TOCICO Annual Conference 2024. Days 1 and 2.

TOC and TOCICO?

TOC – Theory of Constraints - is a collection of management methods, linked by common assumptions and principles, and which help improve the flow of work and results.

It came to prominence through the 1984 publication of Eli Goldratt’s book The Goal.

The Goal has been one of the best-selling business books since then, and it continues to introduce people to TOC today.? It was one of the first serious business books that was written as a novel.? If you have not read it, I recommend you do.

I see TOC as a collection of principles and techniques that help manage common management situations.? I’m drawn to it because it helps to link the ideas of systems and complexity to the needs of individuals and organisations to set and achieve goals in practical and efficient ways.

Systems and processes are made up of interconnected parts that impact each other (interdependence) and are subject to uncertainty and variability.?A consequence of this is many systems can behave in ways we don’t expect, and sometimes can’t predict. Our instincts don’t always help, so we struggle to manage well.

TOC helps by providing (i) techniques to manage specific kinds of management operations, such as manufacturing, projects, logistics and supply, sales, administrative processes and the like, and (ii) thinking and decision-making tools that are more generic in nature.

At the heart of TOC is the idea of the constraint - that systems have a small number of factors that drive many of the visible outcomes.? The "constraint", "weak link" or "leverage point". If we don’t know where the constraint(s) is/are, we do not know where to focus our management attention, so we dilute and waste our attention and improvement efforts.

Focus is at the heart of TOC – find (or choose) the constraint and use this as the leverage point to improve they achievement of your goal.

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The TOCICO is (sort of) the professional body for TOC.

It was originally set up to provide independent accreditation of people’s skills and knowledge in TOC. It still does that, but it has since as morphed into a “place” that people who have an interest in TOC can gather and share their experiences, and in doing so to continuously improve an develop the contribution of this approach to a wide range of person and organisational problems and needs.

The conference is where those of us infected or interested in TOC meet up. We learn from, and debate/argue with, each other. I’ve been attending since 2011.? Not everyone’s cup of tea – there is as much debate and sharing of new ideas as there are presentations of the methods and case studies.?I don't think it is a good place to learn the basics since it is not designed as a polished training event. But for those who understand a bit about TOC, it is a great way to deepen your own understanding and to help develop the methods.

So what happened this time?

Day 1:? Sunday 29 September

A pre-day.? On Sunday morning I took the opportunity to get to see the town of Bad Nauheim and the surrounding countryside. Cue the selfie in the countryside.....

In theory Sunday was half a day, but there were 6-hours of workshops.? These were much more interactive than the main conference will be with longer sessions and more interaction.? A few were developing and debating proposals and problems. These were 'messier' than a nice polished presentation - I liked that.

Other topics covered ranged from the principles, practices and value of buffer management to using TOC to improve healthcare outcomes, and a hands-on learning simulation about the TOC approach to managing manufacturing (which I enjoyed doing last year). I went to one on the strategic plan for the TOCICO, and another on applying TOC's "6 Questions for a Technology".

Evening drinks were sponsored by WiseTech - a company that was designed from the ground up using TOC methods, and which has embedded TOC into its operations and DNA - more on them below. A great chance to catch up with friends from previous conferences, and meet some new folks..

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Day 2: Monday 30 September.

AKA “Day 1" of the main conference!

The kick-off keynote was delivered by Ian Larsen Head of Operations at WiseTech Global (main pic above).? TOC is at the heart of both their day-day operations and strategic management.? It is embedded into both their operations processes and their software product itself.?

(If you don’t know WiseTech Global , it is the largest software and services company on the Australian stock market, and in the top-20 of all companies.? At A$45B, its market capitalisation is 45 times larger than when it floated less than 10 years ago.?Their current CEO used the TOC thinking processes in developing his ideas for the company – apparently it was the example used on the course he took to learn the TOC thinking processes 20 years ago.)

There were several presentations from other WiseTech folks during the conference.

One challenge they have is that because many TOC-based processes are very different to common conventions and often seem counter-intuitive, and because awareness about TOC is low, then there is a risk that well-meaning and motivated new staff will accidentally disassemble the very processes and policies that allow them to innovate at speed.

This is a common risk with using TOC to improve operations performance, which cropped up in many other presentations, and evening discussions.

One way that WiseTech address this is thought their induction process. A significant proportion of managers and supervisors are trained in TOC-based thinking processes.?The programme is called “Black Belt In Thinking” (BBIT), developed and delivered by consultancy ViAGO.?

As well as a core management competence, thinking process tools are embedded into WiseTech’s process for embedding acquisitions (if I remember correctly they have bought and integrated 50 companies since they floated).

So much choice ...

Like many conferences, most presentations at the TOCICO conference take place in parallel tracks.? We had three parallel tracks with a few plenary keynotes – 63 different sessions in total.?

Unlike many conferences, the TOCICO has always recorded all the conference presentations.? Conference attendees get to see them first, then after a year they are available to the broader TOCICO membership – a fantastic repository stretching back 20 years.

I then whet to hear what Henry Fitzhugh Camp is up to. Henry came across TOC when he ran a distribution company.? After he used the TOC approach to replenishment in his business, he set up a software company to provide software based on the TOC approach to inventory management.

He later set up a niche venture capital fund to buy companies and turn them around using TOC. Today he was talking about his current project that will scale up this idea to an industry supply chain.? He has identified a supply problem to one of the world’s largest industries, and has identified a chain of several companies that he wants to acquire and rapidly improve using TOC.

The TOC approach to replenishment (supply chain logistics) is a demand-pull approach that will typically improve service levels (ie lower stock-outs) whilst at the same time reducing inventory holding, compared to using the methods built into most ERP/MRP systems. At this conference several cases were presented that achieved 20-50% reduction in inventory whilst increasing sales in retail by 5-20% (or part availability in non-retail cases).

After two presentations working at the heady corporate levels with lots of zeros on the numbers, next Spyros Bonatsos shared his experience improving flow at a 150-bed hospital in Cyprus, when he was doing his part-time PhD.? He used TOC in two situations.?

First in the hospital laundry.? With no investment, he applied TOC’s technique for managing ‘production’ (known as DBR) to reduce costs by $40,000 pa, and increase the utilisation/capacity of the laundry equipment by 15%.

The second environment where Spyros used DBR was the operating theatres. DBR helped him to structure a process flow analysis and identify improvement opportunities quickly. This was slightly more complicated because there were two process than overlapped - the patient flow process and the operating room flow.? Spyros identified the constraint resource (surgeon), where to put a buffer of incoming patients, and how/when to initiate the patient’s journey to theatre.? Piloting in two theatres showed that this simple – and again zero-cost – process improvement could allow upto 30% more operations each day using the same resources.

TOC has many similar examples of how patient flow and throughput can be improved, allowing improved healthcare capacity with very little investment.

Back to massive companies next – BAE Systems. They have been increasingly using TOC’s approach to project operations (critical chain) for 3-4 years.? A presentation by Simon White René Nibbelke ChPP CQP and Timothy Stacey summarised this journey, describing their approach to managing the business change. Although this change is still in its early stages, there are several examples of significant improvement on some massive projects.? They presented data from surveys from their pilot projects, which showed ‘textbook’ results with users seeing improvement across time, cost, quality and work-life measures.

BAE Systems also presented a detailed case study of Hawk jet maintenance in the UK on day 3, repeating their experience in Australia some 10 years ago, where critical chain helped them reduce turn-around time, do more work with the same resource, and significantly improve reliability.

My final (observer) session on day 1 was about how Milliarum has developed a critical chain-based software product as an SAP module/add-in.? Whilst they have clients using it in a wide range of domains, I can see how this would be particularly valuable in companies with SAP-based workflow and integrations with other functions such as procurement, supply and manufacturing.

For the final session of Day 1, I was up on the stage.? Rene Nibbelke was launching the publication of the APM Guide to Critical Chain (full title – “Senior Managers’ and Project Managers’ Guide to Critical Chain”) (https://www.apm.org.uk/book-shop/senior-managers-and-project-managers-guide-to-critical-chain/)

Association for Project Management

Rene was the driving force in this new guide, supported by a team of TOC, BAE Systems, and project management experts.? One of whom was me, which is why I was on the stage!

It was great to see the book finally being published.? Our team has also been working with the editors of the forthcoming updates to the APM’s BOK8 and Guide to Project Controls, to align the professional body’s publications with current practice of critical chain.

For a long time I've felt critical chain’s absence from professional body and international standard publications has been a major reason for the relatively low awareness across the project management profession. Which in turn has meant many project managers are unaware of a technique that can help them in an already difficult job!

I’ll come back to the related topic of why TOC is (IMO) underrepresented in business and management education in general in a later article.

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So Day 1 – a long day from 8.30 to nearly 18.30 - comes to an end. I've learned many new examples of how TOC is used to improve focus and flow across many different domains. From software to strategy, corporate finance to hospital laundry, tanks to surgery.?

To say nothing of the presentations I missed. There was a whole track on using TOC in healthcare, and inputs on new insights into methods and techniques which I look forward to catching up with when the videos are available.

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And the day is not over yet.? The bar beckons, then out to dinner with about 15 fellow TOC geeks, mostly talking about …guess what. (Yes – sad I know, but it's only once a year)

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To be continued…