What is TOC?

• Systems theory for goal oriented organisations

• Developed by the Israeli Phycisist Eli Goldratt (1947 –

2011)

• Author of the most read managementbook of all times

Every complex system

is based on

Inherent simplicity

What do we mean by Inherent Simplicity?

The Starting point

A complex System

SYSTEM A SYSTEM B

Which system is more complex?

What do people do with a complex system:

- Divide in sub-systems

- Optimize sub-systems

Effect:

– Mis-synchonization

– Building silo’s

– Conflicts in policies and behavior

Core message TOC

Local optima do not create a global optimum

The Program for today

The Theory Of Constraints defines this as the Inherent Simplicity of the system

Only very few factors govern

the performance of the system as a whole

Inherent Simplicity

What is your Goal?

Emp. #1 Emp. #3 Emp. #5 Emp. #4 Emp. #6

Emp. #4 Emp. #5

Emp. #2 Emp. #2 Emp. #2 Emp. #2

Emp. #1 Emp. #3

A very, very simple Organisation

• 1 organisation with about 10 departments

• Every department has 1 dye capacity and 4 tasks ‘Work

in Progress’

• Every ‘day’ (=throw) the department produces the

amount of the eyes of the dye

– So production will be ….?

– So leadtime will be .... ?

• Each day (Throw):

1. First ‘produce’ (pass through)

2. Then ‘receive’

Findings Round 1

• Running and Stopping

• Frequently missing work

• Increasing Work in Progress

• Increasing Leadtime

• Stress

......... Sounds familiar?

As from Operations Management perspective:

• Systems produce significantly less than their capacity (efficiency <

100%). In this case ca. 75%

• Leadtime ≠ touchtime

• Variability + interdependancy causes

– Missing parts en increasing WIP

How can we improve?

Improve the elements of the system

Increase efficiency per department

Findings Efficiency

• Even more WIP Piles in front of constraint; fast moving after constraint

• Stress/pressure at constraint

• Exces capacity at non-constraints Departments produce heavily under available capacity

Questions:

1. Does it make sense to produce at the maximum if you are before the constraint? So what is the use of efficiencytargets on non-constraints?

2. Does it have negative ramifications?

3. What happens if the constraint breaks down?

How can we improve?

Think….

1. What is the Goal again?

2. What prevents the system to achieve the most of its

goal?

3. So Protect it and put it in the lead

Findings TOC

• Proces is stable

• Production is almost equal to theoretical capacity

Constraint is effectively protected against starvation with

relatively low WIP

• WIP remains low

Leadtime remains low

TOC’s 5 Focussing Steps

5 Focussing Steps

1. Identifiy the constraint

– Constraint: it is thé resource which capacity most prevents

the system from achieving more of its goal

2. Decide how to exploit the constraint

3. Subordinate everything else to the above decision

4. Elevate the constraint

5. Go back to step 1 (but beware of the decisions you

took in step 3)

Findings Simulation

• Dependencies + Variability determine the flow through

a system

• WIP determines leadtime, not the output

• ‘Output rules Input’ makes a system stable, fast and

easy to improve

• 5 Focussing steps cause an Ongoing Improvement

Problems in most service organisations

Many things are working fine. But some problems tend to be persistent:

• Completion of tasks takes (too) long (long leadtimes)

• Too many escalations on (potential) late delivery

• Unclear and continuously changing priorities

• Continuous disruptions in (resource)planning

• Too many complaints

• Poor and overdue completion of project(task)s

• Projectresources are not available when needed

• Incorrect identification for causes of quality issues/problems

• Poor solutions for quality issues/problems

From effects to causes

Speculated causes of poor performance

Management and staff do not have the same goal

There is not enough capacity

The process is inefficient

Priorities keep changing (Emergencies)

There are a lot of highs and lows in demand and/or production

Performance is not measured and improved in a stuctured way

Good news!

(Almost) every service provider encounters the same

problems!

You are not alone

Solution element 1

Problem Element

Management and staff do not have the same goal

Create a Product Service Catalog (PDC)

Solution element 2

Problem Element

There is not enough capacity Decrease WIP and sustain low WIP

Effect of too much WIP: Multitasking

Prioritizing? Simple!

Assignment: perform 3 ‘projects’ (complex jobs)

• Every project consists of 26 tasks

=> In total: 78 tasks!

• Problem: everything has HIGH priority!!

• Solution: work on all projects simultaneously (simple!)

Let ‘s do a simulation……

3 projects

Project 1 Project 2 Project 3

1 a I

2 b II

Round 1: horizontally!!

Register:

• Time of completion project 1?

• And project 2 and 3?

• # errors?

Round 2: vertically!!

• First finish project 1, then 2 and then 3

• Register completion time & errors

• Results?

Solution element 2

Problem Element

There is not enough capacity Decrease WIP and sustain low WIP

Solution element 3

Problem Element

The process is inefficient Optimize processes

Solution element 4

Problem Element

Priorities keep changing (Emergencies) Apply Buffer Management

Alles OK Pas op! Spoed!

10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Te laat

De “buffer”

• Solution: Prioritize tasks based on bufferconsumption

Solution element 5

Problem Element

There are a lot of highs and lows in demand and/or production

Assign tasks to teams (not to persons)

Solution element 6

Problem Element

Performance is not measured and improved in a stuctured way

Establish Management processes

Elements of the Solution

Nr Problem Element

1 Management and staff do not have the same goal

Create a Product Service Catalog (PDC)

2 There is not enough capacity Decrease WIP and sustain low WIP

3 The process is inefficient Optimize processes

4 Priorities keep changing (Emergencies)

Apply Buffer Management

5 There are a lot of highs and lows in demand and/or production

Assign tasks to teams (not to persons)

6 Performance is not measured and improved in a stuctured way

Establish Management processes

Questions?

There was no doubt in my mind that the

lessons being imparted in The Goal were

relevant to the work we do in IT

(Gene Kim – DevOps)