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com

27th InternationalConferenceofthe
TOCPractitionersAlliance TOCPA
www.tocpractice.com

August1618,2016Johannesburg,SouthAfrica

Growing a reliable and stable

company in a fast changing world
ie a growth Cpy ....... the TOC way

Albert Visser, Goldratt Group, South Africa

17th 18th August, 2016

27th InternationalConferenceoftheTOCPractitionersAlliance TOCPA

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Albert Visser
I am a director of the Goldratt Group and the MD of
Strategic Corporate Assessment Systems.
I am a certified TOC expert and have been involved
in many TOC projects leading and implementing
TOC for the last 15 years ranging from Viable Vision
projects, Supply chain and manufacturing and
project management projects.
I have been implementing maintenance and
maintenance spares strategies using expert systems
for the last 20 years
I have spent the last 12 years in better
understanding the limitations that is blocking TOC
from becoming the main way of managing
companies and developing a potential solution
(Never say you know)

albert@goldratt.co.za
083 6547821

27th InternationalConferenceoftheTOCPractitionersAlliance TOCPA

www.tocpractice.com

Setting the objective

AGrowthCompany
AgrowthcompanyisanyCpywhosebusiness
generates(significant)positivecashflowsor
earnings,whichincreaseat(significantly)
fasterratesthantheoveralleconomy.A
growthcompanytendstohaveveryprofitable
reinvestmentopportunitiesforitsown
retainedearnings.
27th InternationalConferenceoftheTOCPractitionersAlliance TOCPA

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Necessary Conditions

InordertodothatwemustgrowThroughput
fasterthanOEnowandinthefuture
Youcanonlyachievethisifyouhave
SufficientMarkettoexpandin
YouhaveavalidatedDCE

But
Butevenifthereisgrowthcapabilitywecouldprobably
release30%capacityforgrowthfrominherentpotential
thereafterthecompanyneedstoexpandintothecapacity
andbeyond
Letslookathowenablershelpedcompaniestogrowinthepast
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TheindustrialRevolution

27th InternationalConferenceoftheTOCPractitionersAlliance TOCPA

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Division of labor
This is probably the one most miss understood
process or not understanding of the full implications on
the organization
Lets discuss this through an example
My steel gate cpy
Start
Growth
Lets look at companies that has been successful in
implementing Division of labor

27th InternationalConferenceoftheTOCPractitionersAlliance TOCPA

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Industrythathassuccessfully
implementedDivisionoflabour

MotorCarindustry
Nextlevelofefficiency

Televisionandcellphone
industry
Theyallimplemented
theflowline

ChryslerViperassemblyPlant

Taiwan'scontractelectronicsmakerHon
Haiemploysaboutonemillionworkersat
factoriesinChina,tomakeproductsfor
theworldstopelectronicsbrands

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Growing Pains
Division of labor

Unavoidable Effect: Creating a flow line/Value stream

(Aflowline/valuestreamisaseriesofdependentvalueaddingactivitieswithclear
accountabilityandresponsibility)

Increase in functional capacity or mechanization of functional

capacity

Unavoidable effect: We have to manage the assignment of work

In both cases we have to manage the limiting resource in the flow

line
Adding new functionality/new flow lines/value streams
So a company develops a number of integrated value streams, to
deliver a product or service to the market. This now creates the
fertile ground for TOC, Lean, 6Sigma, BPR and many others
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Growth Pains
We all end up somewhere in between
One man company (all value streams exist in his mind. No division of labor) No
flow line
A large portion lies in between in a mixture of sizes and levels of formal designs
of the flow lines
Huge company (That would fail to exist ie they cannot afford not to do it right)
Flow lines exist and is formally designed
Lets look at the outcome of two different Cpys

What is the effect of a our current value stream creation?

The Humans best characteristic is becoming our worst enemy.
Informal and unwritten local policy is developed

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EvolutionvsDesign
SingleresourceCpy

Transition
Tasksaregiventopeopleseeingasbeing
reliableandcompetentratherthan
consideringtheflow
Functionsaredonebymanagers
Functionalboundariesisnotalways
considered
Employeesarelefttothemselvestodeal
withtheflowissues
Wedealwithitinisolation.Nobodyhasthe
overallprocessresponsibility.
DesignedCpy

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Summary Insights/Learnings from

understanding Company Growth

All the value streams that exist in a large cpy exists in a

entrepreneur? (It is only the way we divide the work that makes it
different)
Most organizations do division of labor in an unstructured way
which leads to:
overload of competent resources
Higher wage bill and sometimes
Burnout of resources and management becomes the constraint
Frequent fire fighting
No one responsible for value streams
Hierarchy Management and very little value stream
management
Slow response to market changes
27th InternationalConferenceoftheTOCPractitionersAlliance TOCPA

What are the problems we

have in companies due to the
current evolvement of Cpys
Our Cpy is at risk
Resignation of key resources has negative effect on operations
We resolve local issues in value stream rather than correcting the
flow of the value stream
Changes to improve the value stream flow is less successful
Change management becomes a timely and costly exercise and
hence people implement at a much lower pace
Most of Current KPIs is not focused on ensuring that the value
stream is optimal
Companies employ and pay more management than they should
The True value is not extracted from Management
Engines of disharmony is very active

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Is there a solution?
What if we can find a mechanism to document all the
business processes of an existing company of say 300
people to the execution level in 2 months. (ie clear
accountability and responsibility for each resource in
the company) All value streams
At the same time we remove all non value adding
processes (release capacity)
At the same time we assign process and sub process
owners (Leverage Management)
Now lets grow the company!!
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Example

OrdertodeliveryVS
Customer
Order

Customer
Delivery

DC

ImpRMSVS
Proc
Imp

Planner

Factory
Warehouse

ReplenishmentVS

DC
RMS

Proc
Loc

LocProcRMSVS

ManufacturingFGVS
Buyer
LocalprocuredFGVS

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TheFutureCompany
Have to move to joint ownership
if you want to keep your Human
capital
This can be done more
successful if we have clear
accountability and responsibility
defined

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First Puzzle Game

Single person build a Puzzle

Market is buying an assembled puzzle

Observe Discussion
This is simulating the start of a business
Entrepreneur
How is the job getting done
What positions is he filling in the company
How long did it take

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Second Puzzle Game

Company build a Puzzle

Increased demand for assembled puzzle

Most reliable resources gets more work

Work is distributed between resources

Observe Discussion

Interaction between resources

They look and feel busy but a lot of time idle

Engines of disharmony
TellmehowyoumeasuremeandIwilltellyouhowIwillbehave.
Peopleneedtounderstandwhereandhowdotheyandtheirpeerscontributetothe
organization.
Neverunderestimatethepowerofinertia.Gapsbetweenresponsibilityandauthority.

How long did it take?

Are we making money?

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Third Puzzle Game

Yourlogo

Company implement flow management

How do I reduce the complexity

How do I reduce the Skill level required
What determines the TP Based on the new approach
How do I increase the flow

Observe Discussion

Interaction between resources

They look much more utilized
Engines of Disharmony
How long did it take?
Are we making money?
27th InternationalConferenceoftheTOCPractitionersAlliance TOCPA