About the Presentation:

Goldratt discusses writing the introduction (chapter 1) of the Theory of Constraints (TOC) Handbook. What is TOC? Focus: do what should be done and don’t do what shouldn’t be done and the evolution of TOC. Throughput accounting was developed about 1981. In about 1985 other environments wanted a solution. Bottleneck was used. Traditional critical path project management was developed in 1958. The critical chain methodology was developed about 1986 for Statoil of Norway. The constraint was the critical chain which represents the time it took to complete the longest path of dependent activities based on technological sequence and resource dependencies. The name theory of constraints was formulated based on this understanding of a different (project versus production) environment. In retailing, the constraint was the shelf space. The five focusing steps (5FS) process originated in 1987. New questions were asked in new environments. New opportunities opened. Everyone is taking what we developed and copying what we did but they didn't think to understand the differences. Therefore their solution didn’t work. When you look at reality and where you want or think you should be you are looking at gaps. Once you acknowledge the inter-dependencies of the gaps you recognize what you call problems are undesirable effects of underlying core problems. Most of the solutions you have been recommending are solutions for UDEs not for the real problem. How do we answer the questions of identifying, exploiting, subordinating, etc.? What we find is you are really using the scientific approach but no one had verbalized how to do it. We spent three years to verbalize the scientific approach. Our solution was the thinking processes (TP). Toyota had developed the five Whys? The current reality made it easier to find the core problem because it was easier to dive down from five UDEs rather than one. From 1989 to 1992 we checked and rechecked the TP. The more powerful the solution the more it changes reality. Many new challenges appear. With improvement in operations, the constraint moves elsewhere. When we don’t have an answer to a problem we try to pretend the problem doesn’t exist. Hitachi Tools from Toyota results of implementing TOC in their job shop were highlighted. This implementation represented the opposite of focusing. This tremendous change created a decisive competitive edge (DCE is defined as a company able to satisfy a client’s significant need in a manner that no else can satisfy it.). Hitachi did not use the DCE. The constraint was in the market. They have the biggest mafia offer ever: Hitachi inventory gets three times the number of inventory turns on their items than competitors. Hitachi did the direct opposite of focusing. The DCE created a need for a new sales process which brings the client to realize that one of his DCEs is blocked by me and my competitors. Holistic implementation became necessary (the 4X4) therefore the strategy and tactics (S&T) tree was vital. The process on ongoing improvement and the evolution of red and green curves are discussed. The organizer of the body of knowledge is the S&T tree which moves down from the objective to what actions must be done and what actions must not be done.

-----------------------------------------------------------

About Eliyahu M. Goldratt

Eliyahu M. Goldratt was an educator, author, physicist, philosopher and business leader, but first and foremost, he was a thinker who provoked others to think. Characterized as unconventional, stimulating, and "a slayer of sacred cows," he urged his audience to examine and reassess their business practices with a fresh, new vision.

Dr. Goldratt is best known as the father of the Theory of Constraints (TOC), a process of ongoing improvement that continuously identifies and leverages a system's constraints in order to achieve its goals. He introduced TOC's underlying concepts in his business novel, The Goal: A Process of Ongoing Improvement, which has been recognized as one of the best-selling business books of all time. First published in 1984, The Goal has been updated three times and sold more than 7 million copies worldwide. It has been translated into 32 languages.

Heralded as a "guru to industry" by Fortune magazine and "a genius" by Business Week, Dr. Goldratt continued to advance the TOC body of knowledge throughout his life, building on the Five Focusing Steps (known as the process of ongoing improvement or POOGI) with TOC-derived tools such as Drum-Buffer-Rope, Critical Chain Project Management (CCPM) and the Thinking Processes. He authored ten other TOC-related books, including four business novels.

Born in Israel on March 31, 1947, Dr. Goldratt earned a Bachelor of Science degree from Tel Aviv University, and a Master of Science and Doctor of Philosophy from Bar-Ilan University. He is the founder of TOC for Education, a nonprofit organization dedicated to bringing TOC Thinking and TOC tools to teachers and their students, and Goldratt Consulting. In addition to his pioneering work in business management and education, Dr. Goldratt holds patents in a number of areas ranging from medical devices to drip irrigation to temperature sensors. He died on June 11, 2011, at the age of 64.

© 2009 TOCICO. All rights reserved.