E Goldratt - The Goal

344

DW: Did you conduct such an experiment? And if so can you tell us about the results?

EG: Fortunately, I don't have to initiate such experiments, since many readers of The Goal are kind enough to write to me and share their experiences. From the letters that I received over the years let's pick one that fits our conditions. Since we are discussing relevancy, it must be a recent letter. It should be from a person who implemented TOC in a plant that is part of a large enough organization, an organization that is using black-belts. And it should contain comparisons between that plant and all other plants of that company.

Judge for yourself if this letter fits our bill perfectly.

Dow Corning Corporation

Healthcare Industries Materials Site 635 N. Gleaner Road Hemlock, MI 48626

May 20, 2004 Dear Dr. Goldratt:

I wanted to share with you what we have accomplished within our organization by using the tools presented in your books, "The Goal" and "It's Not Luck."

When a colleague gave me a copy of "The Goal," the plant at which I work was in a similar situation as Alex's plant in the book. At that time, in 1998, our plant's on-time delivery was approximately 50%. We were carrying over 100 days of inventory and we had customers on allocation because we could not meet the demand for orders. In addition, our man- agement had given us six months to turn things around, or else. I was the new production team leader for approximately thirty percent of the plant sales and forty percent of the plant production employees. My units performance was similar to the plant's overall performance.

As I read "The Goal" I quickly realized one person alone could

not solve the problems within my unit, or within our plant. I ordered several copies of "The Goal," and my colleague and I distributed them to our production manager, plant manager and manufacturing and quality engineers. Everyone was eager for a solution to our problems.

Within my unit we identified the bottleneck and began to focus our resources there. Our plant is a non-union facility and many of the workers were also interested in what we were doing. I ordered copies of "The Goal" for everyone who worked for me. By the time the six-month ultimatum came, my unit and another had started to make significant changes, and the plant was spared any ill recourse. However, the expectation was that we would continue to improve. For the five years that followed, we continued to work on breaking our bottlenecks. When one moved, we attacked it again. We got pretty good, and could determine where the bottleneck would occur next. Eventually, the bottleneck moved outside our plant as depicted in "The Goal." However, we knew this would happen ahead of time and had already begun the indoctrination of our sales and marketing group.

I recently moved out of production, but before I left, the results within my unit were: cycle time reduction of ~85 /o. Operator headcount reductions of 35% through attrition; no layoffs were needed. Work in process and finished goods inventory down ~70%. On-time delivery went from ~50% to ~90% and the number of material handling steps were cut by over half. Our plant, and business unit have done very well too. And me, I received a promotion while in that position, and a compensa- tion award. Dow Corning, like many other corporations, has downsized multiple times in the past five years. During each one, our plant, and business unit were affected very little or completely passed over. I am convinced that if we hadn't read and followed the methods in "The Goal" and "It's Not Luck" the situation would be much different today. There is still much to do, as our business unit is the only one to really have embraced "The Goal." I am hoping in my new role in Six Sigma that I can further share your tools and methods.

346

Thank you for signing the book Dr. Sirias has forwarded to you on my behalf. I am honored.

Sincerely,

Robert (Rob) Kain P.E.

Six Sigma Black Belt

Dow Corning Corporation

Life Sciences/Specialty Chemical Business

DW: Impressive, but why is only one business unit of Dow Corn- ing using TOC? What bothers me is that this person is talking about a span of over five years. If it worked so well, why didn't it spread to the other business units? Is it the Not-Invented-Here (NIH) syndrome?

EG: Before we dive into speculation about psychology of organiza- tions, let's examine the facts. We are talking about a middle manager who works in one corner of a large company. Why should we be surprised that, in five years, this person was not yet able to take his whole company through a major paradigm shift? And, by the way, as you read in his letter, he is making nice progress; he has already moved into a much more influential position.

DW: Still, even with enough time, is it possible for a middle manager to influence his whole company?

EG: Yes. But of course, such a person will need a lot of stamina and patience.

DW: What makes you so sure that it is possible at all?

EG: What evidence will convince you that it is possible?

DW: Give me an example of a middle level manager working for a large company who has succeeded in institutionalizing the usage of the know-how written in The Goal. I mean institu- tionalizing it across the board.

EG: Given that General Motors is the largest manufacturing company in the world, you should get an outstanding proof by interviewing

Kevin Kohls. (Eli Goldratt interview to be continued.)

Interview with Kevin Kohls General Motors

Director of Throughput Analysis and Simulation for North American AssemblyPlants.

DW: What drove you to seek help from The Goal?

KK: It goes back almost 15 years, when I was starting off as a controls engineer at the Cadillac Detroit-Hamtramck assembly plant, just re- turning from Purdue University after completing a masters degree in electrical engineering. When I left a year and half earlier, the plant was just starting production. When I returned, they had yet to hit their production targets; in fact they were far short. As you might imagine, everyone was frustrated about not hitting these targets, and there was a lot of effort being expended to improve the system, with minimal results.

I was frustrated as well. The solutions I was putting in place rarely had a significant impact on the production of the plant, and it wasn't clear why. About that same time, Dave VanderVeen from GM Research made a presentation to Larry Tibbetts, who was then plant manager. Dave was promoting a research tool that he said would help improve throughput in the plant. Larry was very impressed, and asked me to go see Dave to find out if we could use this tool at Hamtramck. When I went down to the Research Building at the GM Tech Center in Warren, Dave explained what a bottleneck was and how his tool identified it. He handed me a copy of The Goal and said if you want to understand bottlenecks and how to improve throughput, this is the book to read.

I took the book home and started to read it right away. The first thing that surprised me was that it was written in novel format. The second was how much I could identify with what was happening in Alex's plant. I finally had to put it down at 2 A.M. so I could get some sleep, but I finished it the next day. I wanted to apply the concepts immedi- ately, so I began collecting data from the systems we had, and putting it into the bottleneck program. After about a week of effort, I was fairly certain I had found the bottleneck. The scary part is that it was not 20 feet away, on the production line right outside my office!