing time, cycle time, throughput and WIP are interrelated

45. Little’s Law

46. Batch and queue production system and the fallacy of a balanced line

47. Why an unbalanced line is better.

48. What prevents me from making more money now and more money in the future?

49. More on the 10 Prerequisite Beliefs

50. Motivating a work force to actively participate in improvement initiatives

51. Re-Introducing the Intermediate Objectives Map

52. Introducing Be Fast or Be Gone: Racing the Clock with CCPM

53. Parkinson’s Law, The Student Syndrome, Cherry Picking and Multi-Tasking

54. Overcoming the four negative behaviors in Project Management

55. Intro to combining the Interference Diagram (ID) and the IO Map

56. The Simplified Strategy

57. The Interference Diagram

58. Interference Diagram for Strategy

59. The ID/IO Simplified Strategy

60. Preface Part 1 for Epiphanized©

61. Preface Part 2 for Epiphanized©

62. CHAPTER 1 Part 1 for Epiphanized©

63. CHAPTER 1 Parts 2 and 3 for Epiphanized©

64. CHAPTER 1 Part 4 for Epiphanized©

65. CHAPTER 1 Part 5 for Epiphanized©

66. Focused Operations Management For Health Service Organizations by Boaz Ronen, Joseph Pliskin and Shimeon Pass

67. Marketplace Constraints

68. A Discussion on Variability

69. More Discussion on Variability

70. Still More Discussion on Variability

71. Paper from the International Journal of Integrated Care

72. Value Stream Mapping

73. Paths of Variation

74. Step 3, Subordination

75. The Key to Profitability: Making Money Versus Saving Money

76. My First Experience With TOC

77. TOC in Non-Manufacturing Environments

78. Deborah Smith’s Excellent Chapter in the TOC Handbook (i.e. Chapter 14)

79. More on Performance Metrics

80. Efficiency, Productivity, and Utilization (EPU) ©

81. Productivity as a Performance Metric

82. Utilization as a Performance Metric

83. What the Dog Saw –Malcolm Gladwell

84. Speaking at the CPI Symposium – Cal State, Northridge

85. NOVACES– A Great Young Company

86. NOVACES’SystemCPI©

87. Problems With My Publisher

88. The Why? – Why? Diagram

89. Experience With the Integrated Methodology

90. A New Piping Diagram

91. The Healthcare Industry

92. More Bad News From the Publisher

93. A Message from the CPI Symposium

94. Multiple Drum-Buffer-Rope

95. Problem Solving Roadmap

96. Problem Prevention Roadmap

97. Improving Profitability

98. More on Throughput Accounting

99. More on Parts Replenishment

100. TLS

101. Engaging the "Money Makers" in Your Company

102. A Conversation on the Theory of Constraints

103. The Key to Successful Consulting Engagements

104. The Three Basic Questions to Answer

105. A Problem With the Airlines

106. A Better Way to Improve Processes and Systems

107. The Problem With Project Management

108. Critical Path Project Management Revisited

109. Critical Chain Project Management Revisited

110. The Fever Chart

111. Comparing CPM and CCPM

112. Performance Improvement for Healthcare – Leading Change with Lean, Six Sigma and Constraints Management

113. More on Performance Improvement for Healthcare

114. Even more on Performance Improvement for Healthcare

115. Still One More on Performance Improvement for Healthcare

116. The Final One on Performance Improvement for Healthcare

117. The Real Final One on Performance Improvement for Healthcare

118. Focused Operation's Management for Health Services Organizations.

119. Focused Management Methodology

120. The Clogged Drain

121. The “Soft” Tools of Improvement

122. More on TOC’s Distribution/Replenishment solution

123. Still More on TOC’s Distribution/Replenishment solution

124. Amir Schragenheim’s Chapter 11 entry in the TOC Handbook

125. Comparison of Lean, Six Sigma and TOC

126. A Simple Lesson on Applying TLS to Your Processes

127. A Historical Index of Blog Postings

128. Mafia Offer Part 1

129. Mafia Offer Part 2

130. Mafia Offer Part 3

131. Airline Problems

132. A YouTube Interview with Bob Sproull and Mike Hannan

133. Active Listening

134. Viable Vision

135. Throughput Accounting

136.  Performance Metrics

137.  On-the-Line Charting

138.  Comment on Epiphanized from a reader in the US Marines

139.  Active Listening

140.  Healthcare Case Study

141.  Change

142.  Getting buy-in for Change

143.  Aviation Maintenance, Repair and Overhaul Client Part 1

144.  Aviation Maintenance, Repair and Overhaul Client Part 2

145.  Continuous Improvement in Healthcare

146.  Using Your Senses in Continuous Improvement

147.  A Video by Phillip Marris on CI

148.  An article about a Construction Company Using the TOC Thinking Processes

149.  Using TOC in Healthcare Part 1

150.  Using TOC in Healthcare Part 2

151.  Using TOC in Healthcare Part 3 Supply Replenishment

152.  Using TOC in Healthcare Part 4 Supply Replenishment (con’t)

153.  Using TOC in Healthcare Part 5 Supply Replenishment (final)

154.  The Sock Maker

155.  The Negative Effects of Using Efficiency

156.  Cost Accounting Part 1

157.  A Political Voting Story

158.  Cost Accounting Part 2

159.  Cost Accounting Part 3

160.  Using TLS for the Affordable Care Act

161.  The System Constraint in Hospitals Part 1

162.  Wait Times in Hospitals

163.  The Oncology Clinic Case Study Part 1

164.  The Oncology Clinic Case Study Part 2

165.  Article: Emergency Department Throughput, Crowding, and Financial Outcomes for Hospitals

166.  Goldratt’s 5 Focusing Steps in Healthcare

167.  My First Experience With TOC Part 1

168.  My First Experience With TOC Part 2

169.  My First Experience With TOC Part 3

170.  My First Experience With TOC Part 4

171.  My First Experience With TOC Part 5

172.  My First Experience With TOC Part 6

173.  Healthcare Case Study Part 1

174.  Healthcare Case Study Part 2

175.  Healthcare Case Study Part 3

176.  TOC in Healthcare

177.  Healthcare Case Study Part 4

178.  My Transition From Aviation Maintenance to Healthcare

179.  Door to Doc Time Case Study Part 1

180.  Door to Doc Time Case Study Part 2

181.  Door to Doc Time Case Study Part 3

182.  Door to Doc Time Case Study Part 4

183.  My White Paper in Quality Forum Part 1

184.  My White Paper in Quality Forum Part 2

185.  My White Paper in Quality Forum Part 3

186.  A Meeting on Epiphanized at the Pittsburgh Airport

187.  Billing for Immunizations Case Study Part 1

188.  Some Thoughts on Performance Improvement Part 1

189.  Some Thoughts on Performance Improvement Part 2

190.  Case Study on Using TOC in Healthcare

191.  IO Map

192.  TOC Thinking Process Tools Part 1

192B.  TOC Thinking Process Tools Part 2

193.  Case Study on How to Use TOC’s Thinking Processes Part 1

194.  Case Study on How to Use TOC’s Thinking Processes Part 2

195.  Case Study on How to Use TOC’s Thinking Processes Part 3

196.  Synchronized and Non-synchronized Production

197.  Competitive Edge Factors

198.  Case Study on How to Use TOC’s Thinking Processes Part 4

199.  Case Study on How to Use TOC’s Thinking Processes Part 5

200.  Case Study on How to Use TOC’s Thinking Processes Part 6

201.  Case Study on How to Use TOC’s Thinking Processes Part 7

202.  Case Study on How to Use TOC’s Thinking Processes Part 8

203.  Case Study on How to Use TOC’s Thinking Processes Part 9

204.  Case Study on How to Use TOC’s Thinking Processes Part 10

205.  Case Study on How to Use TOC’s Thinking Processes Part 11

206.  Case Study on How to Use TOC’s Thinking Processes Part 12

207.  Case Study on How to Use TOC’s Thinking Processes Part 13

208.  Case Study on How to Use TOC’s Thinking Processes Part 14

209.  Case Study on How to Use TOC’s Thinking Processes Part 15

210.  Case Study on How to Use TOC’s Thinking Processes Part 16

211.  The IO Map Revisited Part 1

212.  The IO Map Revisited Part 2

213.  The IO Map Revisited Part 3

214.  The IO Map Revisited Part 4

215.  An Interview About The Ultimate Improvement Cycle by Joe Dager

216.  Healthcare Case Study:  Door to Balloon Time Part 1

217.  More On My First Experience With TOC Part 1

218.  More On My First Experience With TOC Part 2

219.  More On My First Experience With TOC Part 3

220.  More On My First Experience With TOC Part 3

221.  More On My First Experience With TOC Part 4

222.  A Discussion on Constraints Management Part 1

223.  A Discussion on Constraints Management Part 2

224.  A Discussion on Constraints Management Part 3

225.  A Discussion on Constraints Management Part 4

226.  A Discussion on Constraints Management Part 6

227.  How I Present TOC Basics to Students & Teams Part 1 (Most viewed of all posts)

228.  How I Present TOC Basics to Students & Teams Part 2

229.  YouTube Video on Improving Flow Through a Bottleneck

230.  YouTube Video on Throughput Accounting

231.  YouTube Video on What to Change

232.  YouTube Video on What to Change To

233.  YouTube Video on How to Cause the Change to Happen

234.  A Meeting With an Executive of a Larger Corporation

235.  The Missing Link

236.  You Tube Video by Goldratt on Henry Ford and Taichi Ohno

237.  Prevention Versus Detection – The Bug Guy

238.  An Article by Anna Gorman of the LA Times

239.  TOC’s Solution to Supply Chain Problems

240.  The Nun and the Bureaucrat Part 1

241.  The Nun and the Bureaucrat Part 2

242.  The Nun and the Bureaucrat Part 3

243.  The Nun and the Bureaucrat Part 4

244.  The Nun and the Bureaucrat Part 5

245.  The Nun and the Bureaucrat Part 6

246.  A Healthcare Clinic Case Study Part 1

246B.  An Update to Focus and Leverage Part 246

247,  Drum Buffer Rope in Manufacturing

248.  The Sock Maker Revisited Part 1

249.  The Sock Maker Revisited Part 2

250.  Throughput Accounting Part 1

251.  Throughput Accounting Part 2

252.  Throughput Accounting Part 3

253.  How to Use and Integrated TOC, Lean & Six Sigma Methodology Part 1

254.  How to Use and Integrated TOC, Lean & Six Sigma Methodology Part 2

255.  How to Use and Integrated TOC, Lean & Six Sigma Methodology Part 3

256.  How to Use and Integrated TOC, Lean & Six Sigma Methodology Part 4

257.  How to Use and Integrated TOC, Lean & Six Sigma Methodology Part 5

258.  Critical Path Project Management Versus Critical Chain PM Part 1

259.  Critical Path Project Management Versus Critical Chain PM Part 2

260.  Critical Path Project Management Versus Critical Chain PM Part 3

261.  Critical Path Project Management Versus Critical Chain PM Part 4

262.  Critical Path Project Management Versus Critical Chain PM Part 5

263.  Critical Path Project Management Versus Critical Chain PM Part 6

264.  The Cabinet Maker – A TOC Case Study Part 1

265.  The Cabinet Maker – A TOC Case Study Part 2

266.  The Cabinet Maker – A TOC Case Study Part 3

267.  The Cabinet Maker – A TOC Case Study Part 4

268.  How I Run Improvement Events

269.  Using The Goal Tree vs. the Full Thinking Process Analysis Part 1

270.  Using The Goal Tree vs. the Full Thinking Process Analysis Part 2

271.  Using The Goal Tree vs. the Full Thinking Process Analysis Part 3

272.  Using The Goal Tree vs. the Full Thinking Process Analysis Part 4

273.  Using The Goal Tree vs. the Full Thinking Process Analysis Part 5

274.  Using The Goal Tree vs. the Full Thinking Process Analysis Part 6

275.  An Analysis of Focus and Leverage’s Top Page View Postings

276.  An Index of All Focus and Leverage Blog Posts

277.  Using the Thinking Processes in Healthcare Part 1

278.  Using the Thinking Processes in Healthcare Part 2

279.  Using the Thinking Processes in Healthcare Part 3

280.  The Four Disciplines of Execution Part 1

281.  The Four Disciplines of Execution Part 2

282.  The Four Disciplines of Execution Part 3

283.  The Four Disciplines of Execution Part 4

284.  The Four Disciplines of Execution Part 5

285.  The Goal Tree – A New Way to Make it and Use It Part 1

286.  The Goal Tree – A New Way to Make it and Use It Part 2

287.  The Goal Tree – A New Way to Make it and Use It Part 3

288.  Operation Excellence by Jim Covington

289.  The Saw Mill Assessment

290.  How I present the Theory of Constraints to People Not Familiar With it

291.  David and Goliath – Malcolm Gladwell’s Latest Book

292.  The Basics of TOC

293.  TOC’s Replenishment Model Part 1

294.  TOC’s Replenishment Model Part 2

295.  Blog Posting Index

296.  Overcoming Natural Resistance to Change

297.  Integrating TOC, Lean and Six Sigma Part 1

298.  Appendix 1 from Epiphanized Part 1

299.  The Winter Storm in Atlanta

300.  Appendix 1 from Epiphanized Part 2

301.  Appendix 1 from Epiphanized Part 3

302.  Appendix 1 from Epiphanized Part 4 Final

303.  Bill Dettmer videos on TOC’s Thinking Processes

304.  Queuing Theory Part 1

305.  Queuing Theory Part 2

306.  Delta Airlines Lack of Customer Focus

307.  Bill Dettmer’s Book Strategic Navigation

308.  Excerpts from The Ultimate Improvement Cycle – My second book Part 1

309.  Excerpts from The Ultimate Improvement Cycle – My second book Part 2

310.  Excerpts from The Ultimate Improvement Cycle – My second book Part 3

311.  Excerpts from The Ultimate Improvement Cycle – My second book Part 4

312.  Excerpts from The Ultimate Improvement Cycle – My second book Part 5

313.  The Ultimate Improvement Cycle – Step 1:  Identify - My second book Part 6

314.  The Ultimate Improvement Cycle – Step 2:  Define, Measure and Analyze - My second book Part 7

315.  The Ultimate Improvement Cycle – Step 3:  Improve - My second book Part 8

316.  The Ultimate Improvement Cycle – Step 3:  Control - My second book Part 9

317.  Throughput Accounting Part 1

318.  Throughput Accounting Part 2

319.  Throughput Accounting Part 3

320.  Throughput Accounting Part 4

321.  Throughput Accounting Part 5

322.  Throughput Accounting Part 6

323.  Throughput Accounting Part 7 Final

324.  Optimium Health’s Amazing New Software for Healthcare

325.  Personal experiences using Throughput Accounting

326.  MRO Project Management Case Study Part 1

327.  MRO Project Management Case Study Part 2

328.  MRO Project Management Case Study Part 3

329.  MRO Project Management Case Study Part 4

330.  MRO Project Management Case Study Part 5

331.  MRO Project Management Case Study Part 6

332.  MRO Project Management Case Study Part 7 (Finale)

333.  Part’s Replenishment Systems Part 1

334.  Part’s Replenishment Systems Part 2

335.  Part’s Replenishment Systems Part 3

336.  Part’s Replenishment Systems Part 4

337.  Part’s Replenishment Systems Part 5

338.  Part’s Replenishment Systems Part 6 (Finale)

339.  My Most Rewarding Experience

340.  Operation Excellence by Jim Covington

341.  Epiphanized sequel update

342.  The intent of Focus and Leverage Part 1

343.  The intent of Focus and Leverage Part 2

344.  The intent of Focus and Leverage Part 3

345.  The intent of Focus and Leverage Part 4

346.  The intent of Focus and Leverage Part 5

347.  My Most Profound Learning

348.  An update to our sequel to Epiphanized

349.  TOC and the VA Problem

350.  Reasons for Failing Improvement Initiatives

351.  Appendix 1 from Epiphanized Part 1

352.  Appendix 1 from Epiphanized Part 2

353.  Appendix 1 from Epiphanized Part 3

354.  Link to a presentation on TLS

355.  Article on 91 Hospitals laying-off Employees

356.  How Cost Accounting is Hurting Hospitals

357.  Improvement Approach for Healthcare

358.  Being a Satisficer Versus an Optimizer

359.  Healthcare Case Study – Door to Doc Time

360.  Presentation by Henry Camp

361.  Healthcare Case Study – Waiting Time to be Admitted

362.  Using the True Subject Matter Experts for Improvement

363.  Problems at WaterSaver

364.  Systems Thinking Part 1

365.  Systems Thinking Part 2

366.  Systems Thinking Part 3

367.  Systems Thinking Part 4

368.  A Great Quote

369.  A New Book on Project Management

370.  Inside the New Book on Project Management

371.  My Version of TLS

372.  TLS Part 2

373.  TLS Part 3

374.  Cost Accounting Versus Throughput Accounting Part 1

375.  Cost Accounting Versus Throughput Accounting Part 2

376.  Cost Accounting Versus Throughput Accounting Part 3

377.  Why I use the Piping Diagram Versus Chain Analogy for TOC

378.  Cost Accounting Versus Throughput Accounting Part 4

379.  Cost Accounting Versus Throughput Accounting Part 5

380.  Cost Accounting Versus Throughput Accounting Part 6

381.  Demand Driven Performance Part 1

382.  Demand Driven Performance Part 2

383.  Demand Driven Performance Part 3

384.  Demand Driven Performance Part 4

385.  Demand Driven Performance Part 5

386.  Demand Driven Performance Part 6

387.  Demand Driven Performance Part 7

388.  Demand Driven Performance Part 8

Focus and Leverage Part 388

As a result of my last several posting on Demand Driven Performance Using Smart Metrics written by Debra and Chad Smith, I received several emails wanting me to write more on this subject.  At least for the senders of these emails, what I presented really resonated to the point that two of them truly believed that I was writing about their companies.  The fact is, most companies in the world are being run using a cost -centric strategy, so it doesn't surprise me one bit that there was an interest in hearing more about Debra and Chad's methodology they presented.  I responded to these emails by telling them that they truly need to purchase this book as well as Orlicky's Materials Requirements Planning 3rd Edition written by Carol Ptak and Chad Smith.  This will definitely be my last posting on these two books, at least in this series of postings.

On Orlicky's Materials Requirements Planning 3rd Edition  jacket Carol and Chad wrote the following:

"Building on the pioneering work of Joseph Orlicky, this new edition of the classic text on materials requirements planning (MRP) reveals the next revolutionary step for materials and supply chain synchronization in the modern landscape."

"Orlicky's Material Requirements Planning, Third Edition reviews the poor business results embedded in many of today's manufacturing systems, discusses the core problems causing these results, explains an alternative pull structure for planning and controlling materials flow, and presents results from actual implementations."

"This thoroughly updated edition offers comprehensive coverage of MRP, describes the current state of the MRP application, and identifies the fundamental changes required to achieve sustainable success given the current global circumstances and technology options.  This state-of-the-art guide articulates the next generation of MRP logic - demand driven MRP (DDMRP) - and provides a roadmap for the next and distant future for this critical manufacturing management tool."

Throughout this series of postings I discussed two completely different schools of thought on how a business should be run.  On the one hand, most companies focus on its monthly profit through Cost of Goods Sold (CoGs) dollar credits or as Debra and Chad referred to it as a cost-centric strategy.  On the other hand, the new way being proposed by Debra and Chad (and Carol Ptak) is to focus on and protect demand flow, or a flow-centric strategy.

This is a conflict facing many companies and as we have learned from the Theory of Constraints, we are not looking for a win-lose or even a compromise, but rather a win-win solution.  The tool we use to resolve conflicts is referred to as a Conflict Cloud or Conflict Resolution Diagram.  In their book, Debra and Chad have created a Conflict Cloud, so let's look at it now.

For those of you new to TOC, let me explain how a Conflict Cloud works. 



In the conflict cloud there is a common objective that both sides are striving to accomplish (A).  This common objective is fed by two prerequisite needs which must be achieved for the objective to be met.  These needs may not be sufficient in and of themselves, or even together, to make the objective occur; however, if even one of them does not occur, the objective will not occur, which means that these needs are not in conflict with each other.  What is in conflict are the two modes of operation needed to achieve each of the two needs.  The hashed arrow crossing from one mode of operation to the opposite side's need is meant to check that a conflict exists.  In other words, Mode of Operation 1 compromises our ability to achieve Prerequisite Need 2 and vice versa for Mode of Operation 2 and Prerequisite Need 1.  But again, the conflict exists between the two modes of operation and is characterized by the lightening symbol.  The ultimate purpose of the conflict cloud is to develop a win-win solution thus avoiding both a win-lose and a compromise solution.  The conflict can be resolved by inserting an "injection" or idea that satisfies both sides of the conflict resulting in a win-win.

 

 

In their book, Debra and Chad lay out examples of conflicts that exist within an organization on a routing basis,  Actually, this diagram originated in a third book, The Measurement Nightmare: How the Theory of Constraints Can Resolve Conflicting Strategies, Policies and Measures (CRC Press, 1999, Page 25) by Debra Smith.  In her book, Debra illustrates these conflicts in what she refers to as a "Spider Web Conflict Cloud." I encourage everyone to check out Debra's book which I believe is the best one ever written on Throughput Accounting.

Here's an example of a conflict that frequently arises when both sides are attempting to successfully manage their supply chain.

 

The figure above is the conflict cloud which uses necessity based logic and is read as follows:  In order to successfully manage our supply chain (A) we must manage cash effectively (B).  In order to manage cash effectively (B), we must lower inventories (D).  On this side of the conflict cloud the emphasis is on cash management.  (A) is the common objective.

On the other side of the conflict we have:  In order to successfully manage our supply chain (A) we must maintain high customer service (C).  In order to maintain high customer service (C), we must raise inventories  (D').  This side of the cloud is focused on making sure orders are shipped on time, so they increase their inventories..

As I said earlier, the lightening symbol is the conflict that exists between the two pathways to successfully manage the supply chain which are drastically different.  This conflict cloud summarizes the chronic unresolved conflict above, demonstrating that the conflicting actions to satisfy both prerequisite needs.  This conflict clearly shows how the unresolved conflict puts managers in a no-win set of compromises that compromises their ability to successfully manage their supply chain.  It's called a compromise because we end up cutting short on one or both of the necessary conditions for the overall objective of the organization.  The authors explain that "this tends to produce an oscillating effect between the two sides - a continuous set of trade-offs.  The following figure demonstrates the effect when the organization lives on one side of the conflict."



This figure demonstrates the negative effects of trying to satisfy both D' and D and as you can see, this oscillation between two sets of strategies has devastating effects on overall system performance.   So what is the solution to this conflict? The authors tell us that conflicts often produce competitive actions and these actions can waste both money and time.  At some point in time one of the prerequisites becomes more important than the other one.  In this figure we see that on one side of the conflict there is an effort to raise inventories to protect service levels while on the other side we are forced to lower inventories to manage our cash effectively.  This oscillation creates a state of chaos within the organization and as we change from one mode of operation to the other.  Everyone was following the current directive from leadership and as a result, everyone loses.  In this figure we see the negative effects of each mode of operation.  Does this look familiar?  So what is the answer?


You can find the answer to these conflicts and many other conflicts in Debra and Chad's book.  Go buy it and learn how to resolve these conflicts!  I mean, you don't expect me to tell you everything in my blog do you??  :)
Bob Sproull

The Power of Visualiztion

I just finished watching a video made by Mark Woeppel, the President/owner of Pinnacle Strategies, a consulting firm that is heavily based in TOC.  The video was so good that I wrote to Mark and asked him if I could post a link to it and he agreed to let me do so.  After you watch it, please feel free to share it with you friends, colleagues and even your enemies.  I hope you enjoy it as much as I did.

http://blog.pinnacle-strategies.com/2014/10/the-power-of-visualization-video/?hsCtaTracking=37cecde4-a543-4733-8960-5e6ad0fe1ad3%7Cb9d9971b-ed10-4c88-ac70-492e93faf268&utm_campaign=Blog%20Posts&_hsenc=p2ANqtz-_mDInL70DncxGSptU6v9aieWDgwJ21HUNKzZ5s3DGGx3VxI-s8aaff4rUujTACk2a4VPeR6Z3i4hBzg7mWkzotuLjXEw&utm_content=14684840&utm_source=hs_email&utm_medium=email&_hsmi=14684840

Bob Sproull

TOC and Project Management Conference...

I wanted to let all of my readers know about a fantastic opportunity to learn from the best TOC leaders from around the world in Scottsdale, Arizona in February of next year.  These are the best and the brightest when it comes to TOC!!  Click the link at the bottom of this posting on how to sign up.  Check out these subjects and presenters:

2 & 4 Day Intensive How-To Lab Series, February 9-12, 2015, Scottsdale Resort and Conference Center, Scottsdale, Arizona, USA.

This TOC centered event includes a Critical Chain session:
Creating a Project Factory using CCPM: How to manage less and achieve more in projects
Facilitated by Sanjeev Gupta & Skip Reedy

Full program:

[…] These 2 and 4 day Intensive Labs, taught by world leaders in the Theory of Constraints (TOC) community, are ideal for those who want to gain an entirely new level of knowledge so that they are actually utilizing the specific TOC processes, not just watching them on a video or reading about them out of a book. […]

SESSION I: 2 Day Labs February 9-10, 2015
Coming up with the next Business Innovation Breakthrough […] Yishai Ashlag
Distribution the TOC Way […] Facilitated by Amir Schragenheim
Creating a Project Factory using CCPM […] Sanjeev Gupta & S. Reedy
Start With Simplicity (TOC + LEAN + SIX SIGMA = TLS) […] Bob Fox
The Wide Scope of Throughput Accounting […] Eli Schragenheim
Better, Faster, Cheaper: Practical applications of TOC in Government […] Kevin Fox

Days 1 & 2 of the 4-day Odyssey Program … (4 DAY LAB February 9-12)
Facilitated by Dr. Alan Barnard and Dr. James Holt

SESSION II: 2 Day Labs February 11-12, 2015
Focusing on Key Issues with Developing Strategy […] Eli Schragenheim
Retail Sales, Business Performance and SCM […] Mickey Granot
TOC for Personal Growth […] Dr. Efrat Goldratt-Ashlag
Achieving Breakthrough in Healthcare […] Alex Knight
Maximizing Profitability […] Facilitated by Dr. Lisa Lang and Brad Stillahn
Throughput Accounting: Making Rational Decisions and Reporting Results. Facilitated by Dr. Charlene Spoede-Budd and Audrey Taylor
Production the TOC way […] Facilitated by Amir Schragenheim

Days 3 & 4 of the 4-day Odyssey Program (4 DAY LAB February 9-12 continued). Facilitated by Dr. Alan Barnard and Dr. James Holt.

The world class quality of the facilitators and the pertinence of the subjects makes this a very significant TOC event. Recommended.

http://www.tocico.org/?page=2015_workshop_conf

Hope to see everyone in Arizona in February!!
Bob Sproull

Focus and Leverage Part 387

I finished my last posting (Part 386) by telling you that I would post Debra and Chad's Current Reality Tree (CRD) on their fictitious company.  I want to make it clear that the authors did not refer to the figure below as a CRT, but in reality it is what it is.  Let me remind you that the CRT is read from the bottom up using sufficiency based logic (i.e. interconnected "if" - "then" statements) with the tail of the arrow being the "if" and the tip of the arrow being the "then."  The ellipse shape connecting the arrows is the logical "and," implying both conditions must exist to result in the effect at the tip of the arrow.  Either condition by itself is not sufficient to create the effect.  So let's now look at how Debra and Chad explained this CRT-like logic structure.  I won't go through all of the "if" - "then" statements that Debra and Chad presented in their book, but I will write some of them so that those of you not familiar with CRT's will get a basic idea of how they work.  I encourage everyone to get a copy of Debra and Chad's book to get the full details of the CRT.

 

• "If" a key plant metric is to maximize their cost of goods sold dollar credit (the plant receives a credit value of the product unit cost for every product produced) "and" people behave according to their metrics, "then" plants try to maximize making high CoGs dollar products (products with high unit cost).
• "If" plants try to maximize making high CoGs dollar products, "and" some items have more CoGs dollars than others, "then" departments tend to prioritize producing the high CoGs items at the expense of the low items (e.g., cherry-pick orders based upon CoGs dollar value).
• "If" departments tend to prioritize producing the high "CoGs" dollar items at the expense of the low items (e.g. cherry-pick orders based upon CoGs dollar value), "then" some make-to-stock products are over-stocked.
• "if" some make-to-stock products are over-stocked and there is common labor and machine resources, "then" capacity is consumed unnecessarily.
• "If" capacity is consumed unnecessarily, and plants feel pressure to expedite late work, "then" capacity is not always available when needed.
• "If" capacity is not always available when needed, "then" we feel pressure to add capacity and we feel pressure to use overtime.

With this first leg of the CRT completed we see that we have reached two of the undesirable effects (UDEs) that the plant is facing (shaded areas at the top).  These UDEs are not what we want to have happening.

Using the same logic, I encourage everyone to complete the "If" - "then" connections for the entire CRT.  The CRT connections show the plant's actions to meet their planned absorption rate measure.  CoGs credit in the diagram become the negative effects (shaded boxes I the middle of the diagram).  They are then forced to take firefighting actions when they feel pressure to meet their other other KPI of maximizing due date performance.  The authors ask this question, "What is the predictable effect of the actions taken to meet customer's delivery due dates and their fill rates for make-to-stock products?"  At the top of the diagram we see what is happening to all of the key performance indicators of ROI.......they are going the wrong way together.  That is, On Time Delivery is decreasing, Inventory is Increasing; Lead Time is Increasing; Cost is increasing; and Revenue is Decreasing.  As the authors point out, the actions taken to meet their absorption cost measures, actually light the fires they end up fighting with the actions necessary to try to meet their customer service measures:

• The plant is forced into taking actions that oscillate between attempting to meet the target efficiency/plant performance measure and then scrambling to recover their on-time delivery to their customers.
• The sales manager is forced into taking actions to reduce prices and run extra promotions to compensate for the poor service levels.
• The engineering manager is forced into justifying capital improvements that will increase individual batch sizes and make the inventory, service levels, and expedite costs even worse.

The bottom line is this oscillation of cost-and service-centric behavior creates tremendous resource and spending waste, erodes due date performance, and increases investment.  ROI goes in the wrong direction.

 

The authors explain that if the above scenario looks and sounds familiar, it is because the same meeting takes place within supply chains around the world.  They authors continue, "The same list or some variant of this list is in every organization, even those considered best in class and top performers."  The bottom line is, if companies continue to operate under the cost-centric world of "push and promote" to run their businesses, these problems will continue to happen.  But when companies begin operating under the flow-centric world of "position and pull," amazing things begin to happen.  Debra and Chad lay out four different companies who have changed their approach from being cost centric to being flow centric and the results achieved by all four companies are dramatic.

There are many other valuable insights into the Demand Driven Performance methodology that Debra and Chad have written about in their book.  Things like decoupling points and control points that truly impact the success of your business.  So much so that I could have gone on and on with blog postings on all of these subjects.  My advice to all......go buy Debra and Chad Smith's book, Demand Driven Performance Using Smart Metrics!  You will thank me later, but most of all, you'll thank Debra and Chad!!
 

Bob Sproull