October 2006 Volume 2 Number 5
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!
The Need for a Thinking Process
At a glance:
Modern business is plagued with examples of organisational failure and poor strategic decision-making, often the result of misleading data and unsupported intuition. It is obvious that we are in need of a Thinking Process which enables us to verbalise our intuition and emotion, and then rigorously test our assumptions using data and cause-effect logic
TOC has such a Thinking Process which organisations can use to confirm exactly what their core problem is, what they need to change to, and how they can most successfully execute that change. Often companies do not investigate these vital points before pursuing improvement initiatives and this can prove costly. The brilliance of the TOC Thinking Process is the way it enables organisations to answer all these questions and test new strategies before investing valuable resources in them.
The following paper investigates the reasons behind corporate failure and explains how the TOC Thinking Process tools are used to ensure the development and execution of successful strategies and improvement initiatives.
From the Field: Gluck Forwarding Systems
TOC in the services sector:
25% more capacity - higher levels of customer service
In October 2005 Gluck Forwarding Systems called TOCCA to see how the insights and innovations of the Theory of Constraints could be applied to their business. Gluck has always been on the leading edge of forwarding and clearing of containerised freight into and out of Australia. Furthermore, their volume of imported containers from China now ranks them amongst the largest of the Freight Forwarder movers, exceeding some 26,000 TEUs per annum globally.
Gluck have consistently been pioneers in the adoption of information technology to improve business productivity in the highly competitive market for services in forwarding and clearing. For example, they were amongst the first to provide their customers with a seamless integration of information flow: from the raising of a purchase order on the overseas supplier to the delivery of goods to their door and every movement in between.
In preparation for the new CMR information system being implemented by Australian Customs in October of 2005, Gluck upgraded their core Freight Forwarding and Customs Clearing system to that of the latest version of the industry standard enterprise software. Although Gluck are consultants in their own right in the area of international freight forwarding and customs clearing, they chose TOCCA to review their operations. The reason for selecting TOCCA had a number of dimensions: Gluck was aware of ToC and thought constraint based system thinking could bring significant business benefits. They also felt that having a fresh pair of eyes from outside of their business looking at their challenges and opportunities would yield innovative solutions and act as a catalyst for change.
The TOCCA process involved some preliminary analysis of process and metrics, some education in foundational TOC principles and then the design of a tailored Drum Buffer Rope (DBR) operations solution.
By changing the way performance is measured, using constraint accounting principles, and exploiting the capability enabled by internet technology, Gluck has been able to identify an additional 25% of productive capacity without the addition of any new resources. Furthermore, through the use of buffer management methods, with its traffic light signaling, there is the ability to provide ample warning when a shipment is heading into trouble due to late presentation of documents. This system allows Gluck staff to manage by exception and provide superior levels of service to their wide array of customers.
GM operations for Gluck, Steve Bradtke had this to say: “TOCCA has guided us through a thorough review of our operations, understanding the constraints and drivers of our processes. Whilst we have yet to fully implement our new process, significant incremental increases are being realised each month in our quest for overall productivity gains of 25%.”
Continuous Improvement Trio
Want Improvement?
TOC 89%, Six Sigma 7%, Lean 4%
The following article discusses a new process improvement methodology called “TLS”: a combination of the best components of TOC, Lean and Six Sigma.
A comparative study was carried out by a global electronics contract manufacturer with 21 plants, 450 000 employees, and 211 team leaders.
TLS was introduced as a complement to the existing lean and six sigma practices and was deployed at 6 of the manufacturer’s 21 plants in a pilot program: 11 plants applied Six Sigma and the remaining 4 applied Lean.
Over the more-than-two-year study the plants completed a total of 101 projects.
The TLS process improvement methodology delivered considerably higher cost savings to the company.
- TLS application resulted in a contribution of 89% of the total savings reported.
- Six sigma came in a distant second with a 7% contribution to company savings
- Lean applications contributed just 4% to company savings.
In addition, employees in TLS plants were more energised and felt a renewed sense of pride for their accomplishments.
“After being introduced to the TLS approach we all knew within a very short period of time that this was what had been missing in all our efforts.”
Vice President and General Manager
Reviews:
TOCCA Constraint Accounting Seminar
31 May 2006
The Constraint Accounting Seminar was the second of a number of free educational seminars offered this year by TOCCA. The seminar received very positive feedback, rivalling the success of the Critical Chain Seminar held in March.
Companies attending the seminar included: Siemens, Claymore Capital, Gluck Forwarding Systems, Life Therapeutics, Transfield Services, Sales Intelligence, Strategic Alliance Consulting Services, Antz Consulting, Horwath, Bush’s International.
Participants acknowledged that by learning more about Constraint Accounting they would be able to significantly improve their company's throughput, with one attendee stating that "it's common sense and should be incorporated into any business".
Feedback was very positive:
TOCCA introduced me to TOC, which has had a profound effect on our ability to add value to our business partners.
Justin Rosenberg (Manager - Claymore Capital)
I have no doubt that the use of TOCCA’s services, applied strategically, will significantly enhance the value of any business.
Lewis Folb (Managing Director - Sales Intelligence)
The key learning points were demonstrated effectively within a short space of time. This time investment should be made by most executives.
Martin Kaplan (Director Corporate Finance - Horwath)
TOCCA make the training material relevant to most if not all in the seminar.
Adam Cruttenden (General Manager - Gluck Forwarding Systems)
If you have been unable to attend either of the seminars TOCCA has run this year - fear not! There are more to come. Future events will include examination of various other Theory of Constraints (TOC) applications, including:
- The Thinking Process
- TOC for Operations
- Replenishment and Distribution
- Critical Chain
- Constraint Accounting
Come along and enjoy these rewarding learning and networking sessions on us!
If you would like us to contact you with information about any of these workshops please leave your details.
Eli Goldratt's Viable Vision Seminar
"Turn your top line into your bottom line in 4 years or less..."
9 June 2006
In Sydney on Friday 9th June, 2006, Dr Goldratt revealed his concept of Viable Vision and how it is possible to realise in four years net profits equal to your current sales. The seminar provided an opportunity for companies to explore a concept that could truly transform the way they do business.
This was the first, and possibly only, visit Australia has received from Eli Goldratt, and he did not disappoint. In his initial review of real TOC implementations and results, not only did he draw on his own material from work with the US Marine Corps (MATCOM) and the British National Health Service (NHS), he also randomly selected seminar participants to comment on their experiences. Everyone had seen positive results - exceptionally positive results - and all experiences supported Goldratt's claim that:
-
Almost anyone who tries TOC achieves results
-
Results are big
-
Results are achieved within a very short period
-
Almost no investments are needed.
In response to how this is possible, Goldratt explained that "any complex system is based on inherent simplicity", supporting his explanation with a thorough exploration of current practice in operations and finance management. The negative implications of suboptimisation and cost accounting were clearly presented through logical analysis, as were the positive effects of TOC alternatives, leaving all participants with a clear understanding of the inherent logic of the TOC methodology.
Participants were then led through a Template of a detailed strategy and tactic tree formulated for one of Goldratt Consulting's Viable Vision clients - Zycon. The session was intense and gave everyone a brief insight into the extraordinary depth and originality of Goldratt's thinking. Every assumption was tested, and every cause and effect validated. The process was exhausting! It was hard to believe that one man could have the energy to create such a template and the fact that he has created 7 more, each one dealing with a specific industry situation, is a testament to both the man and his ideas.
At the end of the day, companies were invited to apply for Dr Goldratt's Viable Vision Offer. If accepted, after successfully completing the initial selection rounds, these companies will be taken on a voyage of transformation greater than they could ever have imagined: the achievement, in four years or less, of net profits equal to their current revenue.
Realization Conference: Project Flow 2006
Chicago, October 14-15
Realization, the creator of ‘Concerto’, held their annual global customer conference in Chicago on October 14th and 15th, 2006.
Concerto is the TOC-ICO preferred software for Critical Chain schedule management and is getting the attention of some very large enterprises in Australia, eager to capitalise on its proven results.
The conference was attended by around 150 delegates, representing either current or prospective Concerto users.
An interesting mix of presentations included a very lively delivery by Dr. Eli Goldratt, creator of the Critical Chain Method. Dr. Goldratt expressed thanks to Realization for their continued success in the delivery of his vision to the market, and for the excellent record in improving schedule performance results.
Of the other presenters, the majority were from large organisations, specializing in: repair maintenance & overhaul (RMO), software development, manufacturing and energy. The energy company presented a project case study in which 1960s technology used to monitor and control processes in two nuclear power plants, was being upgraded to state-of-the-art digital technology. The US Air Force were pleased to announce continued success and expansion of critical chain into more of their heavy lift aircraft RMO operations, including the C-17. This development was hot on the heels of their award winning achievement in the C-5 programme. For a full account of that story read the following article: Back on the Runway.
Informal discussion with delegates surfaced the common key attraction in exploring adoption of Critical Chain: the delivery of predictable results to the declared schedule. By understanding and targeting available capacity to undertake the declared scope of work, it becomes far easier to create flow across the portfolio and deliver predictable due date performance. In repeatable operations there is a consistent reduction in cycle times.
Realization announced their roadmap for the Concerto software, which includes some very exciting new developments that will ensure Concerto stays at the top of its game. TOCCA will continue to bring Concerto and its results to the Australian and New Zealand markets as part of our vision:
“…empowering people with means to change the world for good…”
Peter Crossley, PMP
Upcoming Events:
The next free TOCCA Educational Seminar ...
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 - The Need for a Thinking Process
TOC Education Series: Western Australia
In affiliation with APICS - The Society for Supply Chain Professionals
APICS will be coordinating a series of 4 TOC Workshops in Western Australia over the following 12months. The topics to be addressed in these workshops are:
-
Supply Chain Management (Replenishment and DBR),
-
Project Management (Critical Chain)
-
Financial Management (Constraint Accounting)
-
Strategic Navigation (Thinking Process)
>>> APICS TOC Education Series Calendar
WORKSHOP 1 : Supply Chain Management
(Replenishment and Drum-Buffer-Rope)
Tuesday 24th - Wednesday 25th October 2006
Tennis West, Victoria Park Dr, Burswood, WA
Effective supply chain management is a critical part of a company's ability to sustain competitive advantage. Learn the different strategies that must be employed on a make to stock or a make to order basis that challenges conventional wisdom and ensure that the business is able to respond quicker than its competitors to meet customer demand.
TOC Education Series: Tasmania
In affiliation with the Tasmanian Department of Economic Development
The Tasmanian Department of Economic Development (TDED) has approached TOCCA to deliver several TOC workshops as part of it's Business Boost program.
TDED has acknowledged the need for the state's manufacturers to increase output with a restricted labour pool. The shortage of skilled machining and engineering resources means that new tools and techniques are required to leverage the resources available in order to grow the prosperity of Tasmania.
A decision was made to provide manufacturers with training in the TOC-based approach to finite resource capacity management through a series of workshops.
§ The workshops will be interactive – participation is encouraged
§ The learning method will be Socratic – this enables greater engagement by participants and facilitates pacing the workshop according to the learners’ needs
§ The learning will be experiential and fun. Making use of games and activities, which enhance the understanding of the material
The outcome of the training provided on the TOC principles will provide a foundation for a step increase in the productivity, output capacity and viability of all Tasmanian manufacturers.
The workshops are already BOOKED OUT!!! If you would be interested in attending any future TOC workshops in Tasmania please contact us on +61 2 9387 3955.
In 2007 TOCCA is proudly sponsoring ARA's new Knowledge Capital Reporting Award. For more information on Knowledge Capital visit http://www.ske.org.au/
It's now time to enter the 2007 Australasian Reporting Awards!
Join the many successful organisations that seek to meet the reporting expectations of today’s stakeholders by entering the Australasian Reporting Awards (ARA).
The Australasian Reporting Awards (ARA) has been held each year since 1951 to encourage organisations to strive for excellence in reporting.
Entries now open
October 2006 – close 31 January 2007
The criteria and entry form are now available - http://www.arawards.com.au/
Phone +61 2 9241 1240 Fax +61 2 9247 2495
Email ara@arawards.com.au
The premier worldwide TOC event
TOC-ICO 2006 Conference
4th Annual Worldwide Gathering of
TOC Professionals
November 4 - 7, 2006. Miami,
Florida.
This four day event is designed to offer practical and relevant information on the latest developments and experience in applying Theory of Constraints to enable organizations to achieve breakthroughs and ongoing improvement. The information given will be provided by experts in TOC through case studies, presentations and more.
This year’s event will again include a two day upgrade for TOCICO certified and expert level TOC practitioners with Dr. Eli Goldratt. Additional opportunity to hear from Dr. Goldratt will be given during the close of the general session on Tuesday, November 7, 2006. Included in the program will be panel discussions, poster presentations and specially designed session tracks for experts and novice level TOC users to enhance their experience.
Do not miss your opportunity to network and learn more about the TOC difference.
Gordon Dunbar - Associate
Dip Bus. B.Bus, Grad.Dip Bus & Admin
Consultant (Mining, Strategy and IT)
Gordon Dunbar has an extensive and diverse work experience spanning the disciplines of finance, marketing, information technology, strategy, asset management and more recently, the development of an online asset sharing system (www.cynf.com)
The various roles have involved both Australia wide and international experience predominantly in mining but including the entertainment sector.
His forte is in developing compelling business cases which demonstrate the quantifiable value of optimising throughput at the constraint (amongst other things) and rethinking information systems (ERP’s) architecture in order to institutionalise the five focussing steps.
Gordon lives in Perth and is responsible for developing and servicing the TOCCA business in Western Australia.
Gordon was an
atheist before becoming aware of TOC in 1992.
Back to top