XP Explained

This week we tackle teams in XP and why XP works based on the Theory of Constraints in Extreme Programing Explained, Second Edition (2005). The two chapters are linked by the idea that work is delivered most effectively when  teams or organizations achieve a consistent flow. (more…)

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I had intended to spend the last entry our re-read of the The Goal waxing poetic about the afterward in the book titled “Standing on the Shoulders of Giants”. Suffice it to say that the afterward does an excellent job describing the practical and theoretical basis for Goldratt and Cox’s ideas that ultimately shaped the both lean and process improvement movements since 1984.

Previous Installments:

Part 1       Part 2       Part 3      Part 4      Part 5 
Part 6       Part 7      Part 8     Part 9      Part 10
Part 11     Part 12      Part 13    Part 14    Part 15
Part 16    Part 17

The Goal is important because it introduced and explained the theory of constraints (TOC), which has proven over and over again to be critical to anyone managing a system. The TOC says that the output of any manageable system is limited by a small number of constraints and that all typical systems have at least one constraint. I recently had a discussion with a colleague that posited that not all systems have constraints. He laid out a scenario in which if you had unlimited resources and capability it would be possible to create a system without constraints. While theoretically true, it would be safe to embrace the operational hypothesis that any realistic process has at least one constraint. Understanding the constraints that affect a process or system provides anyone with an interest in process improvement with a powerful tool to deliver effective change. I do mean anyone! While the novel is set in a manufacturing environment, it is easy to identify how the ideas can apply to any setting where work follows a systematic process. For example, software development and maintenance is a process that takes business needs and transforms those needs into functionality. The readers of the Software Process and Measurement Blog should recognize that ideas in The Goal are germane to the realm of information technology.

As we have explored the book, I have shared how I have been able to apply the concepts explored to illustrate that what Goldratt and Cox wrote was applicable in the 21st century workplace. I also shared how others reacted to the book when I read it in public or talked about to people trapped next to me on numerous flights. Their reaction reminded me that my reaction was not out of the ordinary. The Goal continues to affect people years after it was first published. For example, the concept of the TOC and the Five Focusing Steps proved useful again this week. I was asked to discuss process improvement with a team comprised of tax analysts, developers and testers. Each role is highly specialized and there is little cross-specialty work-sharing. With a bit of coaching the team was able to identify their process flow and to develop a mechanism to identify their bottleneck(s) to improve their through put. Even though the Five Focusing Steps were never mentioned directly, we were able agree on an improvement approach that would find the constraint, help them exploit the constraint, subordinate the other steps in the process to the constraint, support improving the capacity of the constraint, then reiterate the analysis if the step was no longer a constraint. Had I never read The Goal, we might not have found a way to improve the process.

Perhaps re-reading the book or just carrying it around has made me overly sensitive to the application of the TOC and the other concepts in the book. However, I don’t think that was the real reason the material is useful. Others have been equally impacted, for example, Steve Tendon, author of Tame The Flow, and currently a columnist on the Software Process and Measurement Cast suggests that The Goal and the TOC has had a significant influence on his groundbreaking process improvement ideas. Bottom line, if you have not read or re-read The Goal I strongly suggest that you make the time to read the book. The Goal is an important book if you manage processes or are interested in improving how work is done in the 21st century.

I would like to hear from you! Can you tell me:

  1. How has The Goal impacted how you work?
  2. Have you been able to put the ideas in the book into practice?
  3. What are the successes and difficulties you faced when leveraging the Theory of Constraints?
  4. Do you use the Socratic method to identity and fix problems?

Re-Read Saturday Housekeeping Notes:

  • Next week we begin the re-read of The Mythical Man-Month (I am buying a new copy today, so if you do not have a copy, get a copy today.  I will be reading this version of Man-Month.
  • Remember that the summary of previous entries in the re-read of The Goal have been shifted to a new page.
  • Also, if you don’t have a copy of The Goal, buy one and read it! If you use the link below it will support the Software Process and Measurement blog and podcast. Dead Tree Version or Kindle Version.

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Epiphanies, the profound and sudden flash of understanding, in any field are rare; however, when they do happen they generally transform the person that has the revelation but don’t always have an impact on those around them. Sitting on a plane from Los Angles this week as I prepared to write this entry of Re-read Saturday, the person next to me pointed at my copy of The Goal and stated “I read that book, it changed my life.” As I have re-read The Goal I have been amazed at the number people that have stopped me to make sure I knew that they had read the book, also.  In today’s entry, the penultimate entry, Alex has an epiphany and discovers the answer to Johan’s final question to Alex.

Previous Installments:

Part 1       Part 2       Part 3      Part 4      Part 5 
Part 6       Part 7      Part 8     Part 9      Part 10
Part 11     Part 12      Part 13    Part 14    Part 15
Part 16

Chapter 39.  Bill Peach asks Alex to visit him and explain why his ideas are working.  Meanwhile, back at the plant all heck breaks loose.  The new orders have stressed the system.  Random problems in front of the bottleneck used up all of the buffer in front of the bottleneck steps.  The buffer had been used to keep he throughput through the bottleneck smooth and at maximum utilization. Once the buffer had been used up, the random problems caused work to get to the bottleneck in waves, causing the bottlenecks to be alternately starved and swamped.  This problem caused the plant to fall back to overtime and expediting work.

Alex leads a session with his team (soon to be Bob’s team) to find the root cause of the problem.  In the end the problem turned out to be that the new order had reduced the excess capacity in the plant.  Without changing the buffer in front of the bottleneck, the reduction in excess capacity meant that any shock to the system would quickly impact the bottlenecks which in turn would negatively impact the plants ability to deliver.  The team decides they need to rebuild the buffers to anticipate some level of shocks, using overtime and for the time being increase the delivery lead time.  Once a course was decided upon, Bob and “his” team put it into action.  Chapter 39 marks the transition of Alex to being division manager and Bob to plant manager.

Chapter 40.  Alex, now division manager, and Lou, now Alex’s division comptroller, discuss the problems they have in front of them as they make the commute home from division headquarters. The problems at the division level are seemingly insurmountable. Examples they discuss include a delay introducing new product models (even though there is demand) so that organization does not have to mark down old product currently in inventory.  Lou and Alex decide to apply the five step process to the problem: however, both agree, that while the problem is important it not urgent enough to need to break family commitments that evening both men had.  This is unlike earlier in the book when Alex and his team would practically live in the plant.  In the vernacular of Agile, Alex has discovered a sustainable pace.

The five step process is:

  1. Find the constraint
  1. Exploit the constraint
  2. Subordinate every other step to the constraint
  3. Elevate the constraint, then
  4. Repeat if the constraint has been broken

When they reconvene in the morning they struggle with how to apply the five step process to the division.  They determine the constraints at the division level are the policies that drive the wrong behavior.  Both Alex and Lou struggle with how to apply the process when faced with concepts like policies rather than something tangible like a production process when the epiphany strikes.

Johan had left Alex with the task of answering, “What are the techniques needed for management?” The struggle to apply the five step process lead Alex to the conclusion that, to manage, a leader must have the techniques to answer these questions:

  1. What to change?
  2. What to change to?
  3. How to cause the change?

Alex realizes he has learned to think for himself which was the outcome Johan had hoped for when he stopped providing advice.

Re-Read Saturday Notes:

  1. I anticipate that the re-read of The Goal will conclude next week with part 18. Our next book will be The Mythical Man-Month (I am buying a new copy today so if you do not have a copy . . . get a copy today and please use this version of Man-Month).
  2. Remember that the summary of previous entries in the re-read of The Goal have been shifted to a new page (here).
  3. Also, if you don’t have a copy of The Goal, buy one and read it!  If you use the link below it will support the Software Process and Measurement blog and podcast. Dead Tree Version or Kindle Version.

 

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As part of my day job I am often asked to help a team, project or department find a way to improve the value they deliver.  When dealing with knowledge work having a single, prescriptive path is rarely effective because even the most mundane product support work includes discovery and innovation. Once we have discovered a path it is important to step back and generalize the approach so that teams can use the process in a variety of scenarios.  I have found that developing a generalized approach is rarely as straight forward as changing the personal pronouns in the process to refer to another group. Regardless of this hard won realization, I still read posts and hear about people that are considering adopting best practices or procedures from other groups without tailoring.  Adopting a process, procedure or even a tool using an untailored, out of the box approach is rarely a good idea in knowledge work.  Alex and his team continue to search for a generalized approach that can be used to transform the entire division

Previous Installments:

Part 1       Part 2       Part 3      Part 4      Part 5 
Part 6       Part 7      Part 8     Part 9      Part 10
Part 11     Part 12      Part 13    Part 14    Part 15

 

Chapter 37. Alex and his team continue their daily meetings do discover the answer to the question “What are the techniques needed for management?” In Chapter 36 the team had settled on a generalized five step process which was:

  1. Find the bottleneck,
  2. Exploit the bottleneck,
  3. Subordinate every other step to the bottleneck,
  4. Elevate the bottleneck, then
  5. Repeat if the bottleneck has been broken.

 

Ralph (computer guy) voices a concern that they really had not done step three.  After some discussion the team finds that the by constraining how work and material enter the process they really had subordinated all of the steps in the process to the bottlenecks.  Remember that the work and material entering the process had been constrained so the bottlenecks were 100% utilized (no more, no less).  During the discussion, Stacey (materials) recognized that the earlier red/yellow card approach the team had used to control the flow of work into the bottlenecks was still in place and was the cause of the problems she had been observing (Chapter 36). In order to deal with the problems caused by earlier red/yellow card approach and to keep everyone busy, Stacey admitted to have been releasing extra work into the process therefore building excess inventory of finished goods.  The back of the envelope calculations showed that the plant now had 20% extra capacity therefore they needed more orders to keep the plant at maximum capacity.  Alex decides go see Johnny Jons (sales manager) to see if they can prime the sales pump.

These observations led the team to the understanding that every time they recycled through the process they should have re-questioned and revalidated EVERY change they had previously made. The inertia of thinking something will work because it has in the past or because it has for someone else is often not your friend in process improvement!

Chapter 38. Jons, Alex, Lou (plant controller), Ralph and one of Jons more innovative salesmen meet at headquarters to discuss where they can come up with 10 million dollars of additional orders.  During the discussion it comes to light that Jons has a potential deal that he about to reject because the prices are well below standard margins. Alex points out that since the plant has excess capacity the real cost to produce the product is far lower than Jons is assuming (labor and overhead are already sunk costs). The plant could take the order and make a huge profit.  Alex and his team convince Jons to take the order if the potential client will commit to a one year deal.  They further sweeten the deal by committing to a quick deliveries (something other companies can’t emulate) in order to avoid starting a price war.  Jons agrees to accept the order as the potential client is well outside of the company’s standard area of distribution therefore will not impact the margins they getting on other orders.  On the way back to the plant Alex, Lout and Ralph reflect that they had just seen the same type of inertia that the team discovered the previous day in their process improvement approach and that Alex’s new role in changing the whole division will need to address even more organizational inertia.

Later Alex and Julie (wife) reflect that the key to the management practices Alex is searching for lie in the application of the scientific method.  Instead of collecting a lot of data and making inferences, the approach Johan had taken begins with a single observation, develops a hypothesis, leverages if-then relationships and then tests those relationships.  Alex searches popular scientific books for inspiration to his management questions.  When they discuss the topic again, Julie, who has continued to read the Socratic Dialogs, points out that they follow the same if-then pattern that Alex has described as Johan’s approach.

Re-Read Saturday Notes:

  1. I anticipate that the re-read of The Goal will conclude in two weeks with part 18. Our next book will be The Mythical Man-Month (I am buying a new copy today so if you do not have a copy . . . get a copy today and please use this Man-Month).
  2. Remember that the summary of previous entries in the re-read of The Goal have been shifted to a new page (here).
  3. Also, if you don’t have a copy of the book, buy one.  If you use the link below it will support the Software Process and Measurement blog and podcast. Dead Tree Version or Kindle Version

 

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I recently had a long discussion about whether it was more important to solve an urgent and specific business problem or to create a culture of process improvement that would avoid crises in the future. My colleague described the immediate problem as threatening to the entire organization. The obvious answer was that the immediate problem needed to be addressed. The question then became whether consultants should be engaged to provide the answer or to help the organization discover the answer. I suggest that doing the later actually negates the first question by generating a solution to the immediate problem while creating a culture of process improvement. Johan in The Goal illustrates this nicely. He helped Alex and his management team discover the answer while building a culture of process improvement.

Part 1       Part 2       Part 3      Part 4      Part 5      Part 6      Part 7      Part 8    Part 9   Part 10   Part 11  Part 12
Part 13

Chapter 33 begins with Alex working on assembling his new team. He begins with Lou, the plant accountant. Before Alex can ask him to come with him, Lou explains to Alex that another old measurement has been causing problems with how the plant is perceived and how it behaves. Inventory is accounted for as asset on the balance sheet even though inventory is a liability. Since the plant has become more efficient it is carrying less inventory therefore reducing the assets reported on the balance sheet. During the period of time that inventory was drawn down to the levels needed by the more efficient process the plant looked as if it was increasing the amount of liabilities. Now that a new equilibrium in inventory had been established the problem was not an issue, however Lou notes that, “measurement should induce the parts [of the process} to do what is good for the organization as a whole.” Lou is ready to help Alex and is pumped to focus on building a better measurement program.

Alex approaches Bob Donavan, the plant production manager, to become the division’s production manager. Bob points out that the Burnside order that sealed Alex’s new deal was engineered. Alex and his management team had not just “taken” the order, but rather had worked out the best way the order could be delivered and then had negotiated a deal that benefited everyone. Bob wants to find a way create and document a process in which the plant and engineering can be an integral sales. A process and documentation is needed so that the plant leadership team does not need to be intimately involved in every order. Bob Donavan wants to stay at the plant and become the new plant manager and wants Stacey in materials to become the new production manager.

They find Stacey working on a new potential problem. Stacey has identified that there is a class of resources called capacity constraints resources (CCRs). CCRs are resources that have constraints, but are not bottlenecks. As the processing of work through bottlenecks is improved, CCRs risk becoming bottlenecks which Will negatively impact produvtuvity. Process improvements need to be continually be made across the entire system.

Alex finally turns to Ralph. Ralph points out that he now feels like he is an important part of the team rather than just the computer nerd in the corner. He walks Alex through his ideas of building systems to support engineering, managing buffers and for better measurement.

The experimentation that led to changing how the plant works has changed how Alex’s management team thinks about their jobs. Asking questions and experimenting with changes to the process those questions generate has yielded a much higher level of involvement and commitment.

Chapter 34 jumps to Alex and Julie sitting their kitchen drinking tea. They are discussing how each of Alex’s current team is exploring ideas that might not have an answer. Julie points out that if Johan had not cut him off by suggesting he trust his own judgement Alex might be reaching out to Johan for suggestions rather than trying to work on them as a team.

The discussion of Johan brings them back to Johan’s last question to Alex. Johan had asked, “What  are the techniques needed for management?” Julie suggests that since the questions that Alex’s management team each is currently working on will be around after Alex moves to his new job, why not engage them in answering Johan’s question. They have as much of a stake in the answer as Alex does!

Alex pulls the team together and they spend their first session discussing and drawing the many ways Alex could determine what is going on when he start the new job. There are many ways to answer the question of what is going on. Each yields a different answer based on differences in perspective, approach and an arbitrary order of arranging the results. The wide range of ways to think about the problem make it difficult to actually determine a solution. The group agrees to meet the next day.

Chapters 33 and 34 reflect a shift of focus. With the plant saved, Alex is faced with a need to generalize the process that was used so that it can be used for different problems or scaled up to the next level based on his promotion.

Remember that the summary of previous entries in the re-read of The Goal have been shifted to a new page (here).   Also, if you don’t have a copy of the book, buy one.  If you use the link below it will support the Software Process and Measurement blog and podcast. Dead Tree Version or Kindle Version

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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:

Part 1       Part 2       Part 3      Part 4      Part 5      Part 6      Part 7      Part 8

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.

Note: If you don’t have a copy of the book, buy one.  If you use the link below it will support the Software Process and Measurement blog and podcast. Dead Tree Version or Kindle Version

 

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I first read The Goal: A Process of Ongoing Improvement when I actively became involved in process improvement.  I was bit late to the party; however since my first read of this business novel, a copy has always graced my bookshelf.  The Goal uses the story of Alex Rogo, plant manager, to illustrate the theory of constraints and how the wrong measurement focus can harm an organization. The focus of the re-read is less on the story, but rather on the ideas that have shaped lean thinking. Even though set in a manufacturing plant the ideas are useful in understanding how all projects and products can be delivered more effectively.  Earlier entries in this re-read are:

Part 1                Part 2                  Part 3                      Part 4                Part 5           Part 6

As we noted during our re-read of John P. Kotter’s Leading Change, significant organizational change typically requires changes to many different groups and processes to be effective. As we observed in Chapter 18, change is difficult even when everyone has sense of urgency and understands the goal of the change.

Chapter 19

Alex begins to despair of being able to deal with two constraints at in the same process. After dinner with his mom and kids, he picks up Johan at the airport.  On the way to the plant, Johan points out that there are only two reason why what Alex and his team are learning won’t help them save the plant. The first reason is if there is no demand for the product they are making and second if they are not willing to change. Once at the plant, Johan gets a briefing on the problems.  The multiple bottleneck problem has Alex and his team on edge.  They do not see a solution and press Johan on how other plants handle bottlenecks. A bottleneck is any resource that has a capacity that is equal to or less than the demand placed upon it.  Johan points out that most plants do not have bottlenecks, rather they have excess capacity and therefore are not efficient.  Efficient plants have and manage bottlenecks rather than over-investing in capacity. Johan points out that in order to increase the output of the overall process only the capacity of the bottlenecks need to be addressed. Increasing the capacity of the bottlenecked resource increases the throughput of the process.

Johan, Alex and his management staff adjourn to the plant to see the problems in action.  When they visit the robot, which is the first bottleneck in the process, it is idle. The staff went on a break before they completed the set up needed to manufacture parts for an order. Johan points out that any downtime on a bottlenecked resource can’t be made up later in the process, and any downtime limits the plant’s ability to produce completed product, which directly impacts the bottom line. As a group, they explore ideas to increase the capacity of the robot (bottleneck) ranging from changing how breaks are taken to re-commissioning the older machines that the robots replaced.

When the team reaches the second bottleneck, the heat-treating step, the problem of increasing capacity continues to plague the group.  You just can’t add extra heat-treating capacity quickly due to the footprint of the department and the equipment needed.  Johan quizzes the group on different ideas to increase the capacity of the step. He begins by asking whether all the part that go through heat treating really require the step. They also discussed why they were padding out the batches to build inventory and decrease cost per unit of work. Doing work that is not needed (including building inventory of parts that will be used later) steals capacity that can be better used to relieve some of the pressure on the bottleneck. During discussion Johan observes a pile of rejected parts that had been heat treated.  He observes that using a bottlenecked resource to work on broken parts does not make sense. One solution is to move the parts inspection step before the heat-treating step, so that only good parts are treated; an effective increase in the capacity of the process.  This is just like building code and then using an independent testing resource to find the problems just before it is scheduled for implementation.

The focus in Chapter 19 is to drive home the point that every time the capacity of a bottleneck is increased more product can be shipped. The impact of a bottleneck is not the cost of individual part, but the cost of the whole product that cannot be shipped.

Johan leaves the team with a reminder that wasted time on a bottleneck includes idle time, time working on defects and making parts that are not currently needed.

Chapter 20

Early the next morning Alex meets with his team to start planning how to implement the ideas they discussed the previous evening.  Some of the changes, like moving the quality inspections before the bottlenecks, are relatively simple, while others, such as changing the union work rules, are more difficult. However starting to implement the changes is more important than waiting until they all can be implemented.  This is similar to the Agile approach of making small changes and gathering feedback, rather than big bang approaches.  Alex tells his team to shift priorities to make the latest job (most behind schedule) the top priority.  While we might argue that a better approach might be to approach prioritization using the weighted shortest job first approach to maximize value delivered, the important message in the chapter is the shift of focus from step efficiency to maximizing product delivery.

The chapter ends with Alex reminding his team that the changes in process and the new work they are doing is of maximum importance.  Anything that takes their focus off moving forward, including reports for the home office, imperils their future.

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.

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