E Goldratt - The Goal

From observation, I can tell you that readers of The Goal proceed to implement it mainly when three conditions are met. First, there is a real pressure to improve. But that by itself is far from being enough. The second condition is that it is obvious to them that there is no remedy within their existing paradigm. In other words, they had already tried everything else. And the third condition is that something helped them to do the first step. This something might be a "how to" book, like Production The TOC Way, a course, a simulator, or a consultant.

DW: Can you guide me to a case where all the three condi- tions exist?

EG :Frankly, once the three conditions had crystallized in my mind it became easy to detect them in every case. It is just a matter of asking the right questions and the pattern is apparent. Actually, there is no need even to ask guiding questions, you just have to listen.

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Interview with Stewart Witt, Ongoing Improvement

A consultant

DW: I understand that your introduction to The Goal came be- fore you became a consultant

SW: Right. I was VP of operations at the time for a small manufactur- ing company, Ohmart/Vega Company, in Cincinnati, Ohio. Someone gave me the book with the recommendation to read it. And I read it, and it was very entertaining and made a lot of sense, and I promptly put it right back on the shelf.

DW: I've heard stories like that before.

SW: Right. I just wasn't ready yet. This company had hired me specifi- cally to improve their operations and prepare them for growth and make them more efficient, all that stuff. I had talked the president into hiring a consulting firm, saying, "I can do these things but we can get it done that much quicker with some help," and he was fine with that. So we hired Grant Thornton, and they came in. We rear- ranged everything, streamlined everything. They took a look at the software we were using and made some other recommendations. We paid them about $120,000 and in about 6-8 months we started to see some results. Everyone was very happy because we took lead times down from, like, two weeks to one week. It was, wow, that's pretty good! The problem was that the same improvements were happening in sales and marketing. So here comes 40% more orders in the same time frame, and as it trickled out into the shop, so trickled away my improvements. The capacity I had freed up was now being doubled up by all these extra orders and I was back in the same boat that I was in before.

DW: What were you manufacturing?

SW: Nuclear measuring devices for the oil industry. Essentially, it's a non-contact measuring system, kind of like a Geiger counter.

DW: So, you were back in the same boat

SW: Yeah, I spent all this money, all this time. All the things I knew how to do I had done. I couldn't rearrange everything again. I couldn't look at the software and come up with any new ideas. I had already employed the best consultants that I knew.

DW: Right So what did you do?

SW: I signed up for Porsche mechanic school in California. It must have been a weak moment in my life. I do amateur racing and there's a saying that goes: you didn't make any mistake when you spun the car and flew off the track; what you did was you went into the corner and ran out of talent. That's how I looked at it-I must not be cut out for this job, there must be something I'm missing. I couldn't figure it out

DW: How old were you?

SW: That was ten years ago; so, early 30s. Mechanic school wasn't a waste of time. I still use what I learned. I save 600 bucks doing my own tune-ups. But right before I left to go out there, someone said: "You know, in San Jose there's a software company that has been cre- ated to support the rules that are stated in The Goal, and by the way, the Goldratt Institute has just issued a self-learning kit that you might be interested in." So I went to my mechanic class, that was very fun. Then afterwards I stopped in San Jose, took a look at the software, and completed the workbook on the way home. I was so excited that on Monday morning I got my staff together and I said: "This is what we're going to do. We've got nothing to lose. It looks like it's possible. It almost looks too simple. Let's give it a try." They weren't very con- vinced. In fact they were pretty skeptical. I'd put them through a lot already. One more thing, huh?

DW: This was their first exposure to TOC?

SW: Yes. Short story is, it took us about a month to go through the training materials, which came with a tutor guide and a workbook for all the participants. I went through the tutor guide step by step, they went through the workbook, and eventually they said: "I think you're right, we can do this." So we started, and about two weeks later we began to see some things improve. Lead times were starting to come

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down, our on-time deliveries were starting to go up. At first I thought it was just a fluke.

DW: What changed your mind?

SW: Well, a month later here comes one of my welders and he says: "Boss, I think my numbers are wrong. The lead time I've been mea- suring is now about a day and a half." I said: "How can that be?" We were still running more orders. I had even had to fire a guy in the meantime, so we were down resources. And we hadn't bought any new equipment. So I said, "Okay, fine, let me check and I'll let you know what I find out."

DW: What did you find when you examined the numbers?

SW: I told my welder: "You know what? You're right, the numbers are wrong. The lead time is less than a day." Same resources, 40% more orders, a fraction of the lead time. Took us two months to do that. Cost us $500. The company was a hundred years old and they had the best two quarters that they've ever had. One division that was losing a million dollars a month was now making a million dollars a month. If I hadn't seen it with my own eyes, I would never have believed it.

DW: What was the constraint you exploited to make such

a huge difference?

SW: We actually worked through about three of them. One of them had to do with the fact that we were sending everything out to put a protective coating on the pipes that held the measuring equipment. It was a step that had been added at some point by the marketing department, and it had developed into a constraint. So we had to go and find one or two more suppliers to handle the load.

DW: And there were others?

SW: One was the saws that cut the pipes. We offloaded some of the work to another machine that was just sitting there doing nothing. That saw ran at half the speed of the other saw, no one ever wanted to use it. But we identified just the right materials to run on it, which built just enough capacity to eliminate the saw as a constraint. And then the

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paint department was next, we did a couple of things there. At which point the constraint shifted to engineering. We were waiting for some new products to come out, and that's kind of where it ended up.

DW: Do you believe that TOC is an infinite process? In other words, is there always going to be another constraint you can find and exploit?

SW: Theoretically, it can go on forever. But from what I've seen, it goes through one or two cycles within a facility, and then you've kind of broken the constraint in the production operation. Then it may move to, say, engineering. Then you can apply Critical Chain to the engineering group and eliminate that as a constraint, and then the next constraint usually is the market, and typically it's the existing market. Unless you're Coke or GE or whoever, you probably don't have a dominant position in your market. So you can still find room to grow. Finally, there are plenty of cases where, using the same capabilities that you generated using TOC, you can attack new markets that you never thought you could compete in. At that point, you're probably doing all you can handle anyway.