Tuesday, March 29, 2011

Using TOC while seeking a new job

After looking at the hiring process in the last 2 posts, I'd like to change my view point and look at the process from the other side. When a person is looking for a job – can TOC be of assistance?
First up is the realization that seeking a new position is a process of change and as such it would probably be beneficial to consider the 4 quadrants of change. Using the matrix can help a job seeker understand what special needs must be addressed during the process. Generically speaking these are the needs to reduce the risks inherent to the change and the needs to minimize or mitigate losses of parting with the current situation (losing the "mermaid"). It is important to remember that even when this change looks very appealing, an example could be a case of someone unemployed and in need of an income, the change does bring with it risks and losses which should not be ignored. Also make sure to consider both the employment side and the personal side of the change. Looking at the risk quadrant as an example – employment side risks may be "I will not succeed and this position will create a bad impression in my CV", personal side risks may be "I will have less available time to contribute at home which might create friction".


TOC for hiring part 2 - Sorting through the CVs

From a TOC point of view handling the classical hiring process (advertise opening, get CVS, sort, interview, hire) is entirely an operating expense (OE), it does not create any throughput, even though the end goal of the process is, indeed, an increased throughput. Then at the end of the process what you get is "marriage after a blind date", with neither sides really sure if the right decision is being made. Taking that into consideration – perhaps there is place for paradigm shift in hiring.
But assuming we have to use the current process – how can we minimize the impact it has on out throughput? As always – it is done step by step.
So, once a company announces an opening it will receive candidate CVs and most of the times it will receive a lot of CVs, much more than needed to create a meaningful selection. We can divide these CVs into three basic groups:
  • The "No-s" – these CVs present candidates that are clearly not relevant when compared to the defined characteristics for a good enough candidate (as discussed here)
  • The "Yes-s" – CVs that represent candidates with good fit to the defined characteristics
  • The "Maybe-s" – CVs that are not clear cut, perhaps there is great fit in some of the defined characteristics but not in others, perhaps something else is creating doubt
How to treat the "No-s" and the "Yes-s" is clear, assuming there are enough CVs that are not "No-s". So the only problem is the "Maybe-s". This should not be a problem, if we look at the situation from a satisficer point of view. First these should only be considered after the "Yes-s" have been exhausted.
Once it is clear that there is need to go into the "Maybe-s" pool, the first step would be to re-analyze them. There is more data and knowledge in the system now, so perhaps some of these are actually "Yes-s" or "No-s" and should be treated accordingly. Then process them in order from the most promising to the least promising. Stopping as soon as possible (when the position has been manned, there are enough eligible candidates to move to next phase etc.)
One point to keep in mind is that often times bias leads to wrong decisions in hiring. This does not have to be the "regular suspects" of bias such as gender, race, religion and so on. There can be many hidden assumptions about the position, the appropriate candidate and so on that will lead to bias.

Monday, March 28, 2011

Using TOC for a hiring process

Let us begin by defining the goal of the process as finding a good enough candidate for the job. This is how a "Satisficer" would look at this. An "optimizer" will look for the best candidate possible and thus will take much more time and effort to fill up the opening – is this beneficial for the organization? I dare say it is not, since not only is the job open for a longer time, meaning that required output is delayed, the recruiting team also spends more time on this task and thus is not available for other tasks.
To recruit a good enough candidate you first must define the characteristics of a good enough candidate. It is important to keep some slack in these definitions to allow for variability between candidates, so recruiters have a real choice. In order to get a good understanding of necessary characteristics, just get a good understanding of the job this candidate will be doing.
Adding a person to the company's staff is a process of change and should be handled like such (as discussed here). Hiring managers should consider all 4 quadrants of this change first at the general level of hiring someone and then at the specific level of hiring a certain candidate. Throughput considerations should be used.
At the general level consider:

Hire new person (change)
"Pot of Gold" - increased throughput by manning position
"Pain" – losing throughput by paying more salaries (increasing OE) without sufficient return
Don't hire
(don't change)
"Mermaid" – low OE, business as usual, no need to train and bring someone up to speed….
"Alligator" – overloaded workers, missing capabilities….
This would be valid even when the manager leading the process is very willing to hire the new person. Also notice that these are very generic possibilities and should be replaced with the specifics of each situation in real life.
At the specific level each candidate is different so a generic analysis is not relevant. One point to consider, though, is how would the analyses differ between a candidate that is an acceptable fit on all parameters and one that is a very good fit on some parameters but poor on others. Which parameters are the most important to your throughput?

Continued here

Wednesday, March 23, 2011

Road Runner Ethics

Implementing the Theory of Constraints requires everybody behave like the Road Runner (the blue bird). It is either running full speed or standing, there is no other option. It should be the same for all our resources, especially the human one.

Cost world, which demands maximal efficiency at every point, leads people into conflicts - conflicts with fellow workers (that don't want to work their hardest ALL the time but don't want to look "bad" either) and conflicts with the system that requires they achieve opposing goals (no over time, on time delivery AND maximum utilization). These conflicts lead people to slow down their pace of work, make sure they look busy (I once saw a shareware that helps cover up the fact you are not really doing anything?) and often times leads them to make the wrong decisions.

Throughput world focuses on global optima, not local optima, and thus accepts the fact that most resources should have idle time. This means that being active isn't always being productive. But to get the most out of the system we need to have all our protection where we need it - at the constraint. Anywhere else it is wasted as it is not protecting the system. Therefore, even though a resource has over capacity and is not constraining the system, once it there is work to be done - it should be done ASAP. Knowing that working hard is not penalized (=rests are allowed when there is no work) should lead everyone to that direction. So there are no conflicts between fellow workers (no one should feel bad or threatened by co-workers working hard when they are not), no conflicts with the system and the road is paved for making the right decisions.
Meep Meep

Sunday, March 20, 2011

Using CCPM instead of DBR for manufacturing

The Proceedings of ICM 2007 is a 626 pages long document that has 2 TOC related articles. I'll review "A Feasible Case Study of Applying Critical Chain Multi-Project Management in Semiconductor Turnkey Services" which you can find in page 64 (using the reader's page count), the other article is about distribution and I reviewed it in a previous post.
This article reports the findings of theoretical simulation work done to assess the use of CCPM as a production management tool for foundries that serve fab-less semiconductor companies. While the researchers claim CCPM resulted in superior on time deliveries and a better throughput (probably meaning better output speed/volume, not the TOC meaning of throughput), they conclude it is only partially fits turn key projects. Since the methods used in this research are not completely conveyed and the understanding of CCPM in a multi project environment is not proved, this conclusion should be taken with a grain of salt.
I think the major take away is the innovative approach embedded in using CCPM as a production management tool, instead of a DBR variation, to try and handle the highly complex environment of the fab.

Theory of Constraints - Science or Art? Both

A great case study of Pinnacle Strategies's work in helping BP overcome the oil spill in the Gulf of Mexico.
It shows the principals of the Theory of Constraints are generic and scientific, meaning they can be applied to a wide range of situations, these are not rigid rules. The execution should be custom made and can be viewed as an art.
Thanks to Mark Woeppel for sharing this on LinkedIn's TOC Learning Group

Saturday, March 19, 2011

ABC and Theory of Constraints in a Non Profit Environment

In this thesis done in the Air Force Institute of Technology, ABC costing and Theory of Constraints are reviewed, compared and used in order to improve the performance of an organization that is not for profit. In this case the maintenance unit of the air force (AFMC).
This is a very through report, over 150 pages long, that covers all the basics before it dives in.
First important take away is that for a non-profit organization a primary challenge is to define its purpose in a way that will allow management to measure it. This is done in for-profit organization by the definition "to make money now and in the future" which is measurable  Defining the purpose correctly, so it can be measured, is imperative, as it allows the managers to measure and compare decisions in terms of their impact on the goal.

Friday, March 18, 2011

TOC for Distribution

The Proceedings of ICM 2007 is a 626 pages long document that has 2 TOC related
articles. I'll review "Distribution the TOC Way: Review and a Case Study" which you can find in page 158 (using the reader's page count), the other article is about Critical Chain in semiconductors and I'll review it in another post.
The article covers the basics - common UDE's, the cloud they lead to and the generic solution and then gives a case study of a European apparel retailer with very little details.
I found the introduction of the problem on hand very good, clear and easy to understand. Later on the article became less clear, in my opinion.
 Another thing to consider here is "Is batching always a bad thing?" - probably not, it can be good if it helps you get more out of a CCR (capacity constraint resource) for example, but it should be minimized. If so - are there other places where you are batching? Maybe you are batching in sales - using one sales person to sell all your product lines? Un-batching the sales force will allow sales people to gain more expertise with the products they are selling because they have more focus. There might be other benefits for such a move, but there are perils as well so the use of a full thinking process, especially the Negative Branch Reservation, is important.

Wednesday, March 16, 2011

Using S-DBR for Rapid Response Manufacturing

In this 2006 article,
 Eli Schragenheim, explains how to use S-DBS to support a competitive advantage of accepting requests for faster delivery dates in return for a premium.
S-DBR is short for simplified DBR and Schragenheim claims it has now totally replaced DBR in the GG consulting work. This is due to the fact that the classic DBR has too much protection in it and was overly rigid - the schedule was set at such a level of detail that each time a change was needed it impacted the entire system. This means that local variance is amplified to the entire system. S-DBR, on the other hand, uses only one layer of protection, meant to protect the system as a whole and leaves the micro-management to the people who can do it the best - the floor operators and foremen. The explanation of S-DBR and its mechanism is very detailed and clear.
While S-DBR can be used in any manufacturing system (made to order, to stock, to availability and so on) the focus of this article is made to order. In this kind of environment there may be customers willing to pay more for expedited treatment. Adding the ability to respond rapidly without negatively impacting the standard operations can allow the company to gain those premiums, establishing a decisive competitive edge. The article shows how to reserve capacity for the expedited orders and how to manage them.

Overcoming Resistance to Change - Isn't It Obvious?

A lovely video by Goldratt's people. I truely found this to be an eye opener.
When you need to conduct a change - first analyse it from your point of view in all 4 quadrants, then try to understand the other party's point of view and figure out, in advance, how to minimize the risks and loses. While Dr. Goldratt has a book by the same name, the topic of this video is hardly covered in it.

Comparing Theory of Constraints and ABC product mix decision

In an article published in the Int. Journal of Production Economics in 1999, authors Kee and Schmidt compare the product mix decision you get from ABC and from Theory of Constraints and find them both lacking. Their conclusion is that ABC gives the best results when overhead and labor costs are completely discretionary whereas Theory of Constraints gives the best results when these expenses are fixed. They go on to suggest an extended model to cover the middle ground.
This is an academic publication, so ease of reading was probably not a goal for the authors. It is long and the models are translated to mathematical representation. Still, it is quite easy to understand.
Since my knowledge of ABC is non existent (the "know I don't know" quadrant of the Johary window Dettmer talks about in the article in my first post), I'll not go into this. The way Theory of Constraints is represented, though, is very troubling in my opinion. It may be that Theory of Constraints has evolved since that time, I'm not blaming the authors but they presented Theory of Constraints as a rigid system that forces labor and overhead costs be fixed. I do not think this is true. Theory of Constraints looks at cost through a different paradigm and so classifies them differently then the traditional cost accounting systems. Since modern day businesses face labor and overhead costs that are fixed and not negligible at all, the basic Theory of Constraints models make these assumptions but if these are actually true variable costs, at least to some extent, a correct Theory of Constraints implementation will have to adapt to that. So I have to conclude the article is based on incorrect assumptions and therefore leads to incorrect conclusions.

Monday, March 14, 2011

Learning The Basics Of Thinking Process

Flying Logic is a software designed to help graph the logic trees used in TP. I have not tried it yet and right now I think it comes with a very high price tag with regards to what it does. The tool can also be purchased on Amazon at a better price point.
Their site offers a few free documents, including a PDF book called "Thinking with Flying Logic" by Robert McNally that covers the basics of TP, but about half way through it becomes a Flying Logic user manual whith a bit of technique thrown in. It gives a good overview and can help fill in the blancs. It is important to note that their present a slightly different logic than the one presented by GC people in some aspects. For example - they require all the assumptions in a cloud connector to be refuted in order for the cloud to evaporate, GC claims refuting one should be enough. Another point that bothered me is the option to combine solutions when evaporating a cloud, I have a hunch this will open the door wide open to compromises (which are considered lose-lose solutions)

Sunday, March 13, 2011

Links to TOC web resources

As I try to improve my understanding and capabilities in all things TOC I have been searching the web for resources and I'm coming up with more and more useful stuff. I'll share my thoughts on anything I have already checked out when I can.
Here is a PDF of a 2001 article by H. W. Dettmer titled "Applying the Thinking Process - Managing Expectations" which discusses the time a TP proccess will take, why and how to manage your clients through it. Well written and clear it will not add to your knowledge of TOC or TP.
More articles from the same source are found here, not all of them are TOC related.