Digital transformation for chiefs and owners. Volume 2. Systems thinking. Dzhimsher Chelidze
and external. Example of the first – the capacity of the equipment, the competence of employees. External factors are the market, its competitiveness, saturation, capacitance, seasonality, purchasing power.
At this stage we identify key constraints. Tools that can help: brainstorming, TRIZ, simulation and flowcharts, mental maps.
Step 2 – decide how to make the most of the limitation.
To demonstrate this approach, let us take the example above of capacity constraints.
How can productivity be increased without large investments?
First, we introduced operational planning a day in advance. From the morning everyone knew what to produce and in what order. Secondly, we began to organize the importation of raw materials for the day shift in advance, as a result of which people immediately began work after the morning meeting. Third, we switched from 5/2 to 8 hours for 2/2 to 12 hours. This alone increased the number of working hours from 40 to 84, that is, more than doubled. We add a 2.5-fold increase in productivity due to loading planning (machine time increased from 30 to 70%) and we get a multiple increase in productivity. Thanks to this, the department has started to fulfill all past orders plus all major from network customers (IKEA, Leroy, Castorama).
Step 3 – Manages the system with limitation.
Now we begin to develop sales, understanding the maximum productivity of our workshop. In addition, we must develop a maintenance policy to avoid downtime and work with staff motivation.
Step 4 – extend the restriction.
We’re moving on to performance enhancement. For example, we introduce the principles of lean production, optimizing including workshop and warehouse logistics, so that there was not a large number of partially executed orders, and by the beginning of the production cycle all the raw materials were in stock. After that it is possible to plan the modernization of the equipment of the workshop to further mechanize all operations and increase productivity.
Step 5 – return to step one.
Returning to the beginning of the algorithm means finding a new constraint – the most pressing problem in the new conditions. For example, the need to modernize other producers or to plan the supply of raw materials, increase the value of the supply and the value of the goods. Thus begins a new stage of business improvement.
Where did our work on productivity lead? If at the beginning of the project we had 300—400 m2 of raw material warehouse, and the finished products were shipped from the workshop, then after all changes, we had an empty stock of raw materials, everything was started for production immediately after unloading, and the finished products were shipped from a separate warehouse with 150—200 m2. Here productivity was already limited to the supply of raw materials.
Key tools
– Method «drum – buffer – rope»
«Drum» – internal limitation, for example, limits of how much an enterprise can produce.
«Buffer» – before limitation there should be some buffer of materials stock, protecting the limit from downtime.
«Rope» – materials should be put into production only when the reserves before restriction have reached a certain minimum, not earlier, so as not to overload production (one of the principles of lean production).
– Critical chain method
Its essence is that it is necessary to reduce multitasking, get rid of the student syndrome and take into account the law of Parkinson’s.
Our brains can’t do multitasking. It’s a myth. In fact, what it does is people start switching from problem to problem, not getting any through, abandoning them, and then people have to spend their time getting into the game. This takes, on average, at least 20 minutes. Therefore, limiting the number of tasks to three, can increase human performance to 50%.
Student syndrome is the habit of many people of postponing and starting a last-minute task.
– Thought Processes
Here we use modelling and analytical schemes:
The tree of current reality is the identification of causal relationships between undesirable phenomena and the root cause of most of these phenomena.
The Conflict Resolution Diagram is the removal of contradictions and hidden conflicts in a system that often cause chronic problems.
The future reality tree is a schematic showing how the system should work with all revisions.
Transition tree – identifying and addressing possible barriers to change.
The Change Plan is an action plan with instructions for implementers.
This approach is described in artistic form in the book «Goal-2. It’s not about luck». A more formal academic language is in the book by W. Detmer «Goldratt’s Restriction Theory». You can find them by QR-code and link at the end of the chapter.
There are also eight rules in theory to follow.
– Clarity and unambiguous understanding of all terms and statements used.
– Every statement has a complete thought.
– All the causes identified cause these effects, that is, the causal link is not broken.
– The reason given is sufficient to trigger the said effect.
– Possible alternatives have been tested, and it is this reason that leads to the effect.
– Cause and effect are not confused.
– The presence of side effects in the identified cause that also point to it.
– Lack of tautology.
Constraint type
Goldratt identified the following types of restrictions:
– Physical Limitations
Limitations due to equipment performance, lack of materials, space, people.
– Political Restrictions
These and informal restrictions in the style of «we work here so» or «we have it so usual», and formal regulations and procedures. For example, the need to write letters through the first persons with approvals for 2—4 weeks of each letter instead of direct communication between the performers.
– Paradigm Constraints
These are well-established habits in work and ways of thinking, decision-making. They limit the possibilities for finding solutions and better working methods. It’s more about psychological restraints on thinking, including leaders.
Additionally, in many projects, it is the limitations in the personal effectiveness of the manager, the incompleteness of his knowledge and resources: the ability to critically approach priorities, the skills of setting objectives, concentration, attention, time, etc. eventually become a constraint on the productivity of their divisions.
– Market Restrictions
This is a situation where your capabilities and capacities are higher than market demand. This happens when you grow systematically and scale successfully and capture the entire market.
– Typical errors
Stopping the process of improvement after the next stage
You should avoid situations when after the removal of the next restriction you will say «stop, stop». Search and removal of restrictions is a continuous cycle. Restrictions will always stop. This is not a one-time project, but a permanent feature. This rule is laid down also in lean production and Kaizen philosophy (we will talk about them in the next chapter).
If you have the feeling that everything is enough, then