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.

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.

2015 TOCICO Conference - Anti Fragility

This is the second post in a series. For the first post - go here.

A main theme in the conference was Anti-Fragility, becoming anti-fragile as individuals and a community and helping companies become anti-fragile. I have heard the term before but this time I feel I got a much better grasp of it. Here's what I can share:

• Definitions:
• Fragile:
• Sign on the box will say "Handle With Care"
• Mythological prototype is Damocles with the sword above his head ready to drop when his life is at its best
• Features limited gain and unlimited pain
• Breaks in reaction to pain

Richard Westall's Sword of Damocles (Source:Wikipidia)

• Robust:
• Sign on the box will say nothing, as it doesn't make a difference
• Mythological prototype is the Phoenix which comes back from the ashes just as it was
• Features limited gain and limited pain
• Recovers in reaction to pain

 FJ Bertuch's Phoenix (Source: Wikipedia)

• Anti-Fragile:
• Sign on the box will say "Please Kick"
• Mythological prototype is the Hydra which grows 2 new heads for every 1 cut off
• Features unlimited gain and limited pain
• Grows in reaction to pain

Hercules Killing the Lernean Hydra

(Source: Wikimedia Commons)

Anti-fragile systems are designed around multiple low risk experiments, with the ability to quickly focus and cash in on the few successes, letting go of those experiments that did not make the grade. This is a system that does not protect all of its parts.

Now, of course, it is clear that the anti-fragile state is relative, time-based and specific. Think of the human body - our bones are quite anti-fragile, recovering to be stronger at the break point, but our necks and hearts are not, bearing the burden of past trauma, if they ever recover.....

While the subject was a repeating thred there weren't much ideas as to how to make it happen, One thing was made very clear, though, throughout the conference and that is that systems that are based on forecasts are fragile, more will come on that.

So, take a moment to reflect about your private life, your organization, our community - where are they now? how can this be improved? at what cost? 

Let me know what you think.

2015 TOCICO International Conference - Cape Town

I've just returned from Cape Town a week ago and I think it's a great time to share some of my conference highlights with those who could not make it this year.

Some Conference Participants (can you spot me?)

First off - join me in sending love and support to Marcia Hutchinson, TOCICO's General Manager, who broke her arm on the first night and needed an operation. Marcia's proffesional management was totally aparent in the fact the conference went on without any interference, leaving her free to take care of herself. GET WELL SOON, MARCIA!

The first day was a full day of keynote speakers interlacing academics and practitioners  and introducing the conference's main thread of the Anti-Fragile vision. Some success stories brought to light the amazing effects TOC can have on a business and how important it is to ensure the process is maintained over time and management switch-overs.

Keynote Speaker

I especially liked Rami Goldratt's session about the forces eroding our ability to generate forcasts, especially in a retail environment. He makes a valid point - yes, forecasts are inherntly wrong but they should be getting closed and closer to being right. After all, they are based on past experiance, of which we have more and more data points with each day passing, on computing abilities, which grow bigger and faster with each day passing and on algorithms, that should improve over time and experiance. Look at the weather forcast as an example. Over the years it has gotten better, to the point that we trust the 10-day forcast as a good enough directive for packing before a trip. Sure, we do not expect it to be right on the money, just in the vicinity. Shouldn't the forcasts for sales numbers and for purchasing be doing the same? Well, they don't and Rami gave a very clear explenation why. He also promissed to put together a YouTube vid covering his explenation, so keep a look out.

With all the interesting take aways I've had, it seems a series of posts is in order, so be on the look out for my future posts on the subject. (Here is the first one)

Here is a sneak peak:

My presentation about buffering life

So, have a look at the conference schedule, and let me know what is of interest to you.

2012 - Which Conference to Attend?

As you know, I have just returned from Kiev after attending the TOCICO 2011 European Conference. I had a great time there. This being my first TOC conference, I learnt a lot from both the professorial speakers and the local case studies. I also made some great connections. I even got lucky and won a prize in the lottery they held at the reception. In "The Choice" luck is defined as preparation meet opportunity - how lucky would I have been spending the weekend with the family as always?

During the conference the subject of the 2012 TOCICO International Conference came up. Well, I had pledged myself to go, but that was before I knew there was a European conference. Now, of course I still want to attend and I do realize that both my leaning and my networking will be significant. "Look at it as an investment" I was told. The issue I have with this investment is the risk. The risk we take when making any investment is the risk of that investment becoming a down right expense. That trip to Kiev was an expense, one I could allow myself. I took on this expense in hopes it turns out being an investment and I sure am trying to make that happen. Yet I am not currently using TOC to create my personal income, so it was out of pocket money for 2011 and, for all I know, will be out of pocket money that is non refundable and non deductible in any way in 2012 as well. I've done my math, going to Chicago is going to cost me at least $1,000 more than going to Kiev again, simply because Kiev is so much closer than Chicago. That's why I view it as a greater risk.

What will I end up doing? only time can tell as there is still plenty of time to change the facts behind the decision ... So I'm hoping for another stroke of "luck".

Will you allow me a little brag?

Carol Ptak really likes my blog. OMG! This is such a compliment to me, after all she co-authored "Necessary but not Sufficient" and she is enjoying reading ME?
Oh, the fulfillment. Oh, the meaningfulness (is this a legit word?). Oh, the utter horror of knowing I have such a standard to live up to. Nah, just kidding. I'm trying to be very natural in my writing and I totally enjoy doing it.
It is funny, though, we had a lecture about living a meaningful life, a subject Dr. Goldratt and his daughter, Efrat, covered in "The Choice". It was delivered by Christoph Lenhartz, who connected the process of clear thinking to the work of Viktor Frankl, the "father" of "Logotherapy". We were told there are three ways to create meaning in our lives - by what we create (giving to the world), by encountering people (getting from the world) and by our attitude towards unavoidable suffering. Well, I feel I just created meaning in both the first and second ways - through my writing and my (unbelievably fun) encounter with Mz. Ptak.

The III European TOCICO Conference

I just returned tonight from the conference. My head is still spinning from all the learning and insights I got. It was a very special experience for me and it will probably take me some time to completely process it.
Here are some quick "take away"s I noted down throughout the days:

• People have the means to live but not a meaning to live for - we are no longer fighting to survive, we are looking for a meaning
• We each create the meaning for ourselves, so it is our duty not to interfere or hinder or create obstacles to the ability of others to create their meaning (a tad more on meaning can be found here)
• Success (or failure) do not come from the uniqueness of the product but for the uniqueness of the product
• "Where there is a tail - there is a dog" (attributed to Eli Goldratt) this means that when all you see is a "tail" - a handful of clients with a special need there is a "dog" you don't see - a real market potential for a new offer
• Projects fail because time estimates become time commitments
• Analyze success (better than expected results), not just failure (below expectation results), it holds opportunities you can capitalize on, but only if you can understand them
• TOC implementation requires a paradigm shift, compromising drastically increases the possibility of failure of the implementation
• Win Win offers do not sell themselves, especially when the environment is saturated with suspicion and mistrust
• The conflicts of my clients are my conflicts
• The reason to really learn a subject matter is for improving it
• The bigger the base - the bigger the jump

Let me know if you'd like me to elaborate on any of these, or if there is any particular detail you'd like to know about the conference.