Theory of Constraints Handbook - James Cox Iii [560]
The academic TOC community is relatively small, as TOC is not yet the mainstream in management. The main performance measures of an academic person are the quality and the amount of his or her research. TOC research does not support the route to tenure track for a young researcher.
Last but not least, the TOC community is a closed community of people getting their knowledge from a limited amount of sources. In the last few years, TOC has concentrated mainly on the Viable Vision (VV) projects in production and logistic organizations, and putting efforts on Critical Chain Project Management (CCPM). Thus, the important issues of how to implement TOC in service and nonprofit organizations were lagging behind.
Brief Assessment of Service Management
What to Change?
The value drivers for service organizations that hold a great potential for value improvement are:
Proper definition of the goal
Measurement and control
Constraints management, especially in the IT department
Emphasis on shortening lead times and improvement in due-date performance (DDP)
Proper decision making especially regarding pricing, costing, and transfer prices
Proper management of the Sales and Marketing departments
The service industries where the WIP is physical (like retail or health care, since WIP is comprised of customers or patients) were in fact the first to implement some of the concepts and tools discussed in this section. However, the need to change is especially prominent in organizations where the WIP of the service is non-physical (e.g., software code, requests for life insurance policies).
Why Is TOC Not Yet Popular Among Service Organizations’ Managers?
TOC is less popular in service organizations than it is in production management. There are several reasons for this gap:
The “production/manufacturing” language— To most service organizations’ managers, some topics seem to be relevant only to the production world. “Batch size,” “load,” “setup,” “Throughput,” “cost per unit,” “complete kit,” “buffer,” etc. seem to them as not applicable to the service environment. As matter of fact, all of these issues are also highly relevant to service organizations.
Lack of immediate quick wins in operations— TOC and Focused Management received their popularity in the manufacturing sector due to the fact that they were able to achieve substantial improvement in operations in a relatively short time. Many of the improvement areas that brought quick wins in terms of value enhancement have a lesser effect or are difficult to achieve in the service environment.
WIP-related problems are more difficult to resolve— In the implementation of TOC in production, WIP is substantially reduced, with profound effects on performance and value. Smart scheduling procedures and Drum-Buffer-Rope (DBR) implementations were delivering the “miracles.” WIP in service is also a major problem, yet it is more difficult to resolve. This is especially true in service industries where WIP is non-physical.
No raw materials and finished goods success stories— As service organizations do not have raw material (RM) and finished goods (FG) in their core processes, the proven TOC methods for these areas do not apply in service organizations.
Bottlenecks are usually not easy to identify—In the service environment, bottlenecks are not visible. This is especially true for service industries where WIP is virtual.
Lack of abody of knowledge(BOK) and experience on how to deal with service organizations— Production companies are very similar to each other. Practices and procedures were developed along the years to deal with V-, A-, and T-plants. Since service organizations have high variation in processes, structure, and workflow, there are no generic practices for their improvement. Unfortunately, the TOC International Certification Organization (TOCICO) BOK in recent years mainly has focused on production issues, concepts, and tools.
VV projects are focused on production, logistics, and manufacturing.
Difficulties in defining the goals of