how the toc thinking processes 29th international conference of the toc practitioners alliance -...

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.

[email protected]

www.tocexpert.com

www.toc-strategicsolutions.com

www.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.

[email protected]

www.tocexpert.com

www.toc-strategicsolutions.com

www.tocpractice.com

Jelena Fedurko


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


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


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


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Low Performance

Measurements

Injections

High Performance

Measurements

Direction of solution

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?

PIVOT


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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


Adopting Industry 4.0

is the Solution –

then what is the Problem?


“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


Adopting Industry 4.0 –

major shifts


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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


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



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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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 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.


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

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Futu

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Injections


INDUSTRY4.0 PIVOT

UDE

UDE

UDE

UDEUDE

UDE

D D’

CB

A

DE

DE

DE

DEDE

DE

NBRs


What UDEs do


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?


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

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y

Futu

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eal

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Injections


INDUSTRY4.0 PIVOT

UDE

UDE

UDE

UDEUDE

UDE

D D’

CB

A

DE

DE

DE

DEDE

DE

NBRs


What UDEs do


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.


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


Injections


INDUSTRY4.0 PIVOT

UDE

UDE

UDE

UDEUDE

UDE

D D’

CB

A

DE

DE

DE

DEDE

DE

NBRs


What UDEs do


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?


Industry 4.0 Injection: REACHING END CUSTOMER MORE DIRECTLY- Industrial manufacturers reaching end

customers more directly and tailoring their business models accordingly.

Cu

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Futu

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Injections


INDUSTRY4.0 PIVOT

UDE

UDE

UDE

UDEUDE

UDE

D D’

CB

A

DE

DE

DE

DEDE

DE

NBRs


What UDEs do


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?


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

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Futu

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ity


Injections


INDUSTRY4.0 PIVOT

UDE

UDE

UDE

UDEUDE

UDE

D D’

CB

A

DE

DE

DE

DEDE

DE

NBRs


What UDEs do


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



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


Injections


INDUSTRY4.0 PIVOT

UDE

UDE

UDE

UDEUDE

UDE

D D’

CB

A

DE

DE

DE

DEDE

DE

NBRs


What UDEs do


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



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


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”.


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



• 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


OPT:

HISTORY

AND LOOKING AHEAD


• 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


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


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


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


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


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


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

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