TOCICO

Goldratt discusses writing the introduction (chapter 1) of the Theory of Constraints Handbook. What is TOC? Focus: do what should be done and don’t do what shouldn’t be done. Throughput accounting was developed about 1981. In about 1985 other environments wanted a solution. Bottleneck was used. Critical path was developed in 1958. The critical chain was developed about 1986. The constraint was the critical chain which represents the time it took to complete the longest path of dependent activities based on technological sequence and resource dependencies. The name theory of constraints was formulated based on this understanding of a different (project versus production) environment. In retailing, the constraint was the shelf space. The five focusing steps (5FS) process originated in 1987. New questions were asked in new environments. New opportunities opened. Everyone is taking what we developed and copying what we did but they didn't think to understand the differences. Therefore their solution didn’t work. When you look at reality and where you want or think you should be you are looking at gaps. Once you acknowledge the interdependencies of the gaps you recognize what you call problems are undesirable effects of underlying core problems. Most of the solutions you have been recommending are solutions for UDEs not for the real problem. How do we answer the questions of identifying, exploiting, subordinating, etc.? What we find is you are really using the scientific approach but no one had verbalized how to do it. We spent three years to verbalize the scientific approach. Our solution was the thinking processes (TP). Toyota had developed the five Whys? The current reality made it easier to find the core problem because it was easier to dive down from five UDEs rather than one. From 1989 to 1992 we checked and rechecked the TP. The more powerful the solution the more it changes reality. Many new challenges appear. With improvement in operations, the constraint moves elsewhere. When we don’t have an answer to a problem we try to pretend the problem doesn’t exist. Hitachi Tools from Toyota results of implementing TOC in their job shop were highlighted. This implementation represented the opposite of focusing. This tremendous change created a decisive competitive edge (DCE is defined as a company able to satisfy a client’s significant need in a manner that no one else can satisfy it.). Hitachi did not use the DCE. The constraint was in the market. They have the biggest Mafia offer ever: Hitachi inventory gets three times the number of inventory turns on their items than competitors. Hitachi did the direct opposite of focusing. The DCE created a need for a new sales process which brings the client to realize that one of his DCEs is blocked by me and my competitors. Holistic implementation became necessary (the 4 X 4) therefore the strategy and tactics (S&T) tree was vital. The process on ongoing improvement and the evolution of red and green curves are discussed. The organizer of the body of knowledge is the S&T tree which moves down from the objective to what actions must be done and what actions must not be done.