Theory of Constraints Handbook - James Cox Iii [361]
The Five Focusing Steps
TOC strategy finds and capitalizes on inherent simplicity in any organization by using a process called 5FS (Goldratt, 1990, Chapter 1). These steps are:
1. Identify the system’s constraint.
2. Decide how to exploit the system’s constraint.
3. Subordinate everything else to those decisions.
4. Elevate the constraint.
5. Go back to Step 1. Warning: Don’t let inertia become your system’s constraint.
For organizations that fit an S&T template (see examples in the next section from several predefined, generic solutions to common problems), the 5FS have already been applied and are reflected in the S&T. Otherwise, the organization defines its strategy and tactics by answering the implicit questions in the 5FS. If the people defining the strategy are stuck in how to apply one of the 5FSs, one or more of the TOC Thinking Processes (TP) can be used to derive an answer.2
The following example illustrates the 5FS. You will find the description of generic S&T strategies later in this chapter and in Chapters 25 and 34.
Example—The Five Focusing Steps
A retailer wants to increase sales and profits. In applying the first step, identify, the retailer looks for a physical representation of the constraint. Within a distribution system, there are several physical attributes—for example, the physical display space (shelf space) in a retail store, the capacity of trucks that make deliveries, or the number of parking spaces available to customers. In most retail environments, TOC finds the biggest leverage point (physical constraint) represented by the customers who come to buy the products.
Since the word exploit, in English, can have a very negative connotation (i.e., one person taking advantage of another person in a very negative way), you can substitute the words “Get more out of.” Often, when a constraint is identified, upon closer examination there is significant waste of the constraint. In distribution, one of the biggest wastes is attracting customers to a store and not having the product they desire in stock when they arrive. This is the opposite of exploit. Simultaneously, there is another huge waste—having too much inventory in some locations. The waste is not just in carrying costs of the inventory. More often, the bigger waste lies in the efforts that go into getting rid of such inventory, which in today’s world can quickly become obsolete, and in the waste of prime retail space occupied by slow moving items. In order to exploit the constraint in the retail system, TOC advocates moving from a push system (where high quantities of goods are pushed from the manufacturer to a distributor and from the distributor to a retailer through policies rewarding buying high quantities in a single shipment) to a pull system (where you replenish more frequently exactly what was consumed, and modify inventory target levels dynamically and automatically according to significant changes in demand).
The subordinate step defines the actions and policies required by everyone in the system in order to support the decisions made in the exploit step. The most successful implementation of TOC subordination in distribution that I witnessed required store managers to stop deciding on what to order and instead concentrate on training their retail staff in serving their customers (see Fig. 18-3 for actual results from this S&T tree). By subordinating everyone to the TOC pull system ordering decisions, sales doubled within 3 months with the same level of inventory and, at the same time, shortages were cut in half. Another way to decide to exploit is to replenish more frequently to drive down shortages, allowing the retailer to carry a greater variety of items—the more frequent the replenishment, the smaller the quantity of individual items needed to meet a given customer service level.
FIGURE 18-3 TOC Five Focusing Steps in retail—results in 3 months.
Elevate means increasing