8 - Oded Cohen_26 TOCPA_Japan_20-21 May 2016_Eng

8/16/2019 8 - Oded Cohen_26 TOCPA_Japan_20-21 May 2016_Eng

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26th International Conference of the

TOC Practitioners Alliance - TOCPA

www.tocpractice.com 19-20 May 2016 !"#"o#a $apan

Laying the foundations for

Operational Excellence

Oded Cohen

IsraelTOC Strategic Solutions

19 May 2016


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26th International Conference of the TOC Practitioners Alliance - TOCPAwww.tocpractice.com 2

Oded Cohen

Oded has over 35 years of experience in developing,teaching and implementing TOC methodology,solutions and implementation processes workingdirectly with Dr. Goldratt all over the world. Among the

countries to which Oded brings his expertise are theUSA, Canada, Japan, India, China, the UK, Poland,Russia, Ukraine, Colombia, Chile, Peru, Turkey andmany others.

Oded has authored multiple TOC articles and

contributed to numerous TOC books.

Oded in the is the author of Ever Improve – A Guide to Managing Production the TOC Way , published in June2010. Oded co-authored the book Deming & Goldratt: The Theory of Constraints and the System of

Profound Knowledge – The Decalogue.

Together with Jelena Fedurko Oded has co-authoredthe book Theory of Constraints Fundamentals.

Oded is International Director of TOC StrategicSolutions Ltd and Founder and Co-President of

TOCPA.

[email protected]

www.toc-strategicsolutions.com


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Every Organization is built for a purpose

The Purpose is determined by the ownersof the system

When the purpose is expected to have

“More” now and in the future – the abilityto grow depends on the Competitive Edgeof the organization.

The ability to develop Competitive Edge isenhanced when the organization hasOperational Excellence

Why Operational Excellence?


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TOC provides Focused approach to managingFlow Systems

TOC is based on managing the systemthrough its Constraint(s)

TOC Provides managerial tools for propertransparency of what is happening in thesystem and where to focus in order to move

forward

TOC has a set of proven solutions forachieving Operational Excellence

What Does TOC Offer?


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Operational Excellence Includes:

Clear Goal

A set of Service Levels with Desired Targets

Measurements (Financial, Service Levels and

Necessary Conditions) Decision Making Processes

Planning

Execution Control

Continuous Improvement - POOGI

All to provide a strong base for a Market Offer

What is

Operational Excellence?


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Many times – Yes!

Some times – may bring to stagnation ona higher level (alas with stronger andmore secured position)

Some times – like in cases when acompany is in a bad shape - there may bea need for more conditions in order to

bring the company to regain itscompetitive edge.

Suggestion: Conduct Current Reality Study

(CRS) with the help of a senior TOC Practitioner

Is Operational Excellence

Enough?


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Step One – Setting the Targets

Step Two – Measurements and Reports

Step Three – Decision Making Processes

Step Four – Building the Buffers Step Five – Planning

Step Six – Execution Control

Step Seven – POOGI

Step Eight – Market Offer

Practical Process

To Achieve Operational Excellence


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TODAYTHE PAST THE FUTURE

Step One

Setting the Targets

TIME

P E R F O R M A

N C E

CURRENTLEVEL

TARGETLEVEL

There is a strongbelief that the

system can perform

better up to the

Target Level

TARGET LEVEL


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Minimum Set of targets :

The Bottom Line: Net Profit, EBIDTA, ROI etc. Service Levels:

DDP and QLT for MTO

Availability and Inventory Turns (MTA,DTA)

On Time Completion, Budget , Lead Time (Projects)

Necessary Conditions:

Cash flow

Quality

CSR – Corporate Social Responsibility

Step One

Setting the Targets


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For all the key measurements and NecessaryConditions establish the way to measure, thereports, the frequency. For example:

Daily Reports:

Orders received, orders shipped and invoiced

Daily progress of the sales process

Weekly reports

Weekly summary of service levels

Financial performance

Cash Flow status and projection

Step Two

Measurements and Reports


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Monthly Reports:

All reports should summarize the last month andshow the progress for all the preceding months(YTD – Year to Date), while comparing the actual

results versus the targets that were set: Service level

Financial performance

Cash Flow

Sales Pipeline and Backlog (received orders)

Step Two

Measurements and Reports


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Every decision made today by management hasan impact on the future state of the system.

Establish key Decision Making Processes basedon the core concepts of TOC:

The System Constraint(s)

The five steps of Focusing

T-I-OE for accepting/rejecting suggestions and

solutions

The six layers of resistance – for handlingreservations and objections to suggestions and

ideas

Step Three

Decision Making Processes


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CONSTRAINTS –factors or elements that determine

how much the system can accomplish


TheGAP

Block

Lift

Step Three



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1. Identify (choose) the system’s constraint

2. Decide how to exploit the system’s constraint

3. Subordinate everything else to the above decision

4. Elevate the system’s constraint

5. If the constraint is broken go back to step one but do

not allow Inertia to cause the system’s constraint

The Five Focusing Steps

Step Three



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Operational MeasurementsThe Bridge

The System

TOE I

OperatingExpenses

Investment Throughput

Step Three



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1. Disagreement on what the problem is

2. Disagreement with the direction ofsolutions

3. Disagreement that the solution will bring

the desired benefits

Yes, but…4. Fear that the solution will result in

negative consequences (Risks)5. Obstacles to implementation seem to beimpossible to overcome

6. Say “Yes” and do nothing

6 Layers of Resistance to Change

A p p l i c a t i o n o f

t h e T O C

T h i n k

i n g P r o c e s s e s

Step Three



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Flow & Focus

Operational Excellence the TOC Way is achievedthrough its unique concept and techniques of usingBUFFERS for managing the FLOW!

There are several types of Buffers: Time Buffers – for MTO, PTO, Project Management

Stock Buffers – for MTA, PTA, DTA and Retail

Money Buffers – for cash and for Buffer activities

Sales Buffers – for managing Sales Pipe-Line

Money and Sales Buffer are special applications of stock Buffers

Step Four

Building the Buffers


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Process flowGoal units

Management / Workforce

InformationFlow

Decisions

Flow

1

% Chain Complete

Production/Operation Buffer

Stock

Buffers

InformationFlow

Project Buffer

Step Four

Building the Buffers


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Managing the FLOW means:

Planning

Controlling the Execution of the plan

Continuous Improvement – POOGI

These are done with the use of the Buffers!

The TOC detailed solutions for the logistical flowscover all the Injections that are necessary for

managing the flows of the company.

Usually, the first few injections provide immediateimprovements while the entire set is required for

operational excellence!

Steps Five-Six-Seven

Managing the FLOW


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Planning means:

For Time Buffers – Determining the time to start anactivity, such as Material Release, performing a taskor initiating a purchasing order. Planning is doneperiodically. Dates are set in advance.

For Stock Buffers – Planning is done dynamicallybased on the current status of the buffers. Planningtriggers the actions for replenishing the buffers.

Planning for Money and Sales Buffers are done thesame way as Stock Buffers

Step Five

Planning


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Execution Control includes:

Collecting feedback from the progress of activities

of the flow.

Assessing the Status of the Buffers based on theupdated knowledge about the progress

Assigning priorities to activities in accordance withthe status of their corresponding buffers

Taking Recovery Actions when Buffers are in RED

(and definitely when in Black)

Monitoring situations of inadequate buffer sizes

Collecting data for Buffer Analysis ( for step 7)

Step Six

Execution Control


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The essence of Buffer Management

Managerial shift:

From Explaining the Past to Predicting the Future

PIVOT

TOC


Step Six

Execution Control


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POOGI – Process of Ongoing Improvement

Recoding the reasons for delays to the flow

Reasons mean: “What is the system waiting for…”

Analysis of the delay reasons

Applying improvement processes, techniques andinitiatives to improve the flow.

This is the link of TOC to LEAN and Six-Sigma.

Adjusting buffer sizes in accordance with theimproved flow

When needed – incorporating Capacity Management

for critical resources

Step Seven

Continuous Improvement


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The Seven Steps should build the OperationalExcellence of the company.

The market should be aware that the company is:

Reliable

Consistent Professional

This is should be manifested through more orders,

more sales and better bottom line.

In any case – this is the time to explicitly move tostep eight

Steps One to Seven

Summary


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Use the Operational Excellence in order to gain

Competitive Edge in the market place.Competitive Edge can be achieved throughdeveloping a Market Offer that solves a

significant problem of your customers in a waythat is better to what your competitors provide (ifat all).

Identifying the opportunities and developing theoffers are done with the help of the TOC ThinkingProcesses (TP).

Step Eight

Market Offer


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If you haven’t started to Implement TOC yet:

Start the process in a gentle way: do your homework

and build your plan before involving others.

Engage a TOC consultant to help you to review yourStrategic Plan (or your vision) and develop it into a

realistic and practical Step one. Establish the critical factors and the key conditions for

achieving the strategy.

Start the recording of the measurements

Learn for yourself how to USE T-I-OE for decisionmaking

Move to the implementation of Operational Excellence

Recommendations for the

Leader of the System

Documents

8 - Oded Cohen_26 TOCPA_Japan_20-21 May 2016_Eng