Theory of Constraints Handbook - James Cox Iii [411]
We intend to implement a POOGI on the three generic causes. A focused POOGI analysis of the third cause—faulty execution—can be done by examining the reasons for dropouts of opportunities that had a significant delay. It makes sense that an analysis of lost opportunities that were a long time in the funnel experiencing a significant delay would point to a faulty execution (if it was due to the first two reasons, we would not expect significant delays but a quick dropout). Here is how we are going to go about it:
1. We will register the reason for every delay an opportunity encounters. To determine what should be considered as a delay, we have defined the expected standard duration of each step in the sales process. Whenever a step takes longer than the expected duration, it would be considered a delay. When this happens, the reason for this delay is registered. (We will follow the same guidelines Goldratt recommends for production—a reason would be defined as the resource or activity for which the opportunity is waiting).
2. We will focus the analysis on the opportunities that have dropped out after having a significant delay. To determine what should be considered a significant delay, we have defined a project buffer as shown in Fig. 21-8. The project buffer is equal to one-third of the sales process duration. When a certain step takes longer than expected, it starts to consume the project buffer by the number of days of delay. When a certain step takes less than expected, the consumed project buffer can be recovered by the number of days gained. The project buffer is divided into three parts. If the accumulated delays consumed less than one-third of the project buffer, the status is green. If more than one-third but less than two-thirds of the project buffer is consumed (as shown in Fig. 21-9), the status is yellow. If more than two-thirds of the project buffer is consumed, the status is red. If the entire buffer is consumed, the status is black. Significant delays are considered as blacks. In other words, only opportunities that dropped out when their project buffer status was black would be subjected to this POOGI analysis.9
FIGURE 21-8 Sales duration and project buffer.
FIGURE 21-9 Disruptions to flow translated into buffer consumption.
3. We will pull out the registered reasons for the lost opportunities that had a significant delay and identify the biggest common contributor. Basically, we will identify the reason that generated the biggest accumulated consumption across all the project buffers. If the improvement efforts stemming from this analysis are effective, it will no longer be the number one contributor and another analysis will reveal the reason that should be dealt with next.
The focused POOGI for the first two generic causes would follow the same guidelines for lost opportunities that did not have a significant delay.
We expect that implementing the fourth concept of supply chain will result in another quantum jump in performance.
Third guideline: Dedicate a team to build the POOGI mechanism to identify the common significant reason for dropouts and conclude where to focus improvements efforts.
Summary
This chapter is aimed to show that what Goldratt refers to as “Supply Chain Concepts” apply much beyond what is typically referred to as Supply Chain, and therefore should actually be referred to as the “Concepts of Flow.” Our experience in applying these concepts generated a jump in sales performance, hit ratio, and our management’s and sales team’s capabilities. In addition to the tangible