how the toc thinking processes 29th international conference of the toc practitioners alliance -...
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29th International Conference of the TOC Practitioners Alliance - TOCPAwww.tocpractice.com 11-12 November 2016, Vilnius, Lithuania
How the
TOC Thinking Processes can be integrated in strategic
changing and designing systems
Oded Cohen & Jelena Fedurko
Estonia & Israel
TOC Strategic Solutions
tocExpert
11 November 2016
29th International Conference of the TOC Practitioners Alliance - TOCPAwww.tocpractice.com
Oded Cohen
Oded Cohen has over 35 years of experience in
developing, teaching and implementing TOC
methodology, solutions and implementation
processes working directly with Dr. Goldratt all over
the world. Among the countries to which Oded brings
his expertise are the USA, Canada, Japan, India,
China, the UK, Poland, Russia, Ukraine, Colombia,
Chile, Peru, Turkey and many others.
Oded has authored multiple TOC articles and
contributed to numerous TOC books.
Oded in the is the author of Ever Improve – A Guide to
Managing Production the TOC Way, published in June
2010. Oded co-authored the book Deming & Goldratt:
The Theory of Constraints and the System of
Profound Knowledge – The Decalogue.
Together with Jelena Fedurko Oded has co-authored
the book Theory of Constraints Fundamentals.
Oded is International Director of TOC Strategic
Solutions Ltd and Founder and Co-President of
TOCPA.
www.tocexpert.com
www.toc-strategicsolutions.com
www.tocpractice.com
29th International Conference of the TOC Practitioners Alliance - TOCPAwww.tocpractice.com
Jelena Fedurko is a Co-Founder and Co-President ofTOC Practitioners Alliance TOCPA and InternationalDirector of TOC Strategic Solutions.
Jelena has been involved in TOC since 1999. She is aTOC expert, trainer and consultant, and provides TOCimplementation support in production, supply chainand project management. Jelena has worked in variouscountries all over the world, including Japan, Poland,Germany, Switzerland, Turkey, Italy, Russia, Ukraine,India, China, Chile, Colombia, Mexico.
Jelena is the author of four advances books on TOCThinking Processes: Behind the Cloud (2011), ThroughClouds to Solutions (2013), Typical mistakes inworking with TOC Logical Tools (2014), A GoodStrategy & Tactic Tree (2016). Together with OdedCohen Jelena has co-authored the book Theory ofConstraints Fundamentals (2012). She has contributedto a number of books on TOC, and has manypublications. Jelena translated and edited severalmajor TOC books.
www.tocexpert.com
www.toc-strategicsolutions.com
www.tocpractice.com
Jelena Fedurko
29th International Conference of the TOC Practitioners Alliance - TOCPAwww.tocpractice.com
Industry 4.0: “The term Industry 4.0 refers to the combination of several
major innovations in digital technology, all coming to maturity right now, all poised to transform the energy and manufacturing sectors.These technologies include • advanced robotics and artificial intelligence; • sophisticated sensors; • cloud computing; • the Internet of Things; • data capture and analytics; • digital fabrication (including 3D printing); • software-as-a-service and other new marketing models; • smartphones and other mobile devices; • platforms that use algorithms to direct motor vehicles (including navigation
tools, ride-sharing apps, delivery and ride services, and autonomous vehicles);
• and the embedding of all these elements in an interoperable global value chain, shared by many companies from many countries.”
Source: A Strategist’s Guide to Industry 4.0, by Reinhard Geissbauer, Jesper Vedsø, and Stefan Schrauf In
strategy+business http://www.strategy-business.com/article/A-Strategists-Guide-to-Industry-4.0?gko=7c4cf
Moving towards Industry 4.0 –
looking with TOC tools
29th International Conference of the TOC Practitioners Alliance - TOCPAwww.tocpractice.com
It is logical to expect that only some companies will be Developing and Providing Industry 4.0 systems, tools and mechanisms.
While absolute majority of companies will be their Users.
There is also a third ‘player’ – Integrators.
Industry 4.0 –
Developers/Providers,
Users, Integrators
29th International Conference of the TOC Practitioners Alliance - TOCPAwww.tocpractice.com
Source:A Strategist’s Guide to Industry 4.0by Reinhard Geissbauer, Jesper Vedsø, and Stefan Schrauf
In strategy+business http://www.strategy-business.com/article/A-Strategists-Guide-to-Industry-4.0?gko=7c4cf
29th International Conference of the TOC Practitioners Alliance - TOCPAwww.tocpractice.com
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Low Performance
Measurements
Injections
High Performance
Measurements
Direction of solution
UDE
UDE
UDE
UDEUDE
UDE
D D’
CB
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DEDE
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NBRs
What to change? What to change to?
Adopting Industry 4.0
is the Solution –
then what is the Problem?
PIVOT
29th International Conference of the TOC Practitioners Alliance - TOCPAwww.tocpractice.com
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Low Performance
Measurements
Injections
High Performance
Measurements
INDUSTRY
4.0 PIVOT
UDE
UDE
UDE
UDEUDE
UDE
D D’
CB
A
DE
DE
DE
DEDE
DE
NBRs
What to change? What to change to?
Adopting Industry 4.0
is the Solution –
then what is the Problem?
29th International Conference of the TOC Practitioners Alliance - TOCPAwww.tocpractice.com
“Making Industry 4.0 work requires major shifts in organizational practices and structures. These shifts include • new forms of IT architecture and data management,• new approaches to regulatory and tax compliance,• new organizational structures, • and — most importantly — a new digitally oriented culture, which
must embrace data analytics as a core enterprise capability.”
In TOC Terms “new” as a part of a system means “Injections”.
Source: A Strategist’s Guide to Industry 4.0 by Reinhard Geissbauer, Jesper Vedsø, and Stefan Schrauf
In strategy+business http://www.strategy-business.com/article/A-Strategists-Guide-to-Industry-4.0?gko=7c4cf
Adopting Industry 4.0 –
major shifts
29th International Conference of the TOC Practitioners Alliance - TOCPAwww.tocpractice.com
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Futu
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Performance Measurements
Injections
High Performance
Measurements
INDUSTRY
4.0 PIVOT
UDE
UDE
UDE
UDEUDE
UDE
D D’
CB
A
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DE
DE
DEDE
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NBRs
What to change? What to change to?
Adopting Industry 4.0 is the
Solution – then what is the Problem?
Industry 4.0 Injections:- The full digitization of operations- Integration vertically (every function and
the entire hierarchy) and horizontally (linking the suppliers, partners, and distributors and transferring data among them)
- The redesign of products and services to track their own activity and its results, along with other products around them.
- Industrial manufacturers reaching end customers more directly and tailoring their business models accordingly.
- Taking advantage of the economics of mass customization – the ability to make products in batches of one as inexpensively as a mass-produced product in the 20th century, while fully tailoring the product to the specifications of the purchaser.
Adapted from : A Strategist’s Guide to Industry 4.0 by Reinhard Geissbauer, Jesper Vedsø, andStefan Schrauf
In strategy+business http://www.strategy-business.com/article/A-Strategists-Guide-to-Industry-4.0?gko=7c4cf
29th International Conference of the TOC Practitioners Alliance - TOCPAwww.tocpractice.com
Industry 4.0 Injection: FULL DIGITALIZATIONThe full digitization of operations toestablish your company, your employees, and your entire ecosystem of suppliers, partners, distributors, and customers as a fully interconnected, integrated digital network, linked to other networks around the world.
Cu
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Futu
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Low Performance Measurements
Injections
High Performance Measurements
INDUSTRY4.0 PIVOT
UDE
UDE
UDE
UDEUDE
UDE
D D’
CB
A
DE
DE
DE
DEDE
DE
NBRs
What to change? What to change to?
What UDEs do
Industry 4.0 Injections address?
If FULL DIGITALIZATION OF OPERATIONS is a SOLUTION, then WHAT ARE THE PERSISTENT PROBLEMS that do not allow companies to achieve their strategic targets ?
UDE: Response time to customer enquiry/order is (significantly) longer than customer’s tolerance time. UDE: Time to market is too long.UDE: Too many launched products do not bring expected level of sales. UDE: Too often supply chain is clogged with non-moving SKUs.UDE: Only small portion of Requests For Quotations realize in orders.
29th International Conference of the TOC Practitioners Alliance - TOCPAwww.tocpractice.com
Industry 4.0 Injection: FULL DIGITALIZATIONThe full digitization of operations toestablish your company, your employees, and your entire ecosystem of suppliers, partners, distributors, and customers as a fully interconnected, integrated digital network, linked to other networks around the world.
Cu
rre
nt
Re
alit
y
Futu
re R
eal
ity
Low Performance Measurements
Injections
High Performance Measurements
INDUSTRY4.0 PIVOT
UDE
UDE
UDE
UDEUDE
UDE
D D’
CB
A
DE
DE
DE
DEDE
DE
NBRs
What to change? What to change to?
What UDEs do
Industry 4.0 Injections address?
If FULL DIGITALIZATION OF OPERATIONS is a SOLUTION, then WHAT ARE THE PERSISTENT PROBLEMS that do not allow companies to achieve their strategic targets ?
UDE: Response time to customer enquiry/order is (significantly) longer than customer’s tolerance time. UDE: Time to market is too long.UDE: Too many launched products do not bring expected level of sales. UDE: Too often supply chain is clogged with non-moving SKUs.UDE: Only small portion of Requests For Quotations realize in orders.
Does FULL DIGITALIZATION remove all these UDEs? In the part of quick exchange of information (provided the data is correct and updated instantly) and instant
transactions – it should. But what about the content? What would be the practical mechanisms to
• Stop overproduction and pushing into the supply chain?• Speed up new product/new features development?
• Stop operating on forecasts (in case of physically long transportation times)?• Speed up responses to RFQ, especially in highly customized environment?
29th International Conference of the TOC Practitioners Alliance - TOCPAwww.tocpractice.com
Industry 4.0 Injection: VERTICAL AND HORIZONTAL INTEGRATION- Integration vertically (every function and the
entire hierarchy) and horizontally (linking the suppliers, partners, and distributors and transferring data among them)
Cu
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Re
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Futu
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Low Performance Measurements
Injections
High Performance Measurements
INDUSTRY4.0 PIVOT
UDE
UDE
UDE
UDEUDE
UDE
D D’
CB
A
DE
DE
DE
DEDE
DE
NBRs
What to change? What to change to?
What UDEs do
Industry 4.0 Injections address?
If VERTICAL AND HORIZONTAL INTEGRATION is a SOLUTION, then WHAT ARE THE PERSISTENT PROBLEMS that do not allow companies to achieve their strategic targets ?
UDE: DDP/OTIF is significantly lower than high 90s. UDE: A lot of SKUs have overstock.UDE: Materials, parts, FG, tools, drawings, machines, human resources, permissions, approvals are not always available when needed. UDE: Priorities constantly change. UDE: Too much rework.UDE: Corrective actions significantly increase Operating Expense.
29th International Conference of the TOC Practitioners Alliance - TOCPAwww.tocpractice.com
Industry 4.0 Injection: VERTICAL AND HORIZONTAL INTEGRATION- Integration vertically (every function and the
entire hierarchy) and horizontally (linking the suppliers, partners, and distributors and transferring data among them)
Cu
rre
nt
Re
alit
y
Futu
re R
eal
ity
Low Performance Measurements
Injections
High Performance Measurements
INDUSTRY4.0 PIVOT
UDE
UDE
UDE
UDEUDE
UDE
D D’
CB
A
DE
DE
DE
DEDE
DE
NBRs
What to change? What to change to?
What UDEs do
Industry 4.0 Injections address?
If VERTICAL AND HORIZONTAL INTEGRATION is a SOLUTION, then WHAT ARE THE PERSISTENT PROBLEMS that do not allow companies to achieve their strategic targets ?
UDE: DDP/OTIF is significantly lower than high 90s. UDE: A lot of SKUs have overstock.UDE: Materials, parts, FG, tools, drawings, machines, human resources, permissions, approvals are not always available when needed. UDE: Priorities constantly change. UDE: Too much rework.UDE: Corrective actions significantly increase Operating Expense.
Does VERTICAL AND HORIZONTAL INTEGRATION remove all these UDEs? In the part of quick exchange of information and instant transactions – it should.
But what about the content? How will INTEGRATION help • Identify what needs to be SUBORDINATED to what?
• Synchronize production planning among the participants of the value chain –often in different countries?
• Manage individual capacity?• Provide availability?
29th International Conference of the TOC Practitioners Alliance - TOCPAwww.tocpractice.com
Industry 4.0 Injection: REACHING END CUSTOMER MORE DIRECTLY- Industrial manufacturers reaching end
customers more directly and tailoring their business models accordingly.
Cu
rre
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Re
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Futu
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eal
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Low Performance Measurements
Injections
High Performance Measurements
INDUSTRY4.0 PIVOT
UDE
UDE
UDE
UDEUDE
UDE
D D’
CB
A
DE
DE
DE
DEDE
DE
NBRs
What to change? What to change to?
What UDEs do
Industry 4.0 Injections address?
If REACHING END CUSTOMER MORE DIRECTLY a SOLUTION, then WHAT ARE THE PERSISTENT PROBLEMS that do not allow companies to achieve their strategic targets ?
What are the UDEs
? What are the mechanisms that will remove these UDEs?
29th International Conference of the TOC Practitioners Alliance - TOCPAwww.tocpractice.com
Industry 4.0 Injection: PRODUCTS/ SERVICES TRACK THEIR OWN ACTIVITY- The redesign of products and services
to track their own activity and its results, along with other products around them.
Cu
rre
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Re
alit
y
Futu
re R
eal
ity
Low Performance Measurements
Injections
High Performance Measurements
INDUSTRY4.0 PIVOT
UDE
UDE
UDE
UDEUDE
UDE
D D’
CB
A
DE
DE
DE
DEDE
DE
NBRs
What to change? What to change to?
What UDEs do
Industry 4.0 Injections address?
If PRODUCTS/ SERVICES TRACKING THEIR OWN ACTIVITY is a SOLUTION, then WHAT ARE THE PERSISTENT PROBLEMS that do not allow companies to achieve their strategic targets ?
What are the UDEs
? What are the mechanisms that will remove these UDEs?
29th International Conference of the TOC Practitioners Alliance - TOCPAwww.tocpractice.com
Industry 4.0 Injection: MASS CUSTOMIZATION:- Taking advantage of the economics of mass
customization – the ability to make products in batches of one as inexpensively as a mass-produced product in the 20th century, while fully tailoring the product to the specifications of the purchaser.
Cu
rre
nt
Re
alit
y
Futu
re R
eal
ity
Low Performance Measurements
Injections
High Performance Measurements
INDUSTRY4.0 PIVOT
UDE
UDE
UDE
UDEUDE
UDE
D D’
CB
A
DE
DE
DE
DEDE
DE
NBRs
What to change? What to change to?
What UDEs do
Industry 4.0 Injections address?
If MASS CUSTOMIZATION is a SOLUTION, then WHAT ARE THE PERSISTENT PROBLEMS that do not allow companies to achieve their strategic targets ?
What are the UDEs
? What are the mechanisms that will remove these UDEs?
29th International Conference of the TOC Practitioners Alliance - TOCPAwww.tocpractice.com
1. Map out an Industry 4.0 strategy up front. Evaluate your own digital maturity now, versus where you need to be.
2. Start with pilot projects. Use them to establish proof of concept and demonstrate business value.
3. Define the capabilities you need. Foster a digital culture: All your employees will need to think and act like technologically adept natives, willing to experiment, learn new ways of operating, and adapt everyday processes accordingly.
4. Become a virtuoso in data analytics. 5. Transform into a digital enterprise. 6. Adopt an ecosystem perspective. Develop complete
product and services solutions for your customers. Use partnerships or align with platforms if you cannot develop a comprehensive offering on your own.
Recommendations from Industry 4.0
experts to companies on what to do:
6 steps
Source: A Strategist’s Guide to Industry 4.0 by Reinhard Geissbauer, Jesper Vedsø, and Stefan Schrauf
In strategy+business http://www.strategy-business.com/article/A-Strategists-Guide-to-Industry-4.0?gko=7c4cf
The listed 6 steps is ‘WHAT’.
In transition of companies to Industry 4.0,TOC Thinking Process and
logistical solutions can be of great
value to help with “HOW”.
29th International Conference of the TOC Practitioners Alliance - TOCPAwww.tocpractice.com
1. Map out an Industry 4.0 strategy up front. Evaluate your own digital maturity now, versus where you need to be.
TO DO THIS STEP THE COMPANY MUST ALREADY HAVE THE SOLUTION – IT MUST KNOW WHAT TO ACHIEVE AND HOW MUCH OF IT. WHERE WILL THE COMPANY TAKE THIS SOLUTION FROM? HOW CAN TOC HELP?2. Start with pilot projects. Use them to establish proof of concept and demonstrate business value. TO DO THIS STEP THE COMPANY MUST FIRST DEVELOP THE CONCEPT OF THE NEW OFFERING TO THE MARKET. WHAT IS THE MECHANISM TO DEVELOP IT? HOW CAN TOC HELP? 3. Define the capabilities you need. 4. Become a virtuoso in data analytics. 5. Transform into a digital enterprise. Foster a digital culture: All your employees will need to think
and act like technologically adept natives, willing to experiment, learn new ways of operating, and adapt everyday processes accordingly.
WHAT ABOUT RESISTANCE TO CHANGE? HOW CAN TOC HELP?6. Adopt an ecosystem perspective. Develop complete product and services solutions for your
customers. Use partnerships or align with platforms if you cannot develop a comprehensive offering on your own.
HOW TO MAKE THE CHOICE? HOW TO JUSTIFY THE DECISION? HOW TO DEAL WITH DILEMMAS? HOW CAN TOC HELP?
Recommendations from Industry 4.0
experts to companies on what to do:
6 steps
The source of the 6 steps: A Strategist’s Guide to Industry 4.0 by Reinhard Geissbauer, Jesper Vedsø, and Stefan Schrauf
In strategy+business http://www.strategy-business.com/article/A-Strategists-Guide-to-Industry-4.0?gko=7c4cf
29th International Conference of the TOC Practitioners Alliance - TOCPAwww.tocpractice.com
• Detecting gaps in performance – UDEs, UDE Clouds,
Consolidation, Core Cloud
• Solving dilemmas – Dilemma Clouds
• Addressing contradicting tactics – UDE Clouds
• Assessing risks - NBR
• Identifying conditions - CRT, FRT, S&T, logical clusters
• Developing justifications in the systems – Logical
Clusters, Assumptions in Clouds, three types of
Assumptions in S&T Tree steps.
Integrating
the TOC algorithms
29th International Conference of the TOC Practitioners Alliance - TOCPAwww.tocpractice.com
OPT:
HISTORY
AND LOOKING AHEAD
29th International Conference of the TOC Practitioners Alliance - TOCPAwww.tocpractice.com
• OPT was developed in 1975 in Israel, Introduced to the
US in 1978 and brought to Europe in 1982
• OPT was an advanced planning system for
manufacturing companies. It was Finite Forward Capacity
Planning System.
• The Need for such system was raised by large
manufacturing companies that installed MRPII systems
trying to achieve fully integrated systems (MIS)
• MRPII planning was based on Infinite Capacity Planning.
• Many companies had bottlenecks in their production and
hence experienced lousy delivery performance (DDP)
and high inventories in WIP and FG
OPTOptimized Production Technology
29th International Conference of the TOC Practitioners Alliance - TOCPAwww.tocpractice.com
The uniqueness of OPT:
• It established the purpose of production system – to
contribute to the financial performance of the company by
providing systematic approach to managing production.
• It put the reliability of delivery at the highest priority
• It set up the concepts and mechanics for managing
production by establishing:
FLOW – PLANNING - EXECUTION
• It created a breakthrough approach to sifting the relevant
managerial information from the oceans of data provides
by the computerized systems (the IT of today)
OPTOptimized Production Technology
29th International Conference of the TOC Practitioners Alliance - TOCPAwww.tocpractice.com
Distribution
For Production:
Collecting and presenting the relevant data to ensure the fast and
complete production flow from raw material (or components) to the
completion of the customer orders ready to be shipped On Time In Full
(OTIF).
OPTThe Throughput Chain
T
Orders
BOMRoutingsStocks
Purchasing
Resources and
CapacityCalendars Financials
29th International Conference of the TOC Practitioners Alliance - TOCPAwww.tocpractice.com
For Extended Supply Chain (internal and external):
Using the same concept for Pre-Production (such as design) and Post
Production (Transportation, Distribution, Installation, Service etc.)
OPTThe Throughput Chain
T
T
T
29th International Conference of the TOC Practitioners Alliance - TOCPAwww.tocpractice.com
Planning
Finite Froward Planning – Algorithms to determine the planning of each
step in the Throughput Chain.
Producing analytical reports and instructions for actions
OPTPlanning
TPurchasing
Material Release
Detailed Planning
Expected Completion
Financial Outcome
Rough Cut Capacity
What IFAnalysis
29th International Conference of the TOC Practitioners Alliance - TOCPAwww.tocpractice.com
OPT did not have a built in mechanism for controlling the
execution of the planning.
The Control was done manually by the OPT Analyst .
The concepts of managing the execution through Buffers
were developed by TOC from 1986, but by then OPT was
decoupled from TOC.
In early 1990 OPT was “killed” and disappeared from the
market.
In 1991 Goldratt Institute developed a simplified software to
replace OPT – it was called DISASTER (and later The Goal
System). This system contains Buffers and early
developments of Buffer Management .
OPTExecution Control
29th International Conference of the TOC Practitioners Alliance - TOCPAwww.tocpractice.com
OPT can provide conceptually and technically a viable base
for managing production in line with Industry 4.0
The use of advanced digitation and computerized decision
making can support execution control, initiate recovery
actions, suggest improvements and continuously update
and upgrade the quality of data needed for Flow, Planning
and Execution Control.
OPTThe Future
T
Updating DB
ContinupusImprovement
Buffers Status
Recovery Actions