Theory of Constraints Handbook - James Cox Iii [571]
When applying TOC, undesirable effects (UDEs) are the starting point for figuring out what to change. For example, shipping orders late is an UDE of pushing too many jobs into and through a factory. A corresponding UDE in PSTS is finishing client projects late by starting more projects than the service provider can handle at once. Arbitrarily starting fewer jobs or projects isn’t the answer, however, because the number of jobs or projects is a symptom, not a cause. Unless you know which jobs or projects to start—and how to manage their constraints—you haven’t really solved the problem.
Contrary to conventional wisdom, behind even the most complicated web of symptoms there is usually just a single core problem. It accounts for the multitude of pain points. If there are too many jobs in the factory, the core problem could be the factory’s constraint isn’t being managed. If there are too many services projects in progress, the core problem could be the service provider’s constraint isn’t being managed. The pain points associated with rework, overtime, missed shipments or milestones, employee morale, and customer dissatisfaction can be traced back to this core problem. In addition, mandates to eliminate rework, cut overtime, ship on time, meet milestones, reassure employees, and satisfy customers invoke considerable effort to treat symptoms, not the core problem.
Once the core problem is identified, however, it’s usually the result of a conflict. For instance, if senior management complains that utilization is too low, more jobs get pushed into the factory or more services projects get launched. However, the crush of new work and the confusion sown by expediting slow down work on previous commitments, which further depresses utilization. By now, the conflict is in full swing.
The question then should be how to stop the cycle. Conventional wisdom says the way to resolve conflict is compromise. For example, picking an optimal utilization target and setting an optimal production schedule seems like a sensible solution. Unfortunately, universally high utilization and high overall productivity are an inherent conflict, and no amount of compromise will make it go away. Indeed, what often happens is senior management scrutinizes utilization until production becomes unacceptable. Then scrutiny shifts to on-time delivery until utilization becomes unacceptable. Then the cycle repeats. TOC practitioners know, however, that whenever they see an enterprise oscillating this way, its managers are probably compromising on a conflict. Oscillation takes many forms: centralize versus decentralize, hire versus fire, acquire versus divest, and build versus buy, to name a few.
In contrast to conventional wisdom, TOC teaches the way to resolve conflict is to eliminate the conflict itself. For example, the quest for universally high utilization is rooted in the belief that every resource that isn’t fully utilized represents a lost opportunity for production. However, if the non-constraints produce more than the constraint can, work just piles up ahead of the constraint even though non-constraints downstream from the constraint are sometimes starved for work. And if work is released into production just to keep workers or machines busy, it eventually leads to excess inventory. The services equivalent occurs when people bill projects for tasks that could be done better another way, or that don’t necessarily need to be done at all to complete the project successfully, but that do contribute to resource utilization.
TOC resolves this conflict by maximizing utilization of the constraint, while minimizing utilization of everything else that isn’t required to keep the constraint