The Idiot’s Guide to Theory of Constraints (TOC) – Part II


At long last, here’s part II of our guide to TOC, in honor of the late Dr. Eliyahu Goldratt, originally published in The Critical Path email newsletter on February 29, 2000.

Did you miss Part I?  Click here.

In Part I, we focused on the basic root philosophy behind TOC to provide a jump-point for those interested in learning more. In part two of our guide, we list the major relevant books and provide a very brief glossary of TOC terms.

THE BOOKS

THE GOAL – this is the book that started it all. It’s written as a “business novel” – a true innovation for its time. The protagonist is Alex Rogo, general manager of a Unico plant about to go under, along with his career. Interspersed between a side plot about Alex’s family life and spousal relationship, Alex learns from Jonah, his former physicist professor and now a high-priced consultant, about how to save his job and business. By rethinking the flawed assumptions of how a plant should be measured and operated, he saves his business employing non-traditional TOC techniques “under the radar” from his corporate overseers who would no doubt stop all that money-making nonsense if they knew about it. The Jonah character, one could suppose, is the alter ego of the book’s author, Eli Goldratt. Newer editions include the appendix “My Saga”, which explains the true origins of TOC. Many readers have expressed the similarity they find in Alex’s life and their own. 

ITS NOT LUCK – This book picks up with Unico’s Alex Rogo one year after the end of The Goal. Begins to address issues such as distribution, marketing/sales, the TOC “Thinking Processes” and use of logic diagrams.

THE HAYSTACK SYNDROME – The subtitle of this book is “sifting information out of the data ocean”. Here Goldratt outlines the importance of information on a system’s decision-making logic, and tries to architect its flow through the organization to enable TOC. Experts consistently give warnings about the density of this book, which is apparently written as a conventional learning text.

CRITICAL CHAIN – Another novel, this time focused on project management. Provides an alternative approach to “critical path” management, presenting a brutally honest explanation of why projects go late and overbudget, with somewhat controversial techniques for overcoming them (e.g. “buffer management” and ways to counteract the “student syndrome”). Represents the first major outreach by Goldratt to apply TOC to product development activity, i.e. engineering.

This is only the tip of the iceberg, there have been numerous books published in the last few years on several aspects of TOC (e.g. accounting, the Thinking Processes, contrasts with Deming), by many different authors. For a list of additional books and resources, including multimedia and educational materials, go to: http://www.rogo.com/cac/cacbooks.html

TOC MINI-GLOSSARY (in alphabetical order):

This is not meant to be a comprehensive lexicon dictionary, but should provide you with a workable TOC vocabulary.

CCPM – Acronym for “Critical Chain Project Management”.

Cost World/Throughput World – A reference to the difference in thinking between TOC and non-TOC professionals. Those who make decisions based on efficiency and productivity measurements based primarily on costs/expenses live in the “cost world” as opposed to those who measure by throughput (i.e. profitability). The two groups are typically seen as at odds and have an abrasive relationship.

Current Reality Tree (CRT) – Part of the Thinking Process. Cause/effect flowchart outlining the thought processes behind your current situation. Addresses “what to change.”

Drum-Buffer-Rope (DBR) – TOC production scheduling technique. “Drum” refers to the pace followed, “buffer” refers to the safeties used to exploit constraints, and “rope” refers to interdependent events that trigger each other’s activities.

Evaporating Cloud – Part of the Thinking Process. Assuming that the true reasons behind a conflict are buried, cloud diagrams are used to illustrate thought processes in a flowchart that can expose root causes and “evaporate” conflicts.

Five Focusing Steps – General process for implementing TOC (see last month’s issue of The Critical Path for a more in-depth explanation).

Future Reality Tree (FRT) – Part of the Thinking Process. Cause/effect flowchart beginning with an end goal solution and branching out to illustrate the expected effects of the change. Addresses the question, “to what to change to”?

Herbie – Synonymous with “constraint.” Herbie is a character from “The Goal” who is a Boy Scout in Alex Rogo’s son’s troupe. On a single-file hike, Herbie becomes the constraint that hinders progress and the schedule for reaching their destination. This is used as an illustration of contraints management within production scheduling.

Implementable Unrefusable Offer – The way to alleviate the constraint of low market demand for products. Method is to reverse engineer customer value to discover what product features will create the unrefusable offer that will generate sales. From “It’s Not Luck”.

Jonah – The former physics professor of Alex Rogo who teaches him about TOC. This is also the designation of those who have undergone official training from the AGI Institute. TOC masters are often referred to as “Jonahs”.

“Murphy” – A reference to “Murphy’s Law”, that “anything bad that can happen, WILL happen.” Relates to project management where many unexpected problems tend to occur that delay completion. As Goldratt is known to exclaim, “Murphy Exists!”

Prerequisite Tree (PRT) – Part of the Thinking Process. Cause/effect flowchart used to identify all intermediate steps necessary for making change. Used to break up complex problems into manageable bites.

Rogo, Alex – The protagonist in The Goal. “Rogo” is latin for “to ask, inquire or question.”

Student Syndrome – The phenomenon where deadlined tasks are not actually worked on until the last possible moment, akin to college students who do not study for exams until the night before. Relevant to “Critical Chain” project management.

T, I, OE – Shorthand for Throughput, Inventory and Operational Expense.

Thinking Processes (TP) – Goldratt’s scientific method for conceptualizing the root effects of constraints and diagramming how to correct the system. Utilizes a flowchart mapping method composed of “clouds” and “trees” to aid in conflict resolution. TP tools provide a structure for answering the questions, “what to change; to what to change to; and how to cause the change?”

Throughput – The rate at which a system generates money through sales. For example, the amount of units per day a factory produces to meet customer orders. Units that go into inventory are not counted as part of throughput.

Transition Tree – Action oriented flowchart used to map necessary change management. Addresses the question, “how to cause the change”?

Undesirable Effects (UDE) – Part of the Thinking Process. Found on the “branches” of trees, these are parts of the flowchart which define the unintended consequence of a policy or belief in a thought process.

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