Part of the reason I embarked on Re-Read Saturdays was to refresh myself on a number of books that have had significant impact on my career. Re-grounding myself was somwhat of a selfish idea; however at the same time as I refreshing myself on important concepts Re-read Saturday has provided a platform to share those ideas with a wider audience. As we begin the second half of the re-read of The Goal, I have been struck how many people have been exposed to the ideas in The Goal and how many of those ideas they have put into action, even if they can’t recite the Theory of Constraints verbatim. For example, the development and test manager that recognizing the handoff from development to test as a bottleneck and worked out a priorization scheme that maximized throughput of critical projects. Earlier entries in this re-read are:
Chapter 23: Alex meets with Ted Spencer, the supervisor for the heat-treat area, who is asking Alex to get the “computer guy” (Ralph) off his back. Ralph is asking Ted to keep significantly better records of when parts enter and exit the heat-treat process. Ted indicates that he does not know why Ralph wants the data. In the past few chapters we have seen the power of transparency and communication to support process changes; in this scenario the lack of transparency has generated conflict. When Alex meets with Ralph he finds that has been trying to use the process data to understand why more shipments have not been being completed, and has noticed SIGNIFICANT variability in the times that parts enter and exit the heat-treat process. Often parts that have been completed sit until someone has time to unload the furnace. This originally lead him to question the validity of the data, so he requested that Ted to generate better data. The issue turns out to be that parts are often not immediately unloaded after the heat-treat process due to timing and staffing issues. The furnace is loaded and then heats the parts for four or five hours before being ready to be unloaded. In order to maximize efficiency, people are assigned other jobs during the heating process, which causes the timing and resource contention problems. The heat-treat bottleneck is not being run at or near maximum capacity, which reduces the output of the plant. As Ralph leaves he mentions that he believes they can predict when orders ship based on the bottlenecks (this is a bit of foreshadowing; however an area of further reading you might consider is our discussion of Little’s Law). Note that the problem with the heat-treat process was identified through measurement and analysis of the data. The problem Ralph identified is a reflection of the ripple effect of other changes and that as the process is refined better information is exposed.
Alex and Rob Donavon, the production supervisor, meet (loudly) over the discovery that the heat-treat process is not being used to maximum capacity. The discussion unearths that similar timing and resource problems are happening at the NCX-10, even though the new work rules ensure that no breaks are taken during machine set-up. The problem occurs when the machine stops and before the set-up begins again. They decide to staff both bottlenecks 24×7 so there is no downtime. The problem of who to staff the NCX-10 and heat-treat with immediately exposes a new set of constraints, this time as a reflection of the overall organization’s policies on pay and hiring. Hiring, including layoff callbacks, are currently frozen, therefore Alex and his team need to rob Peter to pay Paul. (A bit of foreshadowing – the impact of change can ripple through other process steps.) In an overall sense, the efficiency of both the heat-treat and NCX-10 steps as measured in terms of cost per unit is being reduced while the overall effectiveness of the plant is being increased by the changes being made.
One of the other steps taken as part of the new changes to staff the bottlenecks is that Alex has let the foremen in the heat-treat area know that they will be rewarded for changes that improve the output of the process. The third-shift foreman makes two process changes that have a significant impact. He has broken high priority orders down and batched parts that require the same treatment together, and has prepped the material so that it is staged to be loaded as soon as the furnace is ready. He also points out to Alex that with a little help from engineering they can modify the loading process so that parts can be wheeled in and wheeled out rather than lifted in an out by a crane. The foreman is immediately shifted to first shift to work with engineering to make the changes and document the process. In Agile frameworks like Scrum this is EXACTLY why the teams doing the work need to reflect on how they are doing the work and take steps to improve their processes.
Chapter 24 begins on an up note! The plant has been able to ship more orders with a higher sales value than ever before, while reducing the level of work-in-progress. Champagne flows! During the celebration Bill Peach (Alex’s boss) calls and delivers praise from one the clients that has noticed that his orders are getting delivered. In light of the continuing celebration Alex is driven home by a female member of staff, which leads to complications with Julie, his estranged wife, who just happens to be waiting to surprise Alex. If Alex’s marriage problems were not enough, the next workday Alex discovers that like a virus, the bottlenecks have spread. Changes to the process to focus on making the parts that flow through the bottleneck more available have caused process steps for other parts to become bottlenecks.
Alex tracks down Johan and briefs him on what they have done. Johan suggests a visit to see what has been accomplished.
The Goal is truly about the Theory of Constraints; however Johan’s role is the same as an Agile coach. Johan rarely solves the plants problems directly, but rather asks the questions that lead to a solution. The Goal provides a great side benefit of reinforcing one the central ideas of Agile coaching.
Summary of The Goal so far:
Chapters 1 through 3 actively present the reader with a burning platform. The plant and division are failing. Alex Rogo has actively pursued increased efficiency and automation to generate cost reductions, however performance is falling even further behind and fear has become central feature in the corporate culture.
Chapters 4 through 6 shift the focus from steps in the process to the process as a whole. Chapters 4 – 6 move us down the path of identifying the ultimate goal of the organization (in this book). The goal is making money and embracing the big picture of systems thinking. In this section, the authors point out that we are often caught up with pursuing interim goals, such as quality, efficiency or even employment, to the exclusion of the of the ultimate goal. We are reminded by the burning platform identified in the first few pages of the book, the impending closure of the plant and perhaps the division, which in the long run an organization must make progress towards their ultimate goal, or they won’t exist.
Chapters 7 through 9 show Alex’s commitment to change, seeks more precise advice from Johan, brings his closest reports into the discussion and begins a dialog with his wife (remember this is a novel). In this section of the book the concept “that you get what you measure” is addressed. In this section of the book, we see measures of efficiency being used at the level of part production, but not at the level of whole orders or even sales. We discover the corollary to the adage ‘you get what you measure’ is that if you measure the wrong thing …you get the wrong thing. We begin to see Alex’s urgency and commitment to make a change.
Chapters 10 through 12 mark a turning point in the book. Alex has embraced a more systems view of the plant and that the measures that have been used to date are more focused on optimizing parts of the process to the detriment to overall goal of the plant. What has not fallen into place is how to take that new knowledge and change how the plant works. The introduction of the concepts of dependent events and statistical variation begin the shift the conceptual understanding of what measure towards how the management team can actually use that information.
Chapters 13 through 16 drive home the point that dependent events and statistical variation impact the performance of the overall system. In order for the overall process to be more effective you have to understand the capability and capacity of each step and then take a systems view. These chapters establish the concepts of bottlenecks and constraints without directly naming them and that focusing on local optimums causes more trouble than benefit.
Chapters 17 through 18 introduces the concept of bottlenecked resources. The affect of the combination dependent events and statistical variability through bottlenecked resources makes delivery unpredictable and substantially more costly. The variability in flow through the process exposes bottlenecks that limit our ability to catch up, making projects and products late or worse generating technical debt when corners are cut in order to make the date or budget.
Chapters 19 through 20 begins with Johan coaching Alex’s team to help them to identify a pallet of possible solutions. They discover that every time the capacity of a bottleneck is increased more product can be shipped. Changing the capacity of a bottleneck includes reducing down time and the amount of waste the process generates. The impact of a bottleneck is not the cost of individual part, but the cost of the whole product that cannot be shipped. Instead of waiting to make all of the changes Alex and his team implement changes incrementally rather than waiting until they can deliver all of the changes.
Chapters 21 through 22 are a short primer on change management. Just telling people to do something different does not generate support. Significant change requires transparency, communication and involvement. One of Deming’s 14 Principles is constancy of purpose. Alex and his team engage the workforce though a wide range of communication tools and while staying focused on implementing the changes needed to stay in business.