Theory of Constraints POOGI Part 66 You Want Me To Do WHAT? (conclusion)

We are continuing our series based on The Goal by Eliyahu M Goldratt and the Theory of Constraints. {This series was co-written with Brad Stillahn.}


So how do we get the key people in a highly custom job shop to do the totally counter intuitive steps of the Velocity Scheduling System (based on Theory of Constraints Simplified Drum Buffer Rope)? Well, instead of pushing the steps of a system they don’t understand, don’t agree with, and have no intuition around - we build on a previous success.


What success? Ask any custom job shop if they have ever pulled out all the stops for a customer and turned a job really quickly. Most (probably all) will say yes. Ask them to tell you the story. You will find that they were able to do a job in a fraction of their typical quoted lead-time. For example, one client did a job in 3 days that they would normally quote a 6 week lead-time for.

When they are telling the story ask about what they had to do to get that job done. And what did they had to stop doing or what jobs did they have to stop working on to make it happen. Listen very closely, take notes and ask questions to draw out the story.

Typically they will explain how they had to stop working on a several jobs that they had already started. Then they will talk about how they "crashed" the job. "Crashing a job" is our terminology for bringing multiple resources to bear on a job. They might have used 2 lathes to run operation 1. And as soon as one piece was done it immediately went to operation 2 on a mill instead of waiting for all it sister parts to complete operation 1. In this way, the job just zipped through the shop.

They were able to complete this job so quickly because they 1) reduced work in process by stopping work on other jobs; 2) By focusing on finishing this one job and 3) by "crashing the job" and bringing multiple resources to work on it.

These 3 actions are some of the key components of the Velocity Scheduling System (VSS). The problem you would discover is that they think that they cannot continue to take these actions on an on-going basis. And if they did, they would be inefficient and the company would lose money.

So what we now explain, is that the VSS is a system that will help them find the balance between what they did on that rush job and efficiency. Then we simply ask - would you be willing to try it and to help customize VSS for their plant. We will explain everything, but knowledge does not change behavior, what we need from you is a commitment to try what we ask.

Who would say no to that? Particularly in the group environment we have for our VSS Coaching Program.

If we can get the biggest detractor for each company to agree to try it, to really do the program, they are unlikely to go back on their word. (Law of Consistency) Then, the crystal clear step by step instructions of VSS, in combination with their story and experiences will help the new process (VSS) to stick.

This process of building on a success can be used in any number of circumstances. We’ve also used it to help companies with their sales and marketing, project completion, and distribution solutions. How can you use it? Drop us a line and let us know your thoughts.

What's your experience with buy-in? Please add your comments to this post  (really, I want to know).

Here's to maximizing YOUR profits!

Dr Lisa

(c)Copyright 2010, Dr Lisa, Inc. All rights reserved.

Theory of Constraints POOGI Part 65 You want me to do WHAT?

In Theory of Constraints we follow a process to improve. First we decide "what to change". To do this, of course, we need to agree on the problem(s). Once we have consensus on the problem we then work on the solution or "what to change to". And after that, we decide "how to cause the change".

It all sounds very straight forward and logical and it is. This process does work, but at times it can prove to be challenging -- especially when we don’t take enough time to agree on the problem. So Brad and I are especially vigilant about that. Because there is really no point to moving into discussing the possible solutions unless and until we have agreement on the problem. Every time we’ve pushed ahead too fast we always have to go back and get agreement on the problem.

This is particularly true when we are talking about problems that the Theory of Constraints (TOC) logistical solutions will solve. So Brad coined the expression “we are going to go slow so that we can go fast”. That approach has helped us to get better, faster results with clients. Then we teach our clients to do this each time a challenge, problem, or opportunity presents itself. And, with a little coaching and guidance, they also get very good at this.

Then we move to agreeing on "what to change to". Now, you would think this should be pretty straightforward once we’ve agreed on the problem, but we have found it’s not that easy. Why?

• There can be multiple solutions that would work or we think there are multiple solutions that could work.
• People are only comfortable with solutions which they are familiar with and have intuition around.
• We don’t know what we don’t know.
• The Theory of Constraints solutions are often counterintuitive, the opposite of what most people do now, and most people have no familiarity or intuition around them.

So you can see, if the solution is to implement our Velocity Scheduling System for scheduling job shops (based on Goldratt’s Theory of Constraints and Simplified Drum Buffer Rope) we may get some push back (aka You want me to do WHAT?) even AFTER we have successfully agreed on the problem.

In fact we’ve had some job shops suggest that we must have been hiding out in their shop when we wrote "The 9 Challenges to Scheduling Jobs Shops and Why Your Schedule is Dead on Arrival".

That is the highest compliment someone can pay and we have clearly agreed on the problem. Then those same companies argue and resist every step of the way during implementation. This was super frustrating until we learned how to get them to agree on "what to change to".

So how do we get the key people in a highly custom job shop to do the totally counter intuitive steps of the Velocity Scheduling System? Well, instead of pushing the steps of a system they don’t understand, don’t agree with, and have no intuition around - we build on a previous success.

... next week I'll take you through how we do that.

 What's your experience with getting buy in? Please tell me in the comments of this post.

How to Sell Your Mafia Offer - Part 3

In Part 2 we discussed how we start the Theory of Constraints Mafia Offer Solutions for Sales presentation by agreeing on the problem. I can't stress enough how important it is to really nail this first part of the presentation.

In no more than 4 slides you should be able to describe how YOUR industry (you and your competitors) are having a negative impact on your customer's bottom-line. If you can do this instead of the typical "Background of Our Company" and "Background of Our Products" they will be eager to hear what yo have to say next instead of being half asleep.

During this part of the presentation I like to generate conversation if there is an opportunity. This is nice because often there are people in the room (we will discuss who should be in the room later) who are not fully aware of these situations or the order of magnitude of them. For example (continuing for the Part 2 example) I may ask if in fact they have the experience of having to hold higher inventories due to a supplier's policy and if despite the fact that they have too much of some inventory do they stock out or almost stock out of others. I'm hoping to hear a story about a time when they ended up having to dump a bunch of inventory and also one about what happened when the stocked out.

Once we have our customer's head shaking in agreement and they have shared a couple stories, they are actually eager to hear what you have to say next. You are the first vendor that has so eloquently described the dynamic between industry practices and you verbalized it better than even they have or could.

The next thing we cover is "Agree on the direction of the solution".

... stay tuned for Part 3.

Here's to Maximizing YOUR Profits!
Dr Lisa Lang
(c)Copyright 2007, Dr Lisa, Inc. All rights reserved.

PS There are only a couple Mafia Offer Boot Camps remaining this year. Act fast or January 2008 will be your next opportunity!

How to Sell Your Mafia Offer - Part 2

In Part 1 we discussed some background on "framing" and the importance of how you present an offer. So now we are going to apply that to presenting a Theory of Constraints (TOC) Mafia Offer.

During a Mafia Offer Boot Camp we create either a PowerPoint presentation (called a Solutions for Sales presentation) with your offer and/or what we call a 1 Pager. In both cases we follow the same framing.

1. Agree on the problem.
2. Agree on the direction of the solution.
3. Agree that our solution solves the problem.

The above is part of the Theory of Constraints buy-in process. Notice the resemblance to what was presented in Part 1 regarding Ludwig von Mises' three requirements for an individual to change:

1. The individual must be dissatisfied with the current state of affairs.
2. They must see a better state.
3. They must believe that they can reach that better state.

Let's look at each step in some detail.

1. Agreeing on the Problem.

In the PowerPoint presentation we start with "Analysis of the Supplier's Practices". In this part of the presentation we show how suppliers in our industry (us and our competitors) have a negative impact on our customer's business. These negative effects are due to our practices. Typically these practices are common across our industry and include minimum order requirements, scheduling practices, lead-times, and so on. In this way we are starting with how OUR practices are the cause for at least some of their problems.

Here's an example:
Supplier Practice: Minimum Order Quantities and Volume Discounts
Customer's Mode of Behavior: Batch orders (delay ordering) to accumulate needs and order larger quantities than immediate needs require to get the discount.
Implications on Customer's Business: High inventory with all the cost and risk that goes with it.

Here's another:
Supplier Practice: Charge based on time or by project.
Customer's Mode of Behavior: Slow decision process (check references, etc.) to be sure that promised benefits will be actualized.
Implications on Customer's Business: Promised benefits are not always realized or if they are, they were delayed.

When you do the typical sales call -- show up and throw up spouting all the features and benefits of your product or service, the customer is automatically resisting and looking for reasons not to buy. By starting with how WE negatively impact them, customers are more open to hear what we have to say next.

I typically like to generate discussion around these problems because often times there are people in the room that were not aware of the situation or the magnitude of the problem.

In the 1 Pager we start similarly but we have an opening sentence or two to explain the problem(s). We would start with something like:

Widget suppliers typically require their customers to order minimum quantities and give further incentives to place even bigger orders because that's what's best for them. Have you followed the rules? Have a small mountain of inventory? But still stock out? Is doing what's best for us, not as good for you?

... stay tuned for Part 3.

Here's to Maximizing YOUR Profits!
Dr Lisa Lang
(c)Copyright 2007, Dr Lisa, Inc. All rights reserved.