Thursday, October 22, 2015

Heads Up - The Machine; A New Book From Justin Roff Marsh

I'm a great admirer of JRM so I got he's OK to share this with you.

"Update: The Machine (it's here!)
Can you believe it?
After many years of toil, The Machine is finally available for purchase!
You can get it on Amazon (hardcover or Kindle) and in all Barnes and Noble stores (physical and online), as well as in most US bookstores (including many airport booksellers).
Here's an Amazon link:
If you haven't purchased your copy yet, please do yourself a favor!
And if you're one of the lucky ones who got your copy early, please hurry up and finish it and post a frank and open review on Amazon.
I'm now hard at work on a 6-class video short course. This course is entitled Beyond The Machine. It's enormous in scope, and it's FREE (as in Free Beer) for everyone who purchases The Machine (check the end of Chapter 1).
Thank you, again, to everyone who has shared support and ideas over the last few years.
Now, go read the book!

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Monday, October 19, 2015

2015 TOCICO Conference - Final Thoughts

So, I've already written several posts about the learning that went on in Cape Town this past September (see here, here and here) and I guess it's time to move on. Still I want to leave you with a real taste for more and hopefully next time you'll come join us (see the TOCICO calendar for upcoming events near you). This review did not include my sessions and I will share some of that material separately in a future time. It's on my list.

For this final post I chose to review  2 sessions that I found had a high impact on me:

I have already mentioned Rami Goldratt's keynote on forecasting here. He talks about the fact forecasting capabilities in retail are not improving. In fact, they are deteriorating. It is becoming harder and harder to generate predictions that will create good enough forecasts so as to lead to the right decisions. No one is expecting a forecast system to be able to predict accurately what will shop X sell next Tuesday. But the fact of the matter is these forecasts fail at much simpler questions such as how much of product Y will be sold by the entire network over the entire season. This is a simpler question as it is an aggregation, allowing for mistakes to average out.

Rami presented 3 major forces that are eroding the ability for forecast:
1 - Customers are increasingly requiring products to create the exact fit for their needs and tastes. As a result manufacturers and retailers increase their variety. Think of toothpaste, just as an example. It used to be that you were either a Crest user or a Colgate (or another brand). Now each brand has an extensive range of options - different tastes, different usages and problem resolution and many of the possible combinations of these. As the variety grows the volume per SKU shrinks and with it the ability to predict. At the same time the customers learn to expect even more accurate fit and it is clear there is a feedback loop making the situation grow more and more extreme.
Gateway Supermarket Sardines' Section (from Wikipedia)
2 - Customer tolerance time is getting shorter, meaning retailers lose more sales when the exact inventory is not on hand. For example, in a market research Rami cited, people stated that they will pay a higher premium for immediacy that for technological improvement. As a result there is pressure to hold more inventory at the point of sales.
3 - The product life cycle is getting shorter. Customers are forever expecting new products and so there is a on going pressure on NPIs. New products do not have a history we can use for predictions and they have a major impact on the sales of current products (that have a high level of inventory in the shops from item#2) thus practically eliminating the ability to forecast.
On top of all this (as if that was not enough) more and more industries suffer from a product life cycle that is shorter than the supply time.
With all these phenomenas increasing over time, relying on forecasts will lead companies to fail. What we need is a system to minimize the time needed for reading and understanding the signals from the shop floor and to react to them fast. We have the needed IT, we are just using it the wrong way.
Just so you know, Rami promised a video covering all this in more detail - Rami, we are waiting.

The second talk was by Dr. Alan Barnard concentrating on flow. Re-reading Dr. Goldratt's "Standing on the Shoulders of Giants", Alan pointed out that the 5 Focusing Steps are actually an application and should only be used when the boundary conditions dim them relevant. Instead he suggest starting with the concept and principals of flow:
1 - The prime objective of operations is to focus on flow, specifically on reducing flow time.
2 - This objective is to be translated into a practical mechanism that guides operations when not to produce.
3 - Local efficiencies must be abolished.
4 - A focusing process to balance flow must be in place.

The application of these principals will be:
1- Separate work and time buffer.
2 - Aggregate time buffers.
3 - Remove unnecessary buffers
4 - Simplify flow with a single time buffer.
Looking over these lists it is clear that the 5 Focusing Steps, which are used for constraint or bottleneck management, are only relevant when those are the primary causes of blocks to the flow.

This is just the tip of the iceberg, of course. I highly recommend getting access to the conference videos for these sessions, if you weren't there.

If you enjoyed this and want to learn more - share it and subscribe to this blog, great things are coming.

Monday, October 12, 2015

2015 TOCICO Conference - Catch Phrases

Every TOC event I go to blesses me with a lot of new knowledge and ideas. It also adds some 1-liners and catch phrases. When I capture them here, in the blog, not only can you all enjoy them with me, I can also recall them years later and put them to use (like the ones here). So, here are some of the things I collected during the 2015 Annual TOCICO conference:

  • "War Room" - don't talk about yesterday (to the 3rd point after the decimal), talk about tomorrow!
  • Fear of the unknown drives us to act according to detailed (and mistaken) forecasts.
  • Sales comply with Pareto Law, inventory does not.
  • The bigger the range, the bigger the tail.
  • People claim (as in "market research shows") they are willing to pay a bigger premium for instantaniety than for technological improvement.
  • In fashion, the product life cycle is shorter than the supply time.
  • Any business based on forecast is fragile (refer to my previous post on anti-fragile)
  • Orthodoxy - anything done without knowing why.
  • IVD (Inventory Value Days - what do you know, some countries don't use the UD$ currency, go figure) = stuck, unworking capital (you knew that).
  • Risk is uncertainty against an objective
  • Risk management should be applied on the weakest link.
  • Start with Flow - before applying 5 Focusing Steps check that the constraint is the real cause of delays/blocks in flow.
  • Operational Goal - meet demand (at peak, not just on average) effectively and efficiently.
  • If you are not testing what you are thinking - you are not thinking like a scientist.
  • A cluttered mind is an obstacle to thinking.
  • The indicators must subordinate to the goal.
  • The goal and the necessary conditions must measure alignment as well as progress.
  • Variability in the #1 enemy of flow.
  • We need simple systems that can handle complexity.
  • Systems are variability amplifiers.
  • Forecasts are valuable for mid to long term planning, not day-to-day operations.
  • Incoming "Peaks" are not forecasts.
  • Buffers decouple supply and demand.
  • Come your customer from will, not from need, you can not create trust when you are needy.
  • Strategy - a project portfolio of things that need to be done by the time we are planning for.
  • It is management's responsibility to create the automatic machine.
So, which one is your favorite? Please share.

Let me know if there is any point you feel needs more elaboration.

Monday, October 5, 2015

Working with Intuition - The 2016 Odyssey Program Exercise

In the first part of my thinking backwards exercise I figured out what will make for a successful TOC Odyssey training. So the next step should be to keep working backwards and highlight the actions that need to be taken for these results to unfold.Logical, right?

Well, yes and no.

If you recall, I left the plan hanging at:
My first inclination was to go backwards to:
Then I got thinking.

It seems trivial. In TOC TP we call such trivialities "Oxygen". Since oxygen is always needed for human activity it is not necessary to state it in the logic diagram. Everybody knows it and it does not add information for our analysis. Oxygen statements should be handled with care. The mere fact something came up as an idea should be an indication that a double-check is in order, as one would rarely consider the need for oxygen under normal circumstances. In other words, the fact we have been thinking of the need for oxygen may point out that the conditions are not standard and this should be accounted for,

OK, so the fact that everybody should be in the room for the session to start could be an oxygen fact. It seems very logical, everybody should know this without me telling them, clearly there will be earlier steps that will take care of attendance. I should skip this step, it is redundant.

Or is it? I was stuck in a loop for some time, pondering this, wondering what is going on - why am I still thinking about this point after I figured it out? 

Well, turns out it was my intuition guiding me to a spot I missed. It is not enough to have a full enrollment. Life happens and we will surely have a few last minute cancellations. I know all our registrants will loath missing the session, but sometimes you just can't help it. So, if I want the session to be a real hit and create real value for all, I need to take care of this point and this is just the right place in my plan to inject a place holder for the results of those actions. Makes sense?

Here is what I came up with - In order to have a good kick of we need:

Which will happen if these prior steps happen (remember, we are in reverse order, the top box will happen after the bottom):
All graphics were done using Flying Logic
Well, I actually reached a task. It is going to be located very far into the future of this "project", of course and I expect to find it has some predecessors, but it is still exiting to move to that practical part. 

Next step will be to keep working from the definition of success back to the tasks that need to be done. I am expecting this will no longer be linear and I will be working on parallel tracks soon. Stay tuned and let me know if you have any ideas for making the Odyssey a hit.