Theory of Constraints Handbook - James Cox Iii [363]
Quality—rework daily or weekly OE percentage of sales
Overview of TOC Strategy Applications in Manufacturing, Projects, and Consumer Goods Distribution/Retail Organizations
Introduction to Strategy Applications
If you want to see the result of 25 years of TOC development in strategy and tactics in a single document, this information is now available in the public domain at no charge. Check out the viewer provided by Harmony software that comes with generic Strategy and Tactic Trees (S&T Trees) 3 for manufacturing, projects, and distribution/retail of consumer goods: http://goldrattresearchlabs.com/?q=node/2
Since the details of these S&Ts are provided in the above forum, this part of the chapter will serve as a roadmap to these strategies.
What information should be contained in a strategy description?
1. There must be enough detail so that anyone, at any level and function in the company, can understand what they must do in order to meet the company goals. This has major implications for anyone tasked with creating a strategy for an organization. Simply listing objectives and actions or injections is only a start to providing the clarity of direction for all levels and functions.
2. There should be an answer to the question, “Why is this result necessary to achieve the goal or the next higher level strategy?” In this knowledge worker age, most people don’t want to be told what to do. Their commitment requires them to understand why they need to do it.
3. The strategy should spell out what components will be sufficient to achieve the desired intermediate results and the overall goal. By forcing ourselves to try to understand the full context of what is required to achieve a major goal, we often discover missing pieces a priori. This alone can significantly speed up an improvement process and prevent painful mistakes. Consider an example where a manufacturer improves internal operations to a point of increasing capacity by 30 percent, and the lead time to increase sales to take advantage of the extra capacity is 6 months. A strategy that plans for the sales lead time will achieve results months earlier than one that is insufficient in the sales portion.
Generic Content of S&T Structures
Before a brief tour of three generic strategies for manufacturing, consumer goods distribution, and projects, it’s helpful to understand the format of every S&T. An S&T consists of a structure (see Manufacturing S&T example in Fig. 18-4) and corresponding text containing strategy, tactics, and assumptions (see corresponding text for box 1 [upper left-hand corner of table provides table position in tree] of the Manufacturing S&T example in Table18-1). In the Harmony S&T viewer,4 double clicking on a box brings up the corresponding details. By double clicking on box 1 of the manufacturing S&T, labeled Viable Vision (VV), you would see the format shown in Table 18-1. Clicking on a “+” symbol in the Harmony software opens up the structure to lower levels.
FIGURE 18.4 Manufacturing S & T Structure to three levels. (Used by permission of E. M. Goldratt 2008. Manufacturing S&T © E. M. Goldratt.)
The structure is hierarchical. Each lower level in the diagram contains strategies and tactics necessary to achieve strategies represented in the higher level. Ideally, implementing the tactics at the lowest level is sufficient to achieve the strategy at the next level. For example, when the tactics in all boxes below level 2.1 (i.e., 3.1.1, 3.1.2, 3.1.3, 3.1.4, and 3.1.5; use Harmony S&T Viewer to view these tables) have been successfully implemented, the S&T in higher level 2.1 should be achieved.
In every S&T, the strategy is shown in the box labeled Strategy as illustrated in Table 18-1. The concept of the VV goal was originated by Dr. Eli Goldratt and first verbalized as turning top line (revenues) to bottom line (net profit) in 4 years or less. Currently, the VV goal is more often expressed as achieving a level of measurable performance beyond what the management team is targeting. For