Using [Theory of Constraints AND Lean] to get Fast, Big results that just keep getting better … and ALWAYS reach the bottom line.
Thanks for checking out this Workshop Information.
Why This Is So Urgent!
Derek Barichievy and I decided on the spur of the moment that, having combined Lean and TOC together so often, with some spectacular results, it’d be helpful to conduct a workshop before the summer vacations take hold.
We have very little time left to make a go/no-go decision for a workshop to be held on June 15th 2018 in (probably) Langley or Burnaby and we need to have 10 committed participants to make it work.
So it’s vital you take a look at what we’re doing, decide if this is something your company should be supporting, and if you can — make a commitment as soon as possible. Click this link to open a Form where you let us know who, and how many — and we’ll contact you.
AND PLEASE SPREAD THE WORD! The Lower Mainland manufacturing community is a small world, please tell others about it, if you want to send them a link to this page then cut and paste this url:
The Fee for this workshop will be $495 per person.
It’s priced low because we want to give you an incentive to have AT LEAST 2 participants from a company. When it comes to moving from a workshop to taking action, 1+1 does NOT = 2. It equals a much bigger likelihood of SOMETHING GOOD HAPPENING!
If you want to bring more than 2, we are open to talking custom pricing, by the way.
Steve Jackson & Derek Barichievy
I’m Steve Jackson, I’m a TOC consultant, & have been since 1988. If you know the book The Goal by Eli Goldratt, you have some sense of what the TOC is all about: Focus and Leverage to generate big, fast improvements that ALWAYS reach the bottom line.
I worked with Eli Goldratt’s organization 1988 – 1994 and again at his request, when he needed someone to handle a special client, a few years later. I’m one of the team who worked with Eli to expand the TOC from “just” Production to Distribution and Supply Chain, Sales, Marketing, Strategic Planning, Throughput Accounting, Project Management … and the big one, the one that very few know about, the “TOC Thinking Processes.”
My friend and colleague Derek Barichievy has a resume that makes me shake my head — it’s so impressive I want to call him “Sir” whenever I read it. He’s been a senior manager for very well known companies in South Africa and Europe and (if I can display my age by considering it as a separate entity), the United Kingdom before he settled in B.C. a couple of decades ago.
We’ve worked together a few times. He’s one of the top 5 managers I’ve encountered in nearly 50 years in industry; and one of the top 3 Leaders, which is a different thing altogether. I won’t rank him more precisely because it’d go to his head. These days he’s a consultant, educator, and coach, very much in demand. Derek’s specialty is probably considered to be Lean Manufacturing but I view what he does a little differently than most.
I privately label his work as “Practical” Lean which offends some Lean champions who consider Lean to be entirely practical out of the box. And it certainly can be, but when you understand the “angle” of improvement I’m going to explain in a moment, you’ll understand the distinction I draw.
One aspect of Derek’s “Practical” orientation from my perspective is, he implemented Theory of Constraints to great effect before he and I ever worked together; and of course we have worked together on TOC implementations in BC.
We generated a shift from $200K red ink to $200K black ink in one publicly traded company and eliminated a 14-month backlog in an astonishingly short time. That’s a REAL boost in Productivity, in WHOLE BUSINESS Productivity, not a “local” improvement that looks good and makes people feel good but really does not contribute.
We moved another company to be massively “best in class” in terms of lead times and on-time delivery, in an industry where every order is custom and the lead time demanded by customers is outrageously short.
I have to say right now that my views in what follows aren’t necessarily representative of Derek’s views. He’s a nicer person than I am. He hides his frustration with the “status quo” better than I do!
I know he’d agree with me, though, when I express my frustration with what I see going on with the small manufacturers in B,C, (Actually, in North America. But I’ll climb off that hobbyhorse.)
There’s a real spectrum of actions & results out there.
At one extreme, there are those companies that claim to want to improve, and claim to be trying, but a close look reveals that what’s going on is lip-service only. And their results reflect this.
Well … “Focus” and Leverage” offers a way to make relatively few changes that have massive impact.
At the other extreme are those companies that are making genuine and major improvements and seeing terrific results.
There ARE some of these, and I applaud them because I see very, very few of them (Derek knows of more than I do). But what’s interesting and frustrating is that of those I DO encounter, many (not all) can’t point to major profit and ROI boosts.
Yes, they did “kaizen events.” They proudly tell me the number they did. Yes, 5S. Yes, reduced some set-ups. Yes, perhaps adopted cells. Perhaps even got “takt” time in play. And perhaps they can point to “local” productivity improvements. And genuine lead time reductions. And inventory reductions. Quality improvements. Yes, improved flow through the plant. Hard to argue with those!
Except … all too often it’s a challenge for them to point to any significant difference on the bottom line. They improved all sorts — but it somehow didn’t translate into improving the business according to the most fundamental financial measurements. Profit and ROI. Frustrating for everyone.
In between is where it’s even MORE frustrating.
Manufacturers that really committed and really tried and are convinced they did what they were supposed to do and … disappointment. Not even significant, tangible improvements on things like lead time and on-time performance. But everyone tells them it SHOULD have worked, and their people bought-in (at least, they bought-in at first) … so they conclude it must be their own fault it didn’t so … try again. And again. and I know of some on their 4th attempt.
I realize that what I’m about to say is at odds with every Lean expert out there (except Derek.). But some aspects of Lean work best in certain environments and work poorly in others and not knowing the difference — or believing there IS no difference — leads to the disappointments and the repeat disappointments. Managers in those environments do not realize that it CANNOT work in their environments the way the experts assure them it can. That’s not a popular stance for me to take but I can back it up.
In contrast, you’ve no doubt heard of the “perspective” where someone asks “what does good look like?”
Well, let’s deal with 3 circumstances.
Circumstance #1: The company has a lot of potential sales, if it could just “get its act together.”
They identify the very few internal resources that are the constraints or the “pacers” for flow. They go into what’s called “Exploit mode.” Meaning they challenge the way these constraints or pacers are managed and operated. Often within a week they are able to get 20%, even 30% more out of these units. Same people, just working differently. They challenge some sacred cows, is all.
What about the other resources? Well, they were NOT the constraint. They had additional capacity relative to the constraint. But there are also some changes in how they operate, too.
In 30 days we have the lead time DOWN by 50%, even 75%. By focusing on the “pulse points” we’re producing 20% more, or even beyond that. And on-time performance is at 93%, 95%, … and if it isn’t there yet we won’t stop until it’s 98.5% or better. It’s kind of our base level. Sometimes that takes 60 or 90 days to get all the way there.
Now, producing 20% more from the same resources only converts to dollars when you can ship the products — maybe there’s a backlog we can convert to instant cash but the time comes when we need those added sales. Can we get them? Well, we have the best lead time out there and the best on-time delivery so … we have some tools for our sales and marketing folk to work with.
What’s the impact here?
Well, let’s say this is a company that was shipping $600,000 a month. And let’s say material costs represented 40% of that. After our fast-big improvements we’re now shipping an additional $120,000 a month. Same people, same equipment. The cost of the material to make that happen is $48,000. So we just added something like $70,000 to this company’s bottom line, monthly.
Ok, Ok, maybe there had to be some overtime. Maybe even a new hire or two. So maybe the Operating Expenses grew by $15K a month (rare). So we have to settle for an additional $55,000 profit per month. That’s an additional $660,000 profit per year. Maybe everyone does a lousy job of what I just described and we only bank an additional $400K or $500K a year. Is that so bad?
Did you see what we did?
Focus, and leverage.
Did you see what we DIDN’T do?
We made no attempt to improve everything everywhere. We made no attempts to eliminate waste (although some waste is eliminated as a side-effect). We just got big, fast improvements where it mattered the most, and converted them into profits.
Is this realistic? One of my colleagues in the US has just taken one of the several small manufacturers they are working with from $150,000 annual profit to more than $750,000 in the first year of doing exactly this. These consultants — friends of mine since the 1980’s — make a mint because their fee is based on, 20% of ACTUAL BANKED ADDITIONAL PROFITS FOR THE 1st 3, 6, 9 and 12 MONTHS. When the company has BANKED the profit, they get paid.
Now, THAT’s putting their money where their mouths are!
One of my clients in the lower mainland started shipping record levels in their first month and hit something like 36 consecutive record month’s shipments, doing what I’ve just described.
When Derek Barichievy and I first worked together, that’s close to what we did to eliminate that 14-month backlog of work and transform 200K a month red ink to $200K a month black ink.
Circumstance #2: In this case, the problem is that there simply aren’t enough sales.
The plant COULD ship more, but the sales aren’t there to support it.
Well, there are several paths we can take here, and an analysis will show us the most applicable.
The first thing to realize is that “improving everything everywhere” might not do a darned thing to improve the sales situation. It’s mind-boggling to me to see companies throw themselves into “improve everything everywhere” mode when there is NO CONNECTION between what they are doing and what they want — INCREASED SALES. If they can’t convert improvements to sales then what shape MUST the improvements take? Cost reductions. And what shape does THAT take when the sales aren’t there? Right, we all know that one. It isn’t pretty.
So, start by understanding what it’ll take to win more sales.
Will a lead time reduction GENUINELY cause prospects to abandon their current suppliers to buy from you? Will on-time improvements GENUINELY cause the same effect? It’s easy to fool yourself into believing it will.
In fact a typical “competitive edge” might NOT be enough to cause a big shift like this, especially if there’s any relationship established. In that case, you have to have something we call a DEFINITIVE COMPETITIVE EDGE. And you’d better start by knowing what it is that you’re aiming for, if that’s the case!
Although … perhaps surprisingly often, the answer to that question is “yes.” Meaning, a major lead time reduction or on-time performance to 99% levels CAN BE enough to win some business. Your sales guys typically know EXACTLY what doors to knock on to make this happen.
But sometimes we have to take extraordinary steps.
Sometimes we discover that the sales process is extraordinary ineffective. It’s not uncommon to find that 90% of the sales team’s time is NOT on face-to-face selling. It’s on a million other things. So in those circumstances, a TOC-focused transformation of the sales activities can grow sales by 2X, 3X even 4X.
Sometimes we have to get creative and REALLY understand the needs of your downstream prospects and customers so we can build-in a level of performance beyond anything your competitors can offer, one that helps downstream customers boost their own profits. Win business because of us that they couldn’t otherwise win, for example. We call this a “Mafia Offer.” It’s extraordinarily powerful. It’s pretty much unique to the TOC.
Behind all 3 of these, though, we HAVE to get the plant into great shape.
… either to improve performance to win more business or to improve performance so as to be able to accept more business without disrupting 99% on-time delivery and without increasing best-in-class lead times.
How do we do this? Go back and look at the example in Circumstance #1.
Now again … look at the dollar impact.
We’re typically shipping at LEAST 20% more, and it’s growing as sales grow. The financial impact is once again fast, direct and usually massive.
What did we do?
FOCUS on the real obstacles to increased sales and profit; and leverage the limiting resources. EVERYTHING we did was targeted at winning sales or delivering the business we won. NOTHING was done because that’s what the textbooks say we should do.
What didn’t we do?
We did NOT try to improve everything everywhere.
We didn’t spend a moment on eliminating waste. Although some waste was eliminated as a side-effect!
Circumstance #3: You’ll have picked up by now that the TOC focuses on sales and profit growth. Cost reductions are a side-effect, never the goal. And TOC barely gives thought to the types of “waste reduction” that Lean revolves around. Sure, we agree with the elimination of over-production, for example; in fact, inadvertently we are aligned with many of the “waste reduction” objectives. But for us in TOC these are often a welcome side-effect. Not the target.
But Derek has shown me situations where the sheer waste is such that a focus on eliminating waste has been the absolute key to moving a company from red ink to black ink, or from a pale shade of grey ink to solid black ink. From survive to thrive.
Where it’s even been a prerequisite to almost any other Operational improvement.
In such circumstances, Lean is King.
And now we come to the missing element in the first 2 scenarios I laid out.
The company that emerges with best-in-class lead times, best on-time performance, lowest inventory and a huge boost to the bottom line via TOC… well, from a Lean perspective, that company will still be RIDDLED with what Lean views as “waste.” A successful, highly profitable TOC environment is often a target-rich environment for Lean!
We did NOTHING to improve the physical layout and work flow in the plant. Set-ups on non-constraints take up the time of people whose resources could be far more effectively deployed on other issues … we didn’t touch them. Quality improvements and reductions in variability on the Constraint processes are GOLD and the TOC will point you to them but it’s LEAN that has the toolkit to deal with them.
Quality improvements outside our points of focus can have a multitude of benefits … we’ll get to them eventually but we don’t have a toolkit to deal with them. Lean does. Value Stream Mapping can be an extraordinarily powerful guiding tool. We didn’t need it for what I described — but man, are we ever glad to see such a map when one exists!
More: the improvements to the performance on the constraints, or pacer resources that helped us ship 10%, 20%, 30% more? Well, the TOC doesn’t have any toolkit to make improvements beyond some changed work practices to prevent the obvious waste of capacity. But Lean does. Lean (and Six Sigma) can be the perfect platforms for the types of improvements we need to see.
A “kaizen blitz” on a non-constraint looks good, feels good and might achieve nothing of real value (sorry, Lean dogmaticians.) But that same event on a Constraint can generate 4- and 5-figure daily profit boosts starting in 24 hours!
The resources feeding the constraint(s)? Well, variability in the processes can cause havoc on the constraint. How do you reduce that variability? Lean has the tools.
Do you think 5S has implications for the constraint(s) performance?
For the feeding non-constraints? Of course. For the resources involved with moving work from the internal constraint or pacers to the shipping dock? Of course.
And … the list of the ways Lean works to support TOC is endless. This is what I refer to as “Practical Lean.”
I can’t think of a single TOC implementation in 30 years that wouldn’t have been improved through the wider use of Lean alongside TOC.
But it’s important to realize that what we didn’t do here was deploy Lean from a perspective of “improve everything everywhere” and a focus on “eliminate waste.”
We first used the Focus and Leverage platforms of the TOC to make sure we were doing those things that produce the biggest benefits the fastest. THEN we used Lean in a similarly focused manner, to make TOC better, to make results more sustainable, to make systems more methodical.
THIS is the shape of the ground we’re going to cover in this workshop!
It’s all about fast, big, tangible results that translate into sales growth, profits and ROI.
If you are coming, let us know!
Click this link to the Lower Mainland Workshop Form and give us some information — who, how many, how we can contact you!