May 2006                                                                                                                              Volume 2 Number 4

 
 


Staff Spotlight

Peter Crossley

Partner

 
In this Edition
  Articles:
1. Finance: Scorekeeper or Player?
2 From the Field: Cadbury Schweppes
3 TOC Success Story: Back on the Runway
4 Review: TOCCA Critical Chain Multi-Project Management  Seminar
  Events:
5 TOCCA Constraint Accounting Seminar
6 Goldratt's Viable Vision Seminar
7 TOC-ICO Conference
 

TOCCA

Products & Services

Consulting & Training in:
• Strategy
• Thinking Process Tools
• Operations Management - Drum-Buffer-Rope
• Critical Chain Multi-Project Management
• Constraint Accounting
• TOC books & learning material

 

http://www.tocca.com.au/

 

TOCCA

Partners

Additional Theory of Constraint Resources:
• Washington State University
• Iowa State University
 
International

Theory of Constraints International Certification Organization (TOCICO)

http://www.tocico.org/

Welcome to another issue of Archimedia,  the System Thinking and Constraints Management newsletter brought to you by The Theory of Constraints Centre of Australia.
Click Here to Subscribe!

 

 

Finance: Scorekeeper or Player?

 

At a glance:

There are two ways one can view the finance function within an organisation: scorekeeper or player. Whilst scorekeeping is a necessary condition of running a business, there is a far more vital role for the finance function, if one subscribes to the view that measurements drive behaviour.

At both conscious and subconscious levels within the enterprise, the measurement framework implemented will be driving the behaviours of operations, sales and marketing functions. If the measurement framework encourages local optimisation of the division, profit centre, department or work centre, then the behaviour produced will have the effect of isolated functional silos, striving to improve their performance. This local optimisation is often at the expense of the enterprise as a whole.

Thus, the finance function cannot abdicate responsibility as player: simply by setting the rules by which the score is kept determines how the game is played.

Research suggests that a constraint approach to profit maximisation, leads to a 25% increase in operating profits with significant additional cash flow benefits

In order to achieve profit maximisation, companies need to consider the scarce resources (constraints) in their business.

The finance function must drive the management and measurement of constraints in a business, in order to fully integrate Operations, Marketing and Sales in the decision making framework.

 

Download the full article...

 

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From the Field: Cadbury Schweppes

More chocolate with less Work in Process

 

Erik Siedler

Assortments Business Unit Leader

 

"My first introduction to TOCCA was in January 2005. TOCCA was invited to Cadbury Schweppes Claremont to conduct a two day workshop on TOC (Theory of Constraints) and to apply these principles on a production line in the Assortments Business Unit. At the end of a very interesting and fun workshop, TOCCA presented their findings on how the DBR (Drum Buffer Rope) principle and Buffer Management could be applied to the  Assortments Counting and Packing Line.

 

"TOCCA was subsequently engaged by Cadbury Schweppes to develop a DBR system for us and the results so far have been very encouraging. The TOC process has forced us to critically evaluate our planning and production process methods.  As a result of this analysis and higher production volumes in 2005, Work In Progress (WIP) stock holdings have been significantly reduced compared to last year and several production process flows have been optimised, eliminating double and triple handling.

 

"Thanks to David and his team, the TOC approach has allowed us to take a fresh approach to production planning and process optimisation and has engaged our workforce to look at production process improvements more pro-actively."

 

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TOC Success Story: Back on the Runway

$40 million of additional revenue through faster

turnaround times in maintenance

For the second year in a row, a Theory of Constraints (TOC) implementation has won the prestigious Franz Edelman award for Achievement in Operations Research and Management Sciences.

 "The purpose of the competition is to call out, recognize, and reward outstanding examples of management science and operations research in practice. The prize is awarded for implemented work, not for a submitted paper or for the presentation describing the work."

The winning team was from the Warner Robins Air Logistics Centre (WR-ALC). “Back on the Runway” details the amazing progression of maintenance, repair and overhaul operations at WR-ALC on the model C5 aircraft.

In summary:

Fiscal Year (FY) 2000

    LEAN[1]

FY 2005

 TOC[2]

FY 2006

Lead Time (LT) /

Turnaround Time (TAT)

390 days

240 days

171 days

Due Date Performance (DDP)

25%

100%

100%

Work in Process (WIP)

13

13

7[3]


 

[1] Lean initiatives were implemented by WR-ALC in 2000. Outstanding results led to WR-ALC winning the Shingo Gold Award in September 2005.

[2] TOC Project Management Method (Critical Chain) was implemented by WR-ALC in April 2005. Massive improvement was made on already outstanding results.

[3] Estimated annual revenue generated by the 5 additional aircraft in operation: $40 million

 

 

"The results are remarkable considering they were achieved on an already well-performing operation, one that had just been awarded the Shingo Prize Public Sector Gold Award."

 

 

Download the full article...

 

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Review:

 

 TOCCA Critical Chain Multi-Project Management Seminar

 30 March 2006

A very successful day of Critical Chain Multi Project Management (CCMPM) learning & networking was enjoyed by some 15 people representing a diverse group of industries. Held at TOCCA’s premises at Bondi Junction in their new training facility, the seminar provided in-depth assessment of the CCMPM methodology and tools and focussed on the three vital points of any Critical Chain implementation, namely:

  • Manage the flow, not projects
  • Adopt counterintuitive rules
  • Attack policies, not behaviours

Companies that contributed to making this seminar a success included: Transfield, Leighton, Antz, Boeing Australia, ADI Limited, M Webster Holdings, Kell and Rigby and Sales Intelligence.

The structure of the day received positive feedback – a mid-morning start, networking lunch and wrap up by 4 pm allowed both local and interstate attendees to make the most of one day out of the office.

This was the first of a number of free educational seminars that will be offered this year by TOCCA. Future events will include examination of a range of Theory of Constraints (TOC) applications, including:

  • Constraint Accounting
  • TOC for Operations
  • Critical Chain
  • Replenishment and Distribution
  • The Thinking Process

Come along and enjoy these rewarding learning and networking sessions on us!

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Upcoming Events:

 

The next free TOCCA Educational Seminar  ...

 

TOCCA Constraint Accounting Seminar

 

Wednesday 31st May, 2006

11:00am - 4:00pm

 

Suite 1501

Level 15, Westfield Tower 2

101 Grafton St, Bondi Junction

 

For an insight into ideas that will be presented at this Seminar, we suggest you read the feature article of this Archimedia edition - Finance: scorekeeper or player?

 

>>> Seminar Details

 

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Eli Goldratt's Viable Vision Seminar

"Turn your top line into your bottom line in 4 years or less..."

 

Friday 9th June, 2006.
8:00am - 4:30pm

 

Sheraton on the Park

161 Elizabeth St, Sydney



The workshop will be dedicated to Theory of Constraints and an in-depth exploration of the Viable Vision concept and its ability to produce enormous gains in profitability — not by pursuing minor efficiency improvements, but by harnessing the power of your organisation as a tightly integrated whole.


Places are limited. To avoid disappointment, register your interest today.

 

>>> Find out more                                                                  Register Your Interest

 

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TOC-ICO Conference

The premier worldwide TOC event

TOC-ICO 2006 Conference
4th Annual Worldwide Gathering of TOC Professionals
November 4 - 7, 2006.  Miami, Florida.

>>> Find out more

 

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Staff Spotlight:  

 

Peter Crossley - Partner

BA Hons, HNC Business and Finance


Peter Crossley has more than 10 years experience in global IT and systems integration, beginning in Asia Pacific during a 6-year period based in Hong Kong.
 

His integration experience includes rollout of call centres throughout Asia for a major fast food franchise, delivery of mixed platform job costing systems to construction JVs, and business systems infrastructure development, throughout a very broad range of industry sectors including retail, hospitality and banking.

During a five year assignment in North America, Peter managed key system development and integration projects for a leading North American company working on multi-million dollar international defence sector projects.

Peter has been responsible for the deployment of the critical chain multi-project management solution, "Concerto", at BHP Billiton, HPM Industries, Breville HWI and Skye Group.

 

Peter has just finished the beta version of TOCCA's Project Portfolio Manager - a .net application to track everything you ever wanted to know about projects. Watch this space...



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