Unlocking Business Value Throughput: Fusing DevOps and the Theory of Constraints
Cloud Best Practices Network, UK, May 22, 2016
Using existing management best practices notably Six Sigma and the Theory of Constraints, any organization can systemically apply new ‘DevOps’ software practices to accelerate ‘Business Value Throughput’.These practices focus on ‘whole systems design’ – Identifying and unblocking bottlenecks in process flow, that we describe applied to the software development process as part of a shift to DevOps tool sets. Most notably it defines formula for articulating and improving your rates of ‘BVT’ – Business Value Throughput. Read more
Relentless System Thinking
Builder, USA, January 18, 2016
We often see management teams treat the symptom of a problem without bothering to address its root cause. We see these teams misinterpret the visible, undesirable effects of a problem for the problem, itself. We see them default to what they have predetermined to be the relationships between cause and effect, and accept those relationships at face value.
The most robust structures and categories for expressing, arguing, and challenging the existence and sufficiency of cause-and-effect relationships are found in the Theory of Constraints, in a set of tools known as logical thinking processes.
The rigor of relentless systems-thinking pays enormous dividends: designing the right solution and making the right decisions; solving the real problem instead of treating its symptoms; focusing the improvement effort on what is most important, right now; resolving conflicting ideas and objectives, without compromise; managing the constraint instead of managing everything. Read more
Bajaj Electricals: Lighting up
Hindu Business Line, India, January 10, 2016
Bajaj Electricals, the consumer electric company’s stock has corrected by about 30% and is valued at 12% the likely earnings of 2016-17. However its peers like Havells India and V-Guard Industries trade at 25-28 times their one-year forward earnings.
Bajaj Electricals’ consumer durables business which contributes to about 40% of its revenue has been under stress since March quarter last year. The company has adopted the ‘Theory of constraints’ approach and though the results are yet to be realised, the company is confident that over the next three to four quarters, sales should gradually improve... Read more
Delivery Reliability – What Companies Can Do
Outlook Business, India, November 14, 2014
Ravi Gilani, founder Goldratt India, talks about the need for Indian companies to focus on ‘delivery reliability’ and not just on the quantity and quality of products. As a nation we have come a long way in terms of product quality, but still need to work on delivery reliability. As Sumantra Ghoshal said – we are satisfied with our underperformance.
Many times business owners and decision-makers are not aware of the impact of being able to deliver on-time-in-full (OTIF) on their bottom line — senior industry leaders estimated a 10-30% increase ballpark figure on being asked this question. Significant increases in OTIF almost always results in a minimum profit before tax (PBT) increase of 100%, even shooting up to 400% in some cases. But most organisations continue to ignore this because of one crucial wrong assumption — the belief that we must always control costs, as if the organisational goal is not ‘make more money’ but ‘control costs’. Read more
In this interview, Rami Goldratt, CEO, Goldratt Consulting, talks about TOC and how the Focus in TOC helps companies overcome constraints. He says, “If you are not improving something that's limiting the business from doing more, the business will not do more. TOC is about how to identify the right constraint and then giving you the right set of tools to open it. “
He emphasizes the need to improve response time rather than forecasting since it is becoming increasingly difficult to have accurate forecasts. First reason is that consumers are becoming more sensitive to the products they want putting pressure on retailers. The second is consumer tolerance. Consumers are willing to wait less and less for the product to become available which means that retailers need to have it in the stores not in the warehouse.
Finally, product life is becoming shorter with new products constantly being introduced and retailers needing to offer discounts to sell the older version. This puts a lot of pressure on brands. Unless the new launch is a star product like the iPhone, there will be a clash between your old and new offerings. All this makes our ability to forecast and have the right inventory impossible.Read more
How TOC helped Dr. Reddy’s Win Best Supplier Award in the US
Corporate Dossier, India, 17 Oct, 2014
Five years ago, Dr. Reddy’s Laboratories faced high backorders and low supplier ratings in the US. The company started implementing Theory of Constraints, and managed to win the best supplier award last year.
Dr. Reddy’s not only tightened the supply chain with a focus on better inventory management in Russia and the US, but also tightened their finance and project management. They moved to a throughput based system where they track operating expenses, significantly simplifying management accounting and reporting.
An increasing number of companies are implementing TOC to stay ahead in the game. The key here is to do away with constraints that are limiting the business from doing more. Read more
How TOC can help improve e-Commerce Companies
Practical Ecommerce, September 8, 2014
IDavid Sasson, President of overstockArt.com, talks about Theory of Constraints and how e-Commerce companies can use it to their advantage. He explains how TOC focuses on the constraint that is impacting the throughput of the system. Read more
Transforming New Zealand Business - "It's Not Luck!"
British Theory of Constraints guru John Tripp travels down under this November to join INTENT Group Limited (INTENT) in hosting a series of events around the North Island focused on helping kiwi businesses transform and flourish. Transforming New Zealand Businesses – It’s Not Luck!Read more
IIM-Indore students get interactive on Theory of Constraints challenge
The Free Press Journal, India, July 28, 2014
At the recently concluded Business Conclave at IIM-I, Colloquium ’14, the students had a guest talk by Sudhanshu Saraf, Director at Goldratt India. He is a certified master Black Belt in Lean and Six Sigma, and prior to his association with Goldratt India, Saraf was a principal consultant with Eicher for 13 years.
The session started with a real life challenge for the students to give them a firsthand understanding of Theory of Constraints (TOC). He also spoke about the three pillars of organizational success : customer delight, employee satisfaction and shareholder returns amongst other TOC concepts. The session concluded in an interactive session where possible solutions to the problem were discussed at length. Read more
Godrej Security Solutions wins TOCICO Int'l Award for 2014
SME Times, India , July 9, 2014
Godrej Security Solutions, has been awarded the TOCICO International Achievement Award 2014 for sustained excellence and demonstrated results utilizing Theory of Constraints (TOC), in addition to significant contributions to the TOC community.
Godrej Security Solutions pushed up the on-time performance of its plant to as high as 90%, which was just 30% before implementing TOC. Production lead time was brought down by more than 60% and output tripled. In addition, overtime was reduced by 80% and the WIP (work in progress) was slashed by more than 57%. Order delivery lead time was also tackled using TOC processes, bringing it down to under four weeks. Most importantly, the same resources were harnessed to achieve these gains.
The company saw an impressive jump in profits, working capital and market share while profits tripled and profitability (PBT/Sales) doubled, post the TOC implementation. Read more
First Get Your House in Order!
Outlook Business, India, July 5, 2014
In this article Ravi Gilani, Founder and Managing Consultant of Goldratt India, observes that companies tend to unnecessarily externalize their problems. Rather than looking to the outside environment searching for things to blame (lack of demand, policy paralysis, stagnation of economy, corruption, etc.), we would do well to look internally. He goes on to cite extraordinary success stories despite poor economic conditions and a rapidly changing business environment.
Organisations should worry more about getting their house in order rather than delude themselves in a recessionary cocoon... Read more
Theory of Constraints’ new success formula for the Fashion Industry
www.bgfashion.net, June 18, 2014, Bulgaria
Goldratt Consulting organized the World Conference in Washington from 8th to 11th June. At the conference in Washington TOCICO, owner and top managers of major global companies such as Boeing, Mazda, Bosch, Hitachi, P&G shared their experience from using Theory of Constraints in their companies. Richmart is the only company in Bulgaria that uses the services of the Goldratt Consulting.
To commemorate its success at the conference, Richmart – Men’s suits production, gave a press conference on 17th June in the prospects of the Bulgarian fashion industry's leading trends in men's fashion business were discussed.
During the conference Martin Yordanov, Director Richmart, spoke about the enormous potential for the development of the Bulgarian fashion industry. Short lead times (2 weeks) for production and delivery is the new buzz word in the fashion industry. He felt Bulgaria was well equipped to deliver on the above premise since Bulgaria has the most modern factories in Europe in recent years. Read more
Indian IT major Infosys to possibly rope in Goldratt Consulting for improving productivity
Economic Times, India, March 31, 2014
Indian IT major Infosys is looking at roping in Goldratt Consulting to help improve its business productivity by enabling its operations to become more efficient while also accelerating top line growth.
If engaged, ‘Goldratt’ is proposing to substantially reduce (by as much as 40%) the time taken to deliver software services to clients, through optimum resource deployment. This in turn should help the company expand revenues by as much as 25% from the current levels. It is proposed to start the initiative with a product vertical. The vertical will undergo an overhaul, including employee restructuring, reducing time taken to build as well as delivery the product to the client. Read more
Buffer Management in Theory of Constraints
Dr. Ricketts, a well-known practitioner and innovator of Theory of Constraints (TOC), says that buffer management is an inherent part of TOC application. He talks in greater detail about the conventional and bi-directional buffer.
Conventionally, buffer can be assumed as a product sitting on a shelf in a warehouse. Depending on the amount of inventory, the buffer status is decided as ‘Red, Yellow or Green’. However, Dr. Ricketts says that having all products in the green zone is not a good situation to be in. This is where he introduces the concept of bidirectional buffer – the services side of implementing replenishment. In the services side depending on the nature of service, you will need to factor in the number of consultants coming in or going out. Read more
Small appliances brand Morphy Richards challenged standard industry practices by adopting Theory of Constraints
The Hindu Business Line, India, Dec 12, 2013
Consumer Durables brand, Morphy Richards, has seen dramatic improvement in stock outs and excess inventory at the distributor end. They have been able to optimize working capital by as much as 40%. All this has been achieved after the company decided to implement Theory of Constraints – within the company and extending the principles to include its distributors too.
The company had grown from Rs. 2 Cr. in 2003 to Rs. 185 Cr. in 2013. However, the company was looking at an ever flourishing upward growth curve. That is when the top executives attended a seminar on Theory of Constraints, and decided to implement it. Many undesirable practices in a sales led setup had to be rejigged – 60% of the sales happening in the last week of the month, most stock replenishments happening on the value of goods sold and not the actual product sold (hence apples could be replaced by oranges), high spares inventory and a host of other issues. Read more
Dramatic improvements seen after implementing Theory of Constraints at Lithuania – the country!
www.itbusiness.net, Germany, 5 June, 2013
Lithuania has embarked on a countrywide implementation of Theory of Constraints to increase its GDP from 1.434 to 10.900 per capita GDP. The goal is an increase of 664% over a 17 year period. In 2009-10 Theory of Constraints was applied to the Guarantee Fund application process in Lithuania. The result was a dramatic lead time reduction from 388 days for the applicant to receive payments to 63 days. Theory of constraints education was then expanded to training for 200 healthcare managers and 2,500 teachers. Several conferences have supported the spread of theory of constraints within Lithuania. Read more
Theory of Constraints is Gaining Awareness and Success in Japan. Is This the Quality Movement All Over Again?
TOCICO Website, USA, December 11, 2012
Japanese adoption of the theory of constraints is growing at a rate that rivals the quality movement started by Dr. W. Edwards Deming. The founder of the Theory of Constraints (TOC), Dr. Eliyahu Goldratt, made several personal trips to Japan. The positive impact made to Japan by TOC is rivaled only by the quality movement after World War II started by Dr. W. Edwards Deming. The United States could easily be trying to play catch up with Japan once again. Read more
Investigating the Theory of Constraints
APICS, USA, November 16, 2012
Two concepts that should be instantly familiar to any supply chain and operations management professional are Just-In-Time (JIT) and the theory of constraints (TOC). These are robust concepts with long histories, and each has its own advocates and opponents. It was quite interesting, then, to read about these ideas compared and contrasted in the real world. Business Standard, an Indian newspaper published in both English and Hindi, recently examined the role of TOC and JIT in automotive factories across the subcontinent. Satyashri Mohanty, director of the Vector Consulting Group, says the Indian automotive sector “swears by JIT in an effort to replicate Toyota’s success in Japan.” However, JIT has not been successfully implemented at some of these organizations. Instead of tighter inventories and a produce-to-demand environment, “you will find a huge mismatch of inventory__one to two months’ worth of stocks for some parts, while others are out of stock.” The answer, Mohanty suggests, is TOC. Read more
Buffer Management & Risk Management the Theory of Constraints
Chronologist, Malta, October 4, 2012
This is the second post in a series in preparation for my presentation at the Lean Kanban Netherlands 2012 conference about Enhanced Risk Management in Kanban via the Theory of Constraints, that I will deliver on October 26 in Utrecht. As described in the previous post, the purpose of this series is to understanding how the ideas of TOC can be applied in contemporary software processes, and in particular to Kanban for Software. Read more
Goldratt's CAGE - Simulation Game
Purvodaya, India, October 31, 2012
Goldratt's CAGE is the brainchild of the Supply Chain and Operations Group of VGSOM. It is one of a kind simulation game which tests the management capability of the participants under a dynamic business environment. This event gives an opportunity to the budding managers to strategize their business to be more efficient and responsive than their competitors but...(and that's a big but)...in a completely different context of business where the participants will have to apply not only the rules of the game but also their business brain to the fullest. Date: 31-Oct-2012 to 04-Nov-2012 Organizers: Vinod Gupta School of Management, IIT Kharagpur Website:http://purvodaya.com/ Prizes worth Rs. 20,000 to be won!
48 percent decrease in the average number of days, from 194 days to 101 days, and a sustained increase in the number of determinations per month
60 percent decrease in the processing backlog, from five months, to less than two months
45 percent increase in the percentage of applications processed by the tax filing deadline, from 60 percent for CY 2011, to 87 percent for CY 2012" Read more
The Secret to Getting On Time & Reducing Lead Times
Mould Making Technology, USA, August 1, 2012
Manufacturing and Theory of Constraints Expert Dr. Lisa Lang: Create a competitive advantage by refocusing your job scheduling strategy.
Most shops have tried a number of strategies to improve their on-time delivery and reduce leadtimes—e.g., updated ERP or scheduling software, used some lean techniques or hired an expeditor—but, the results are usually not substantial. And, that’s because typical solutions address the various symptoms, but don’t address the root cause. So how do you address the root cause? How can you dramatically improve your scheduling?
The Secret Solution The secret is to stop focusing on efficiency. When you are willing to do that, and put a more effective scheduling system in place, you create a buffer to better absorb all those sources of variability listed above. If you are willing to give this strategy a try and your competitors continue to cling to efficiency, you can create an incredible competitive advantage. Read more
Theory of Constraints Might Give You The Answer ...
The Economic Times, India, December 16, 2011
Dr Goldratt believed that it was possible for an organisation to convert its topline sales into bottomline profits in 4 years or less. It may sound ambitious to the point of being delusional, but it's worked for Godrej. Up until three years ago, Godrej Locks was caught in a trap commonly experienced by manufacturers everywhere. Sales predictions, no matter how meticulously collected, never fully represented what the customer really wanted. This led to overproduction - often of the entirely wrong units — which would then lie idle for months. Consequently, the distributor's capital was locked and he couldn't buy more from the company... Read more