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Project Management (CCPM) to manage their internal processes, and we propose a key injection—“Everyone in the organization who has a significant impact on Throughput is measured by the same simple measure (that aligns all the actions of the organization with the goals of the organization)”—and show how it invalidates several of the assumptions underlying the core conflict. TOC provides measures for supply chains to achieve coordination. We believe that TOC Supply Chain measures can be used in complex organizations to create an effective method of coordination between units and departments and to give senior management new insight and greater ability to manage independent units. These Supply Chain measures are discussed and examples of their application to complex organizations are provided. We also address additional injections related to “Conflict Resolution” and “Resource Allocation” along with a negative branch about “Leadership Certification.”

Definition of Complexity

There are many possible ways to define complexity. For this chapter on TOC in complex organizations, let us define complexity not according to size of the organization, nor to its technology, nor flow complexity, but rather according to its TOC complexity. With this criterion in mind, we have the following four levels of organization:

Copyright © 2010 by James R. Holt and Lynn H. Boyd.

Simple

Complicated

Complex

Chaotic

If the solution for the organization can be implemented with a single TOC tool (such as DBR or CCPM), we will call it a simple organization. If the solution for the organization involves the interrelationship of two or more TOC tools (such as DBR and TOC Replenishment seamlessly integrated into one package), then we will call it a complicated organization. If the organization has many independent yet interdependent elements each needing an individual TOC implementation responding to ever-changing product demands, we will call it a complex organization.1 This typically occurs when the organization has many independent business units, each with its own independent resource pools and individual profit/loss statements and yet the whole organization’s effectiveness depends upon the successful contribution of many of the other business units. Complex organizations are characterized by multiple interactive constraints in a quickly changing environment aggravated by many near constraints operating within local optima guidelines without a clear, overriding schedule. A hospital is an example of a complex organization. Doctors, clinics, wards, laboratories, pharmacies, nurses, maintenance, housekeeping, imaging, record keeping and other functions, departments and units all try to perform at their best independently while also having to integrate many of their processes for effective organization performance. On top of the hospital’s normal processing of patients, there are numerous improvement and new product development projects going on. Projects require communication and coordination between departments. Each department’s capacity can be divided into capacity to meet current patient demand plus protective capacity. Protective capacity must be available on demand to support the constraint (current T) when unplanned demand occurs or Murphy strikes. However, at times when not confronted with these demands protective capacity is available for ideas projects, that is, future Throughput. Recognize, however, that if management is in the Cost World, when a resource is idle it is a perfect candidate for any cost-cutting initiatives.

An aircraft manufacturer is another example of a complex organization. Producing and assembling current models and producing spare parts for out-of-production models is a complex task, but added to it are the demands of numerous and continual product and process improvement projects and the demands of developing new aircraft. In addition, these companies may compete in a number of markets including commercial, military, aerospace, and others. Maintaining these two major processes, one focused on current