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Operational/Functional Solutions

In addition to providing and understanding of the impact and importance of the constraint on a system's ability to achieve its goals, the Theory of Constraints has a few other tricks up its sleeve. In all the common functions and processes that one finds in organizations, TOC can help. In some areas, there are specific constraint-based applications that can be customized for implementation in an organization. In others, the Thinking Processes becomes a powerful set of tools to derive and drive rigorous unique solutions.

Operations/Production

How can we replicate Alex Rogo's achievements described in the book, The Goal? More importantly, how can we achieve the impressive results described by those real companies willing to talk about them:

  • Due date performance up 44%
  • Cycle time and lead time reduced 65% and 70%
  • Revenues up 63%
  • Inventory down 49%

    Source: The World of the Theory of Constraints, APICS/St. Lucie Press Constraint Management Series

The key lies in the ability to transform production from the prevailing cost world mentality into the common sense approach of the throughput world mentality and implement Drum-Buffer-Rope (the logistic mechanism) and Buffer Management (the control mechanism). (Recommended reading: The Goal, The Race, Production the TOC Way)

Finance and Measurement

Every reader of The Goal is aware that common sense will not prevail on the shop floor unless the financial approach changes. Cost-accounting based measurements are devastating. What is less known is that the damage is not restricted to the shop floor - it is even more profound in marketing, sales and especially engineering. So what is a sensible financial approach which bridges the gap between the bottom line measurements (the profit and loss statement and the balance sheet) and the local measurements (efficiencies, pay-back period, product cost, etc.)? The simple, almost obvious answers are the foundation for true bottom line improvement. (Recommended reading: The Goal, The Haystack Syndrome, It's Not Luck, The Implications of Theory of Constraints on Management Accounting)

Engineering, Product Development -- Projects

Projects, like production, involve many resources which have to carry out many tasks in order to accomplish pre-determined end results. Projects (especially in multiple-project environments) have characteristics which drastically differentiate them from production. Can we finish projects ahead of time, within the allotted budget and without compromising on the content? Some people are, with Critical Chain-based project management. (Recommended reading: Critical Chain)

Distribution

With the exception of companies whose stated business is retail, most companies tend to ignore distribution. This is a huge mistake. Since every company is a link in a supply chain, most already realize that as long as the end consumer has not bought, nobody has sold. The biggest clot in the supply chain - the majority of the inventories - are usually found in the distribution stage. If a company wants to prosper its managers must understand how to help the distribution link to drastically improve its performance. (Recommended reading: It's Not Luck, Late Night Discussions)

Marketing

Marketing should not be confused with sales nor with advertising. Marketing is the ability of the company to bring the market to want its products. In other words the ability to create a competitive edge and grow demand. If all the improvements that were initiated by the internal demand fullfillment processes mentioned above are not converted into a decisive edge, the majority of the potential benefits will not be realized. Rarely can a company devise effective marketing without the involvement and contribution of managers from all functions. The challenge is to put the systematic framework that enables everyone to contribute. The TOC Thinking Process provide that framework. (Recommended reading: It's Not Luck, Late Night Discussions and TOC Journal)

Achieving Buy-in and Sales

Not just the sales people but every manager in every company is required to sell; to sell their products, their suggestions and decisions, to clients, bosses or their own people. Is there an effective, systematic way to sell; to overcome resistance to change? Understanding the layers of resisitance that are faced enables the detailed application of a decisive, powerful method. (Recommended reading: The Goal, It's Not Luck, Critical Chain)

Managing People

The essential topics required to manage people are well known: conflict resolution, empowerment, team building, etc. What is not well-known is that the same logical approach used to derive solutions for the more "tangible" topics above is equally effective at providing powerful methods to manage people. In the long term this application of TOC probably provides the most important know-how. (Recommended reading: It's Not Luck)

TOC Thinking Processes

At the core of TOC is a scientific, cause-and-effect worldview that is embodied in the Thinking Processes, a set of rigorous logical tools that enable one to create their own solutions.

I was to learn later in life that we tend to meet any new situation by reorganizing; and a wonderful method it can be for creating the illusion of progress while producing confusion, inefficiency, and demoralization. - Petronius Arbiter [circa A.D. 60]

Related links:

TOC and Six Sigma - Better together

Specific Functional Tactics:

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