Why is Sustainability still a Significant Challenge in Successful TOC Implementations?
|Andy Watt - Founding member of TOCICO, the owner and driving force behind Goldratt UK.|
|When I saw the theme of the TOCICO conference in 2016 was sustainability of the TOC solutions then I thought it was great as sustainability is dear to my heart and that I have many sustainable implementations. I have a great pride in my organisation delivering sustainable implementations. I was keen to present at the TOCICO in 2016 and thought I would check back through the hundreds of successful implementations with businesses in the UK and see if there were some interesting things that I could present and discuss. When I looked at the organisations then I asked myself the question are they sustainable? |
The first thing to clarify is what is meant by a sustainable TOC solution and what are the necessary conditions required to be in place to demonstrate this.
I first looked at one of my very first clients who have been amazingly successful in the last 12 years and recently presented their sustainable results at a UK conference for me. Their sales have doubled in this time, and the output contribution of the CCR’s have increased by 50% which has had a huge impact on the bottom line. The TOC operations solution is embedded in their SAP system and the management team applied the 5 steps themselves without our help when they had an internal Constraint 5 years ago. This seemed to me that they have a successful and sustainable TOC solution. However, something bothered me, my intuition told me that without the Managing Director of the business the solution was under threat. I talked this through with some of my team and we realised that whilst the TOC solution had been embedded in their software and that we had some key people in the company that understood the application of the first three steps in the five steps they did not have the right mind-set required for sustainability and an ever flourishing company.
I had congratulated myself and my team on a great job on sustainability when the internal team had conducted their own 5 step analysis when they had a problem in 2010 however, now I challenged my assumptions. If the TOC solution and most importantly the 5 step thinking was embedded and sustainable in the organization, then why did they wait until they had a problem to begin to apply it?
When I looked at many more of our successful implementations I challenged myself on this point and wanted to check if essentially inertia was now the Constraint. I had to concede that actually in almost all cases it was.
It appeared that our implementations were still local, reactive fixes to problems being experienced and they did not fundamentally change the mind-set of the organisation into one of POOGI and five steps. This mind-set change from reactive and local as an organisation to one of continuous improvement is what I now fundamentally believe makes an organisation sustainable.
I will be analysing various implementation case studies of ours in different sectors and for different solutions, both holistic, operations and project management – all of which have successful results and explaining why I believe the POOGI and the fundamental 5 steps and hence sustainability is not in place.
Summary of What to Change is: Mind-set of the organisation is local and reactive to immediate problems.
What to change to I believe is a continuous improvement mind-set with the 5 steps and POOGI properly embedded.
What I noticed when analysing the implementations was that many of them achieved fantastic results from the first 3 steps of the five focusing steps alone. This meant that with the focus on the constraint and the synchronisation of the organisation through subordination we were able to "fix” the immediate problem. This was done to such an extent that the results remained sustainable. However, we seemed to have failed in our use of POOGI. POOGI seemed to be applied rarely in the implementations and there was little appetite for it. When there was a capacity problem rather than earlier application of POOGI to prevent the problem it appeared that step 4 was being incorrectly applied. Step 4 elevate is really where POOGI should be applied and instead our former clients were simply adding more expensive capacity reactively not proactively.
In the next part of the presentation I will take you through two cases studies where we have applied the holistic mind-set of POOGI (at step 4) and the 5 steps in an organisation and I believe are beginning to create the truly sustainable TOC solution. This is what to change to.
The third question of how to cause the change is where the real challenge lies. I will examine the two companies where I believe this has been successful and what we have done to achieve it. I will also go through what I believe are the necessary conditions that have to be in place to truly make the TOC solution sustainable.
This means that in order to have the TOC solution sustainable I must have the right processes, the right people and the right environment to create the necessary conditions for sustainability.
Why is there a need to change? In order to make TOC the main way of managing businesses then we need more and more sustainable successes. These successes need to be significant and there needs to be enough of them. Proper application of POOGI will result in more significant success.
How do you measure, refocus, sustain and grow the change. This is a very important question how do you measure a mind-set? How do you drive somebody to behave in a way that creates the continuous improvement desired? You need to continue to set flow targets not for the TOC solution but for the business as a whole that ensures the management team are focussed on the right things always in their application of the five steps. The sustainability is created from the correct application of POOGI in the right area at the right point in the five steps. Once you have created this mind-set and thinking with enough people and the evidence of the results is there then you can claim sustainability. I will present the necessary measures for a sustainable TOC solution.
Finally, I will present the three biggest learnings for me and summarise the process to implement to make the local optima sustainability a thing of the past.
Andy Watt is a founding member of TOCICO, the owner and driving force behind Goldratt UK, increasing the exposure of TOC to the UK.
Andy, a Mechanical Engineer for ten years prior to starting his consulting career, held a number of Senior Management positions within the Aerospace and Defence industry in the UK. He specialised in the implementation of TOC, Lean, Six Sigma and Taguchi in production and R&D environments. This included Hunting Engineering, AWE Aldermaston and Lockheed Martin.
In 2000 Andy joined AGI UK, managed by Martin Powell and Oded Cohen. With their help he formed his own company in 2004 Goldratt UK to provide TOC consultancy across the UK. Since 2004 it has grown to 12 employees and annual sales in excess of $2M.
Conducting two types of implementations; Holistic and functional implementations; these are typically Production, Distribution, Project Management and Sales & Marketing.
Over the last fifteen years Andy and Goldratt UK have worked with hundreds of organisations implementing TOC including; Honeywell, Masterfoods, Bombardier, Siemens, Johnson Matthey and many more SMEs. This includes significant involvement in the market sectors of Banking and Finance, Pharmaceutical, Automotive, Aerospace and Defense.
Andy is also an owner and Director of software company RopeWeaver who provide TOC based software for SME’s in Operations and Distribution.
In 2013 Andy also became shareholder in Tenon Engineering a manufacturing business engineering and producing instrumentation products; including Rheometers and plastimeters; across the world which is on a TOC journey to become ever flourishing.