Critical Chain - Eliyahu M. Goldratt [68]
"We heard from Mark how they implemented our ideas in their environment. Conceptually they have made many changes. Practically it boils down to three. If you recall, the main changes were: One. Persuading the various resources to cut their lead time estimates; Two. Eliminating milestones or, in other words, eliminating completion due dates for individual steps, and Three. Frequent reporting of expected completion times."
They write as fast as they can, but I was talking too fast, and they ask me to repeat the three changes. I do, and then continue.
"As we heard, it was surprisingly easy to implement these changes . . ."
"Whoa!" Mark booms.
Ruth backs him up, "If it weren't for you, explaining everything to our people, persuading them to collaborate. . . . I don't think that such a paradigm shift can be imposed."
"I fully agree," Fred supports his team members. "Thank you," I say. "Persuading people to collaborate is always necessary. The time when you could dictate is over. If you want people to think, to take initiative, you cannot dictate."
They all nod.
"But the fact is that you did implement it in about one week. Mark?"
"About."
"My question is, how can we do it in the other type of project environment, where most of the resources are vendors and subcontractors? Roger, whose job is dealing with them, told us it's impossible. That they will never collaborate. Roger do you still think so?"
"Yes." And being Roger, he must add, "And whatever you say will not change it." He puts his head in his palm and shuts his eyes. I ignore him.
"Are subcontractors and vendors a problem? Did you ever see a project that was significantly delayed because a vendor or subcontractor was late?"
If there ever was a rhetorical question, that's it.
"It is also a problem for us," Mark comments. "We are less dependent on subcontractors, but delays from our vendors are a major problem."
I nod to him and continue. "So, the lead times of our subcontractors and vendors should be of tremendous importance for our projects. Nevertheless, how do we choose them?"
"They can tell you whatever they want," Ted is almost shouting. "But the truth is, it's price. My company is a subcontractor. So I know. They may talk about reliability and quality, but when they come to sign, it's price."
Ted doesn't have to shout. Everybody agrees.
"Price is important," I say. "But lead time is not less important. Sometimes more. That's where the change should start. We must understand the financial impact of a delay. We must understand that a three months' delay sometimes costs us more than giving another ten percent to all our vendors."
Some are nodding, most look skeptical. Brian doesn't seem to agree, and he is not the only one. I have to demonstrate my claim. Otherwise they'll think that I'm just exaggerating in order to make a point.
"Brian, two weeks ago you invited me to spend a day with the team responsible for the expansion project of your plant. The plant manager was there, the project leader and all his key people. They are all concerned that the project will not be finished on time. Can you tell the class a little bit about this project?"
"Sure." Turning to the class, he says, "It's a six-million-dollar expansion project. For us it is big. And it looks like it will be at least four months late. If we are late, let me tell you, some people will be bent out of shape. That's for sure. So, yes, everybody is very concerned. Wouldn't you be?"
I keep on asking, "Do you think that they know the penalty of not finishing this project on time? I mean the damage to the company?" Before he has a chance to dig himself a hole, I continue, "You are a major player on this team. Do you know the damage?"
"Sure," he says. Then, expecting I will ask for the answer, he corrects himself. "If you mean the dollar and cents impact, no I don't."
"What data do we need in order to answer this question?" I ask the class.
For a while nobody answers. Then Brian himself hesitantly