Goldratt’s TOC Thinking Process

Goldratt’s TOCThinking Process

Using the TOC Thinking Process to Identify Problems, Develop Alternatives, and

Implement SolutionsEd D. Walker II

Department of ManagementLangdale College of Business

AdministrationValdosta State University

You graduate and get a good job. Now what?

• You are expected to solve problems.

• If the job were perfectly routine they would not hire a college graduate.

What 3 questions must you answer to solve a problem?

• What to change?

• To What to Change?

• How to Change?

How do we solve problems?

• Too often we treat the symptom..

• Shouldn’t we treat the underlying problem?

• Have you ever been taught a tool for this?

Tools created by Eli Goldratt

• What to change?– Current Reality Tree

• To what to change?– Evaporating Cloud– Future Reality Tree & Negative Branch

• How to change?– Prerequisite Tree– Transition Tree

The Current Reality Tree

• Today we will focus on the first question

• What to Change?

There are two types of problems: Deviations and Dilemmas.

• A deviation is easily fixed once the cause is recognized. For example - the house is too hot. Why? The air conditioner isn’t on. Solution: turn on the air conditioner.

• A dilemma is hard to fix even when the problem is recognized because a conflict is involved. Mary wants to watch “60 Minutes”. John wants to finish watching the football game. There is one TV.

Most business problems are dilemmas.

• If the problems were mere deviations they would have been solved once the deviation was recognized. There is nothing to prevent the solution.

• In a business very often the symptoms of the problem appear in department X (say production) but the underlying cause is in department Y (say marketing) and marketing has no incentive to fix the problem.

Current Reality Tree (CRT)What to Change?

• A CRT is a diagram that links underlying cause to symptoms via cause-and-effect arrows.

• If the underlying cause involves a dilemma we will need the next tool (evaporating cloud) to solve it.

Basic Structure of a CRTSymptom

a.k.a.Undesirable

Effect(or UDE)

UDE

UDE

Underlying Cause

Definitions -- CRT• Current Reality Tree -- a logic-based tool for using cause-and-effect

relationships to determine root problems that cause the undesirable effects of the system (APICS Dictionary, p. 19.)

Undesirable Effect

Undesirable Effect

Undesirable Effect

Undesirable Effect

Core Problem

Undesirable Effect

Starting from undesirable effects andusing existing knowledge, this thinkingprocess enables a person to pin-pointthe core problem.

CRT – Benefits• Focus• Team-Building• Root Cause Analysis• Systems Thinking• Cross Functional Problem Solving• Effective Communications• Common and Agreed upon Understanding

of the System

Steps in Construction of the CRT1. List between 5 and 10 problems (called undesirable

effects -- UDE's) related to the situation.2. Test each UDE for clarity -- is the UDE a clear and

concise statement. This test is called the clarity reservation.

3. Search for a causal relationship between two of the UDEs.

4. Determine which UDE is the cause and which is the effect. Read as "IF cause THEN effect." This test is called the causality reservation. Occasionally you may have the cause and effect reversed, check using the following statement "Effect BECAUSE cause."

Steps in Construction of the CRT5. Continue the process of connecting the UDEs using the

If-Then logic until all UDEs are connected.6. Many times the causality is strong to the person feeling

the problem but doesn't seem to exist to others. In these instances, "clarity" is the problem. Use the clarity reservation. Generally, entities between the cause and the effect are missing. The current relationship is stated as "IF cause THEN effect." The correct structure in its simplest form may be "IF cause THEN (missing effect). (Missing effect becomes missing cause at the next higher level.) IF (missing cause) THEN effect."

Steps in Construction of the CRT7. Sometimes the cause by itself may not seem enough to

create the effect. These cases are tested with the cause insufficiency reservation and are improved by reading "IF cause AND __________ THEN effect." What is the missing dependent statement that completes the logical relationship? Add it to your diagram using the "AND CONNECTOR" (represented graphically by a horizontal line or an ellipse across both connecting arrows). The and in this relationship is called a "conceptual and" which means that both entities connected with the "and connector" have to be present for the effect to exist. If either entity is eliminated, the effect is eliminated as well.

Steps in Construction of the CRT8. Sometimes the effect is caused by many independent

causes. The causal relationships are strengthened by the additional cause reservation. The problem to be addressed is "how many of the causes are important enough to address?" One, two, sometimes three causes frequently result in creating about 80 percent of the effect. Generally, eliminating these few causes is enough of a reduction where the remaining effect becomes minor. Therefore it is not necessary to have an exhaustive list of causes for an effect. These cause-effect relationships are called a "magnitudinal and" for each cause increases the magnitude of the effect. Each of the causes must be addressed individually to eliminate most of the effect.

Steps in Construction of the CRT9. Sometimes an if-then relationship seems logical

but the causality is not appropriate in its wording. In these instances words like "some", "few", "many", "frequently", "sometimes" and other adjectives can make the causality stronger.

10. Numbering of UDEs on the CRT is for ease of locating entities only. An asterisk by a UDE indicates that UDE was provided in the original list of UDEs.

Constructing a CRT

• List Undesirable Effects (UDEs)– Many bank tellers quit to take a better job.– Some single parent bank tellers quit to make

more money on public assistance and to be with their children.

– Many bank teller job vacancies occur each year.

Constructing a CRT

• List Undesirable Effects (UDEs)– The bank’s budget for hiring, training, and

raises is quite small.– Some bank tellers (students or their spouses)

quit at college graduation.– Bank teller jobs are low paying entry level

positions.

Constructing a CRT• Search for causal relationships

Desirable Effect Desirable

Effect

Desirable Effect

Desirable Effect

Injection

Injection

Injection

This thinking processenables a person toconstruct a solutionwhich, when implemented,replaces the existingundesirable effectswith desirable effects.


60 Several bank teller job openings occur each year.

40 Some bank tellers (students or their spouses) quit at college graduation.



30 Many bank tellers quit to take better job positions.




50 Some single parent bank tellers quit to make more money on public assistance and to be with their children.




20 Many industries have higher paying entry level positions.

10 Bank teller jobs are low paying entry level positions.

The Bank Teller CRT



50 Some single parent bank tellers quit to make more money on public assistance and to be with their children.


20 Many industries have higher paying entry level positions.

10 Bank teller jobs are low paying entry level positions.

70 Most bank teller vancacies are filled with new inexperienced employees.

90 The bank is constantly hiring and training new employees.

80 The bank's budget for hiring, training, and raises is quite small.

100 The bank has little money left for raises.

The Steakhouse

CRT

75 Significant future sales are lost. 70 Significant current sales are lost.

65 Some customers may not like the quality of service provided.

55 Approximately 20% of the tables are tied up significantly longer than expected.

60 Potential customers leave because of long lines.

30 Some customers don't complain; they just don't return.

45 An overcooked steak takes about 16 minutes to correct.

50 An undercooked steak takes about 10 minutes to correct.

35 Some customers (3%) request the overcooked steak be redone. This is about 10% of tables.

40 Some customers (3%) request the undercooked steak be redone. This is about 10% of tables.

25 The customer is dissatisfied with the steak.

20 The cook does not prepare the steak to the customer's specifications.

15 The customer does not know what rare, medium rare, medium, medium well, and well done means with respect to this restaurant.

5 The grill is too hot. 10 The grill is too cool.

Categories of Legitimate Reservation

• Clarity• Entity Existence• Causality• Tautology (House on Fire)• Cause Insufficiency• Additional Cause• Predicted Effect

Application of CLRCorrect order for expressing the Catagories of Legitimate Reservation

FirstClarity Reservation

(What does this word mean?)

SecondEntity Existence(Does that really

exist in your environment?)

ThirdCausality Existence(How/Where does

that come from this?)

Cause Insufficiency(This doesn't

cause that without providing another cause in the "and"

connector)

Additional Cause(I agree but I also

see the effect could be caused by

another, additional cause)

Predicted Effect(If what you say is

true, I should expect to see another effect which doesn't exist

in this reality)

Tautology(These are related

but the arrow is going the wrong

way OR The effect is the justification

of the cause.)

List of Undesirable Effects (problems)

1) Secretaries are frustrated.2) Secretaries make mistakes.3) The manager/department appears inept.4) Work is completed slowly.5) Secretaries constantly ask managers for

clarification.6) Managers do not trust the system.7) Secretaries often change departments.8) The secretary is not trained.

Test each UDE for clarityIs the UDE a clear and concise statement?

1) Secretaries become frustrated with their work assignment/load.2) Secretaries make mistakes.3) The manager/department appears inept.4) Work gets postponed/completed more slowly than expected.5) Work must iterate between the manager and secretary several

times.6) Management loses trust in the system.7) Secretaries are rotated among the managers frequently.8) Assignments are made for which the secretary is not trained.

The search for causal relationships.

2* Secretaries make mistakes.

3* The manager/ department appears inept.



8* Assignments are made for which the secretary is not trained.



4* Work get postponed/completed more slowly than expected.

The search for more causal relationships.

1* Secretaries become frustrated with their work assignment/load.



6* Management loses trust in the system.


5* Work must iterate between the manager and secretary several times.

An example of cause insufficiency.

7* Secretaries are rotated among managers frequently.


21 Different departments/managers require different skill sets of their secretaries.

An example of the clarity reservation.



a.



23 Secretaries are unable to learn what a particular department/manager likes.

b.

An example of the clarity reservation.



a.7* Secretaries are rotated among managers frequently.


b.

52 Secretarial staff supervisor reassigns work/secretary to satisfy the secretary.

The initial Current

Reality Tree.



21 Different departments/managers require different skill sets of their secretaries.







52 Secretarial staff supervisor reassigns work/secretary to satisfy the secretary.


7 (loop)

52 (loop)

An example of the additional cause reservation.

39 Secretaries are shifted to cover for absences.

100 In a pool of 16 secretaries, at least one secretary is absent one day per week.

101 Secretaries take time off work for family/vacation/personal leave.

7* Secretaries are rotated among managers frequently. 52 Secretarial staff supervisor

reassigns work/secretary to satisfy the secretary.

Another example of the additional cause reservation

39 Secretaries are shifted to cover for absences.


102 The highest skilled secretary is always assigned to the highest level of management.

7* Secretaries are rotated among managers frequently.8* Assignments are made for which the

secretary is not trained.





52 Secretarial staff supervisor reassigns work / secretary to satisfy the manager(s) / secretary.

7 (loop)

52 (loop)

100 In a pool of 16 secretaries, at least one secretary is absent one day per week. 39 Secretaries are shifted to cover for

absences.


102 The highest skilled secretary is always assigned to the highest level of management.

103 Lower level managers are unable to chose which secretary is assigned to them.

21 Different departments/managers require different skill sets of their secretaries. 8

11 Different secretaries have different skill sets.

51 Secretarial skill don’t necessarily match the skill sets required by different managers.

44 Managers aren’t notified of the shift.

37 The secretary’s current workload is not considered

21

19 There are no formal initial training requirements


41 Manager know which secretary possesses the skills required.

61 Managers seek out the secretary whose skills are required even if the secretary is on another department.


71 The secretary assignment system is by-passed.

104 The current work of the moved secretary is delayed. 105 The moved

secretary is unfamiliar with the new department/ manager and is therefore less efficient.

106 The work of the absent secretary is delayed.

27 Managers must oversee more work than he/she should.

4* Work get postponed/completed more slowly than expected. 99 Managers interrupt the

work currently being processed by the secretary to expedite a task.

107 The manager is required to do some tasks his/her self.

109 The manager does not have time to do things that cannot/have not been delegated.

110 The manager complains to the secretarial staff supervisor.

81 Secretaries try hard to please the manager(s). 81 Some secretaries are busier

than the system would indicate.

91 Some secretaries are less busy than the system would indicate.

31 The work scheduling system is informal and ineffective.

80 The secretarial staff supervisor counsels the secretary about his/her work quality.

46 The work of the receiving department is also made late.

49

24

49 Managers are less efficient.

27

48 The company is less efficient.

24 Managers can’t become too dependent upon a particular secretary.

7

50 Secretaries are less efficient.

34 Managers don’t train their secretary to handle as many tasks as might be possible.

1

81

48

4

Figure 11: The final Current Reality Tree.

Project 1• You are to use the thinking process tools to

analyze something in your personal life.– School– Relationships– Sports performance– Whatever

• This project is an individual project designed to allow you to become comfortable with the tools.

• In Project 2, each group will find a business to analyze with the TP tools.

Documents

Goldratt’s TOC Thinking Process