Critical Chain - Eliyahu M. Goldratt [44]
Don guided them in making estimates of the resulting negative effects. They estimated the impact on lost sales, excess inventory, wasted cost, long delivery lead times, unreliable duedate performance, and, not less important, time wasted in heated quarrels between departments. The numbers were staggering.
Then, Don asked if they had any other problems. In the ensuing three hours I got a lesson in how to handle complaints. Don didn't dismiss anything they raised, even though some of them looked to me like pitiful excuses. With each problem they raised, Don made them quantify the negative impact. Then he guided a discussion of how much of that impact is due to what was already described on his diagram. He kept on referring to it as their current-reality-tree; the logical description of the effects stemming from the fact that they operate in the environment created by the tons-per-hour measurement.
It was amazing. For example, they complained about their vendors not always delivering on time. Don made them realize that if they did not produce so much excess inventory, they could hold much bigger stocks of raw materials. Vendors not delivering on time would then become a minor point.
Or, the problem that clients sometimes change their minds at the last moment. After inquiring, ‘last moment' turned out to be four weeks before delivery. If lead times were much shorter, this also would not be a problem, as they would have delivered before the client had a chance to change his mind.
To make a long story short, they became convinced that all the other problems were either relatively insignificant or were significant because of the existing chaotic environment. There was a real, true consensus that the core problem, the constraint of the company, was the fact that their prime operational measurement was tons-per-hour.
Don pointed out to them that this was actually very good news. Yes, very good news, because all their competitors suffered from exactly the same core problem. Correcting it would give this company a tremendous advantage.
You're probably asking yourselves, like I did, how come the steel industry uses such a devastating measurement? The answer is that their systems, like every other industry, are based on the cost world. Remember the basic assumption of the cost world? The only way to achieve good cost performance is through good local performance everywhere. If you believe in that assumption you'll be forced to use a measurement like tonsper-hour.
Now you understand much better why TOC claims that currently the core problem of our organizations, the constraint, is the fact that so many of our management systems are based on the belief that the assumptions of the cost world are valid.
You can imagine how embarrassed I was remembering the list of twenty-six constraints I had handed to Don just the previous evening. Now I knew why he hadn't bothered to read it. Once you understand TOC you realize that there are no real-life systems with twenty constraints. Such systems will be chaotic to the extent that reality will have eliminated them a long time ago. Real-life systems have one, maximum two, constraints.
I also understood that I did not have the tools needed to enable me to identify the constraint. No wonder. That was the first time I'd ever seen a proper analysis, that I'd seen a currentreality-tree.
At the opening of my talk I said that in my eyes the most important contribution of TOC is the research methods it introduces. Now you understand why. The thinking process of TOC, called the evaporating cloud, caused a revolution in my work. This method, or better still, this thinking process, is the