– Is your sales growth stagnating or inadequate?
– Are your profits fluctuating from year to year?
– Are you struggling to meet your financial commitments to your vendors, banks, or employees?
– Do you often get customer complaints for delayed deliveries?
– Do you have month end syndrome?

Goldratt Bharat (formerly Goldratt India) has been helping Indian organisations to increase their sales, profits, and cash by an order of magnitude in weeks and months through the concepts of Theory of Constraints (TOC) and philosophy of Better than Before for the last 24 years.

If you would like to explore more, please connect with us at
info@goldrattbharat.in

Learn more: https://lnkd.in/gv9hwDVq

Critical Chain Project Management (CCPM) was introduced in 1997 in Dr. Goldratt’s book, Critical Chain. The critical chain is the longest chain of dependent resourced tasks in the project. The solution aims to protect the duration of the project, and therefore, completion date, against the effects of each task’s structural and resource dependency, variation, and uncertainty. The outcome is a robust approach that enables completion of projects on-time, every time, and within budget. The shorter duration provides a huge opportunity to deliver more projects over all, in the same amount of time, and same operating expenses, thereby significantly improving the bottom line.

CCPM solution aims at removing some of existing behaviours that are harmful to the goal of the project, such as bad multitasking, student syndrome and Parkinson’s Law.

It is common for resources to be required to switch between tasks on multiple projects or within the same project. Such multitasking usually extends the duration of all projects and, therefore, is considered bad multitasking. Bad multitasking occurs when switching tasks does not help any project
finish earlier.

Preventing bad multi-tasking is the single largest contributor in reducing project lead time. In project management, Full Kit refers to the process of clarifying requirements, getting approvals, staging materials, etc. for the project, before the project is released for execution. The discipline of not starting without Full Kit helps hugely in preventing bad multi-tasking. For some projects, we can define different level of Full Kit for different stages of the project.

Student syndrome refers to the human tendency of failing to start a task, even though the start date has passed, because there appears to be plenty of time before the seemingly distant due date.

Parkinson’s Law refers to the phenomenon of work expanding so as to fill the time available for its completion. CCPM attempts to reduce its impact by using significantly reduced task time estimates and getting frequent estimates of time remaining until completion.

CCPM methodology of planning projects focuses on the following:

• A plan, or project network, that includes all task and resource dependencies as well as time estimates with safety removed
• How to create a schedule showing the critical chain and the buffers
• Identifying expediting and improvement activities based on buffer management
• In multi-project environment, how to determine the staggering of projects based on the resource whose capacity or capabilities

Results that can be expected with the help of CCPM:

• 20-40% faster completion of projects
• Meeting delivery timelines and budget commitments
• Clear priority system across the organization
• Harmony and flow among the team members

TOC solution Drum Buffer Rope (DBR) helps in reducing lead time by a factor of 2 to 6 times. It is a method for scheduling and managing operations, that have an internal constraint or capacity- constrained resource.

• Drum: Schedule at the bottleneck
• Buffer: The amount of time raw material is released before it is required at the bottleneck
• Rope: The mechanism of choking the release of raw materials to match consumption at the constraint; do not release the material too soon

The drum schedule combined with the rope mechanism helps limit work in progress inventory which, in turn, reduces lead time and increases output. Ensuring that the inventory is balanced, and full kit is available prior to start of production is critical in reducing lead time, WIP and increasing On Time Delivery.

A necessary pre-condition for successful implementation of DBR is Full Kit, which refers to ensuring availability of all inputs (raw materials, tooling, specs, etc.) for an upcoming order prior to release of the order to the shop floor.

In this short clip, Ravi Gilani, Founder & Managing Consultant, Goldratt Bharat explains Drum Buffer Rope with a simple example. The process of identifying the constraint and scheduling production as per its capacity helps in reducing lead time dramatically and improving on time delivery.
 

The core idea in TOC is that every real system such as a money-making enterprise must have at least one constraint that limits the system to achieving its goal. Every for profit organization will have a constraint in supply, operations, orders or cash. Current constraint may shift, but there cannot be any situation when there is no constraint. Had it been so, its profit would have been infinite!

The output of the organization is achieved through the synchronized efforts of various functions. The output is limited by the weakest area. The strength of the chain is determined by the strength of the weakest link. What should be done to improve the output of an organization?

Dr. Goldratt created a Process Of Ongoing Improvement (POOGI) or five focusing steps.

Step 1: Identify the system’s constraint
The first step is to identify what factor is currently limiting the organization from achieving its goal.

Step 2: Decide how to exploit the system constraint
It is imperative the most possible out of the existing capacity of the constraint. Utilization at the constraint is critical. In the case of an internal resource constraint, to exploit means get more goal units by taking actions that make the best use of or take the best advantage of the constraint. Some examples: staffing the machine during lunch, breaks, and shift changes, quality inspection just prior to the constraint machine, reducing setup times at the constraint etc.

Step 3: Subordinate everything else to the above decision
Subordination is vital to achieve full exploitation of the constraint. It has two major components:
1. All non-constraint resources must be managed to ensure that the constraint always has exactly what it needs when it needs it; and
2. All non-constraint resources are not allowed to process work beyond what is required for the constraint.
All policies and measurements must be designed to get the most out of the constraint. Utilization and efficiency at the non-constraint resources must not be measured. However, this does not imply that there are no measurements for non-constraint resources. This step is often missed, and thereby the majority of financial benefits of TOC are not achieved.

Step 4: Elevate the system constraint
If more capacity is required after steps 2 and 3 to meet the market requirements, increase it through capital investment, outsourcing, or off-load the constraint by defining alternative routings, processes or design. Capital investment should not be the first option. Often, exploitation and subordination are sufficient to reach the needed output. Do not increase the investment too soon.

Step 5: If in the previous steps a constraint has been broken, go back to step 1, but do not allow inertia to become a system’s constraint.
The five focusing steps are not intended to be used as an infinite loop whereby an organization identifies and eliminates the current constraint over and over again. Rather, top management should determine where to move and hold the constraint.

The long-term strategic application of TOC does not call for continuous removal of all constraints. In any case all constraints cannot be removed. Rather, the idea is to choose where the constraint should be in order to best exploit the market opportunities, and then keep it there!

Theory of Constraints (TOC) is a management philosophy that treats a corporation as an interlinked, interdependent system rather than just a collection of independent processes or functions. Dr. Eliyahu M. Goldratt, the creator of TOC, observed that just as the strength of a chain is dictated by its weakest link, the overall performance of any company is dictated by its constraint. If you can find a way to manage the constraint you can dramatically increase sales, cash, and profit without any significant investment.

Dr. Goldratt, was an educator, author, scientist, philosopher, and business leader. But he was, first and foremost, a thinker who provoked others to think. TOC was first introduced in the best-selling book, The Goal, an intriguing business novel that transformed the thinking of managers throughout the world.

Due to the overwhelming popularity of The Goal, most people assume that TOC is applicable to manufacturing only. Companies that have implemented TOC understand that it is a holistic philosophy, with as much application to strategy and marketing, as it does to supply chain and operations. The real strength of TOC lies in its Thinking Processes, that were first introduced in Dr. Goldratt’s book Its Not Luck (also known as The Goal II). The constraint of any system/ organization is defined in relation to its goal. Often, there is no upfront discussion and agreement on the organizational goal and its measurement(s) among the team members. Different team members have a different perception of the goal and its measurement depending upon which function they are responsible for. In most cases, team members are not aware of the effects that their actions will have on other functions. Therefore, the top team must learn the cause and effect relationships across the organization. Can each employee understand the impact of his/ her actions on the goal of the company?

An understanding of TOC metrics or operational measures, Throughput (T), Investment (I), and Operating Expenses (OE) can help each employee understand the effect of his/ her actions on the financial performance of the company. These metrics form the basic building blocks of the TOC methodology. TOC based metrics help in imparting financial literacy and aligning the entire top team. This helps the team in understanding the impact of any decision on Throughput, Investment, Operating Expenses (T, I, OE), and arrive at decisions swiftly. With the help of these metrics, each employee is able to understand the impact of his/her actions on the overall goal of the company. This leads to vastly improved team work and ownership.

TOC provides a simple and effective process for system improvement or five focusing steps, outlined
below.
Five Focusing Steps
1. Identify the constraint
2. Decide how to exploit the constraint
3. Subordinate to the constraint
4. Elevate the constraint
5. If the constraint has shifted, go back to Step 1. Do not allow inertia to become the constraint!

Over the last 40 years, TOC has evolved from a methodology primarily used in operations, to one that has applications across all functional areas such as production, supply chain, distribution, projects, sales and marketing, strategy and tactics. It has been applied across sectors such as automotive, steel, pharmaceutical, consumer goods, electronics, retail, apparel, packaging, construction, aerospace and defence, software, insurance, hospitals, and schools.

TOC’s production scheduling solution Drum Buffer Rope (DBR) helps in reducing lead time by a factor of 2-6. This is done by following simple logistical procedures, and applying the five focusing steps to the identification of bottleneck, followed by exploitation and subordination. Most organizations are able to get 30-40% additional output without adding any new resources.

In projects environment, the application of Critical Chain Project Management (CCPM) has helped several organizations to reduce project lead time by 20-40%, thereby, enabling them to complete projects early, and within budget.

Does culture have any relationship with measurements, be it formal or informal?

Service providers often try to increase their business by trying to delight their existing customers or offering great benefits to potential customers. However, in many cases, they end up annoying the customers.

TOC’s replenishment solution helps in increasing availability without increasing inventory, taking into account the variability (or reliability) of the supply from the vendors.