‘The Theory of Constraints Doesn’t Apply to My Environment.’ Think Again… Part 2
Explore how the Theory of Constraints can benefit your business.
Welcome back to the second newsletter focused on compelling case studies from around the world and across different business sectors. Last month, in our June 2024 edition, we shared some of our favourite examples of successful Theory of Constraints (TOC) implementations in Aerospace, Defence, Rail, and Automotive.
Today’s edition will look at how you can apply TOC and CCPM (Critical Chain Project Management) in…
So, let’s dive straight in.
In Warehousing and Distribution…
Autoline – Driving Innovation: A New Approach to Operations
Autoline is an Australian company supplying full-scale light vehicle maintenance solutions for a wide range of makes and models. They pride themselves on their ability to supply parts which can combat the many challenges Australian terrain can pose.
There was a desire among top management to manage the growing flow of work more effectively, from ‘goods in’ to ‘order despatch’. Delivery performance was slipping – the warehouse team always found themselves with orders left at the end of the day. At the front end, the team was also struggling to keep up with a high volume of large deliveries.
Supply chain and stock was another challenge. Too much cash and space was tied up in slow-moving – or even obsolete – SKUs. On the flip side, there were often stock outs of the fast-moving SKUs needed to complete orders…
Autoline partnered with Goldratt UK in 2023 to implement a TOC-based solution and achieved impressive results.
“The biggest gift Goldratt UK gave me was the confidence in understanding the principles of supply chain.” - Charles Draffin, Managing Director.
Warehouse output increased dramatically, to the point where the team were comfortably breaking records. The warehouse team broke their record four times, and each time they felt they had plenty more to give.
The pick rate increased from 25-30 per hour to 40-50 per hour. And, the pack rate increased from 15-20 per hour to 25-30 per hour.
Exporta – Growing and Managing Capacity
Exporta provide a wide range of products to help other businesses move, store, and secure their products – primarily plastic pallets, wooden pallets, and plastic storage boxes.
Have a watch of the short 5-minute video below to hear Calum Young (Warehouse Manager) speak on his experience implementing TOC in the warehouse.
Calum mentions simple but highly effective tactics such as reducing interruptions to enable a ‘focus and finish’ mindset and controlling the release of work into the system to avoid overloading and enabling multi-tasking.
“We’re not working nearly as hard as we used to, we’re just working smarter.” - Calum Young, Warehouse Manager.
Upper management were very impressed by the warehouse and what they were able to achieve. They have increased confidence in their ability to deliver on customer promises.
“The whole process has been eye-opening, and it’s been exciting to get behind. It’s been like a shot in the arm, and it’s definitely taken us to the next level.”
In Manufacturing…
Manufacturing was the first focus of the Theory of Constraints back in the 1980s when TOC was being developed. The first implementations of TOC were within production environments and were celebrated as ground-breaking changes to traditional practices.
There are lots of great case studies available for you to read on the Goldratt UK website.
Eli Goldratt’s business bestseller, ‘The Goal’, follows the story of Alex Rogo, a Plant Manager struggling to save his factory. His mentor, Jonah, guides him towards identifying the bottlenecks in his production process.
If you work in manufacturing, you must read ‘The Goal’ – it will change the game for you. Goldratt UK are gifting a limited number of free copies, you can request one here. Please note that this offer is subject to availability, and only open to UK residents at this time.
Take the first step in your TOC journey today – request the book.
Here, let’s look at Gedore UK who partnered with Goldratt UK to design a TOC-based solution to reduce their backlog and lower production lead-times.
The immediate challenge for Gedore UK was satisfying customer demand within a lead-time that felt acceptable to the market. They were experiencing a high level of overdue orders which made this difficult.
The team embraced TOC and implemented the key principles: reducing the WIP (Work In Progress), reducing batch sizes, introducing a single priority system, Constraint Obsession, and more.
The results over an 18-month period included:
Gedore UK achieved more than these tangible results, there were added benefits. You can read the full story on the website.
In Financial Services…
If you work in the Financial Services industry you will no doubt be aware of the many different forms projects can take – digital transformation projects, regulatory compliance projects, service improvement projects, operational efficiency projects, training… the list is endless.
These projects all have at least one thing in common: implementing Critical Chain will improve their delivery.
A previous client of ours (who wishes to remain anonymous due to the nature of the competitive edge developed) was a large Financial Services organisation and they had a problem.
They had made a commitment to their stakeholders, and worse – the market, that an app would be launched for their corporate customers. In fact, this app was so important that a few of their customers had expressed that if it was not made available for their staff to use, they would take their business elsewhere.
The delivery of the app had been promised for June 2021, and by March the best estimate they had for delivery was the end of the year. Our client called and asked for our?help.
If you are going to change the outcome of an event (in this case, significantly reduce the lead-time and bring forward the due date), the question you should always ask is:
‘What are you going to do?differently?’
After a couple of days of studying their current working practices, we learnt that there were 7 different methods being used to prioritise work… This naturally meant there was no consistent way to keep work in the same order. Managers argued that the priorities must continually change but it simply wasn’t the case. The consequence of this belief was that team members were multi-tasking on a grand scale, frequently starting and stopping new pieces of work. This resulted in huge amounts of Work-In-Progress (WIP) which allowed teams to load up ‘sprints’ with work in the wrong order and then, not having completed all of it, put it back into the backlog and start a new batch of work for the next?fortnight.
Planning was no better. One problem was that tasks were being sized too small. In fact, they had 350 tasks all planned out which meant that when a change was made to the scope (which occurred frequently) then all 350 tasks had to be replanned… We partnered with this client to develop a CCPM-based solution which addressed priorities, planning, and measurement.
The result?
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Not only was the project brought in earlier than its predicted finish date at the end of the year, but it also finished on the original due date.
This delighted both stakeholders and clients; they got what they wanted with no reduction in?scope.
Read more about the challenges and the solution in the full case study here: https://goldratt.co.uk/a-theory-of-constraints-case-study-financial-services/
In Health and Social Care...
For those working in Healthcare who are wondering how TOC can be applied in this unique environment, a good place to start is the extensive body of work carried out by Alex Knight.
Have a watch of the short 8-minute video below for an introduction to TOC in Healthcare. To begin with, Alex posits two key questions:
So, how far can TOC help to answer these important questions? In many cases, TOC can be used to cut down the extreme multi-tasking, align resources, and ultimately improve flow and the capacity to treat more patients.
For a more detailed introduction to TOC in healthcare, try Alex's business book ‘Pride and Joy’ which follows an implementation in a struggling hospital. This book will grip any manager working in the Healthcare industry.
Goldratt UK are currently working with a large Healthcare client to increase the flow of patients and quality of care. It’s an exciting project and we look forward to sharing more information in due course.
In Sales and Marketing…
If you’re interested in how to apply the Theory of Constraints to Sales and Marketing, a fantastic place to start is Eli Goldratt’s book ‘It’s Not Luck’ which follows on from the story introduced in his bestseller, ‘The Goal’.
In the book, Eli touches on customer segmentation, product differentiation, and strategic pricing. He also introduces the reader to his thinking tools.
Another book we can recommend is Justin Roff-Marsh 's ‘The Machine’ in which Justin proposes a new approach to sales management. This approach focuses on the division of labour, the centralisation of sales, and process engineering.
Learn more about his approach and read some of the success stories on his website: https://salesprocessengineering.net/
A Goldratt UK example - Using TOC to Increase Sales…
Cooper Crouse-Hinds UK
Cooper Crouse-Hinds UK Ltd is a premier manufacturer of high-quality fabricated metallic explosion-proof enclosures and junction boxes which meet the requirements of the most hazardous areas and industrial environmental applications.
Through aligning the sales and marketing activities to fully take advantage of the company’s capabilities the business reaped impressive results…
Within a period of 2 years:
Request the full case study via email - [email protected]
In Fashion and Apparel…
John Smedley – A Goldratt UK Case Study
John Smedley designs and manufactures contemporary knitwear of the highest quality. Combining traditional techniques with the latest technology, the company continues to produce luxurious hand-finished garments in England.
Operating in a highly seasonal industry means having to keep the range ‘fresh’ with a number of new styles based on market trends and technology developments. The range design can have a significant impact on Production capacity and their ability to deliver the following season.
Design is a highly creative process and there are tight timescales to meet the range launch date and customer deadlines. There were a small number of resources with a large number of activities…
Furthermore, these were technically complex designs with a significant requirement for Production resources. The priorities of design work were not visible to Production resulting in 8-10-week lead-times for samples.
John Smedley worked with us to implement the Theory of Constraints in Design. The results?
The volume of work within the department was made visible and the priority system was seen within all departments. The entire management team’s focus was dedicated to the range earlier in the process and weekly meetings focused on the highest priority activities. There were fewer ‘surprises’ between Operations and Design and more control over the operation in general.
Are You Ready to Begin Your TOC Transformation?
Request a free copy of Eli Goldratt’s business bestseller ‘The Goal’. The perfect first step in any TOC journey.
Request your free copy today – click here.
What’s New with Goldratt UK?
Association for Project Management
This month saw Andy Watt deliver a workshop for APM (Association of Project Management) on the principles of Critical Chain Project Management (CCPM). He shared some interesting case studies, outlined the key tactics, and ran an interactive session to illustrate some of the results you could expect to see implementing CCPM.
A valuable and enjoyable event. If you missed out this time around, stay tuned! Make sure you're following the Goldratt UK LinkedIn page to be notified when these sessions are running in the future.
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Goldratt UK, 31st July 2024.