Theory of Constraints POOGI Part 67 -- Employees Need Time Off? That’s unproductive!

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}

Dr. Lisa: Each employee has a life outside his or her job in a business. They have family, financial and other pressures. Time off is sometimes needed.

Brad: Of course, but business owners have to run the business to satisfy their customers, as well as make enough profit to stay in business. Time off can be a real issue. In some businesses, it is the main issue.

Dr. Lisa: In many businesses, employees have holidays and earned vacation. Normally there are paid breaks for non-exempt employees. In addition, depending on the company, they might also have paid sick leave and/or unpaid time off.

Brad: Often times, the more senior the employee, the more earned vacation they have. And senior employees are frequently the most skilled. When they are off, it's tough to maintain productivity. Early in my career, I supervised a small department of highly skilled employees. We were responsible for the production of a large group of paper mills. It didn't take me long to realize that on average, one person would be off on vacation every day. And of course, it didn't work out that way. Half the department would be gone the whole month of December. Most small businesses have this problem, although they cope with it in different ways.

Dr. Lisa: Yes, I've seen all kinds of different ways business owners cope with this, including NOT dealing with it at all. But, to maintain due date performance, there needs to be some predictability and consistency of resource availability. In the Velocity Scheduling System (based on Theory of Constraints drum buffer rope), machine shops are comparing load to capacity for several weeks into the future. Often the company policy requires less notice for vacation than the scheduling horizon, meaning that significant variability is added from even planned time off, not to speak of unplanned time off that happens with no notice. Due date performance is jeopardized.
Dr. Lisa: Then there is the impact on profitability. Paid time off is an operating expense. Throughput (Throughput equals Sales dollars minus Truly Variable Costs in Theory of Constraints Throughput Accounting) dollars must exceed Operating Expense to make a Profit. During some weeks and months of the year, there isn't enough productive time available to produce enough Throughput to make money. This puts the business owner in the position of having to make enough more money in the more productive months to make up for the loss months.
Brad: And, customers don't care about the people scheduling issues the supplier has. They expect what they want when they want it (or at least when it was promised). For sure, the demands placed on a supplier by a customer do not neatly fit into the preferences of when employees would like to work.

... to be continued in Part 67
Hello? Is anyone reading? Please add your comments (just click the comments hyper link at the bottom of the post)

Here's to maximizing YOUR profits!


Dr Lisa

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

Critical Chain Project Management Goldratt Theory of Constraints

http://www.ProjectVelocitySystem.com Critical Chain Project Management based on Goldratt Theory of Constraints.   This Theory of Constraints video on Goldratts Critical Chain Project Management CCPM explains how to get MORE projects DONE faster. This video covers 1) why it’s so difficult to get projects done on-time; 2) how to select the right projects (or prioritize jobs); and 3) how to get MORE projects DONE faster with Project Velocity System for project based companies including service companies.

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.

Theory of Constraints POOGI Part 64 Getting Jobs Through Engineering cont.

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.}


Brad: Aren’t customers the real problem? Supplying incomplete information to the engineers, late?
Dr. Lisa: Blaming customers won’t solve the problem, although what you say is often true and they are a large source of variability.

Brad: So what is the real problem, and what is the solution?
Dr. Lisa: The real problem is how engineers do what they do. (It’s typically NOT that we need more engineers.) But it isn’t just the engineers, it is all of us. It is how projects are managed. We allow some bad assumptions about the best way to manage projects significantly deteriorate our project performance. It is true everywhere around the world.

Brad: For example?
Dr. Lisa: For example, the idea that there is good multi-tasking. Multi-tasking has a terrible effect on engineering. Engineers must finish projects, and that means they need to 1) know which projects to focus on and 2) work on finishing those, rather than starting all of them. Projects need to flow quickly through engineering. But that is just one example. I have a white paper on the subject called Information Overload Destroyer that can be downloaded at http://www.informationoverloaddestroyer.com/ for additional examples.
Brad: So what is Project Velocity System, and how does it help?
Dr. Lisa: In Project Velocity System Coaching Program, I will take the people involved with managing and doing projects through 10 sessions followed by 10 coaching sessions aimed at getting immediate improvement in project delivery: On time, in scope, and within budget. In other words, we will focus on getting a job ready for manufacturing BEFORE they need it.
Brad: I thought that in project management, if you’re lucky, you only got to pick two of the three. Of course, with a lot of projects, you get one or none. It’s not unusual for projects to be late, with scope sacrificed, and way over budget.
Dr. Lisa: That’s reality without a process, but with the right process, you can ensure that engineering is not and will not starve manufacturing. And this can be accomplished by the end of the Project Velocity System Coaching Program and most often without hiring a single additional engineer.
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Want to improve your engineering and project management performance? Go to http://www.projectvelocitysystem.com/ to learn more and sign-up for the next available program. Want to talk about it? Just give us a call or send an email.

What are the challenges YOU face getting jobs through engineering? Tell me your 2 biggest challenges in the the comment box!

Here's to maximizing YOUR profits (and selling price of YOUR business)!

Dr Lisa

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