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July 16-19, 2017
Melia Hotel in Berlin, Germany.


Oded Cohen - Co-Founder and Co-President TOC Practitioners Alliance
   
 

 

Generally, the sales function determines what production should produce, while the production function dictates what can be produced (and in many cases quantities and timing). When these points of view do not coincide, TOC interferes and suggests sorting out the differences by synchronizing sales and capacity.

The synchronization has been embodied in the implementations of the TOC solutions for production. Its formalization was captured in the standard S&T Tree. Yet, a great deal of experiences has been developed by the TOC practitioners and very little has been published.

The synchronization is an ongoing process that demands both systems and managerial involvement of the relevant functions – especially sales and production planning as well as tight watch of higher management.

Recently, we have witnessed cases in which companies that have had outstanding logistical performance in MTO environment have started to suffer deterioration. Additionally, companies that have been new to TOC have not managed to achieve the expected improvement even though they have tried to follow the guidelines to the letter.

This is due to the gap between the assume conditions and the reality. These gaps may have happen during the years, due to changes inside and/or outside the company. Failing to recognize these gaps can be the cause for failures in the synchronization that lead to deterioration in the performance.

We will discuss what is needed to be done in order to ensure that all the conditions for the synchronization are in place and what to do when the reality differs from what is assumed in the standard  solution (as captured in the S&T tree).

The presentation includes:

·      Identifying lack of fit to the standard S&T

·      Aligning expectations

·      Modifications and add-ons to accommodate for special circumstances

The presentation provides the conceptual approach to manage the interdependency between sales and capacity in specific circumstances. It is based on several MTO companies. The lessons learned can help TOC practitioners to identify such situations and to handle the implementation accordingly.

Case one: Long standing TOC implementation. The successful “build” did not established directly a competitive edge to “capitalize” on but enabled the company to increase the about of own designs and hence to grow sales. However the additional capacity needed for the high season was provided by subcontractors. This growth threw the company into instability causing deterioration in performance – both logistically and financially.

Case two: A company that is new to TOC. Most products are produced to blueprint or designed to order. Both pre-production and production processes are long and labor intensive. The company constraint is in the market. At the same time there is not enough money to invest in more capacity and not all the orders generate enough Throughput to support the financial performance of the company.

·      Identifying lack of fit to the standard S&T

The standard TOC solutions as captured by the S&T prescribe a well-defined sequence:  Build, Capitalize and Sustain. The expected results depend on the conditions prescribed in tree (as captured in the necessary or parallel assumptions) are relevant. But, what to do when not all of them exist?

The above sequence assumes that during the build phase the focus is internal and there is no need to involve the sales function. At the same time it assumes that in the capitalize phase there is no need to involve production or production planning – except for the monitoring of the available capacity. This is not always the case.

·      Aligning expectations

When the TOC practitioner recognizes that some of the conditions of the S&T tree do not exist in the environment understudy, they must notify the company and should align them to more realistic results.

·      Modifications and add-ons to accommodate for special circumstances

The suggested modification is should provide the technical and the managerial procedures for establishing the synchronizations between sales and capacity. Examples will be illustrated.  

Oded Cohen, MCS in Operations Research, is one of the most known names in the Theory of Constraints, renowned for his profound knowledge, expertise, ability to structure solutions and passion about helping systems and individuals achieve outstanding results. Oded is the author of the Ever Improve approach recorded in his book Ever Improve – translated in Spanish, Chinese and Russian; the highly comprehensive logical structure for system analysis and solution development – the U-Shape. The book Ever Improve is the internationally recognized comprehensive guide to bringing significant improvements to production and material management environments, and has been used as the fundamental base for developing management solutions for non-production areas. Together with Domenico Lepore, Oded co-authored the Decalogue – the methodology and the book presenting the combined approach by Deming and Goldratt to improving systems. Together with Jelena Fedurko, Oded wrote the book Theory of Constraints Fundamentals.

Oded’s journey with TOC started in 1978. In 1982 Oded joined Goldratt’s company – Creative Output and went to the UK to open there a subsidiary. In 1986 Oded moved to Goldratt Institute. In 2001 Oded left Goldratt Institute and moved to the Goldratt Group as the International Director of Goldratt Schools.
Oded was one of the Founders and the first Chairman of Board of Directors of the TOCICO – TOC International Certification Organization.

After untimely death of Dr. Goldratt in June 2011, Oded left Goldratt Schools and, together with Jelena Fedurko, while actively working with companies all over the world, established and focused on developing the TOC Practitioners Alliance – an international professional platform for companies and individuals to grow their TOC knowledge and address practical issues and challenges in TOC implementations, and the tocExpert Network – an international pool of TOC Experts
Oded is the author of several fundamental books and chapters on TOC and a sought after speaker at international conferences.