How to reach the highest efficiency on state (country) level. Oded Cohen

Reaching the Highest Efficiencies September, 2012Copyright © 2012 by Oded Cohen

How to Reach the Highest How to Reach the Highest Efficiency on State (Country) Efficiency on State (Country)

Level Level

Oded CohenOded Cohen Vilnius, September 2012Vilnius, September 2012


Oded Cohen Oded has nearly 35 years of experience in developing, teaching and implementing TOC methodology, solutions and implementation processes working directly with Dr. Goldratt all over the world. Among the countries to which Oded brings his expertise are the USA, Canada, Japan, India, China, the UK, Poland, Russia, Ukraine, Colombia, Chile, Peru, Turkey and many others.

Oded has authored multiple TOC articles and contributed to several TOC books.

Oded in the is the author of Ever Improve – A Guide to Managing Production the TOC Way, published in June 2010. Oded co-authored the book Deming & Goldratt: The Theory of Constraints and the System of Profound Knowledge – The Decalogue.

Together with Jelena Fedurko Oded has co-authored the book TOC Fundamentals, recently published in Russian.

[email protected]

www.toc-strategicsolutions.com


• High Efficiency

• Areas for Improvements

• TOC Approach to Improvement

• TOC Portfolio

• Where to Start?

Reaching Highest Efficiencies


The objective:Get higher performance of the existing systems while making the most (exploiting) the available

resources – especially state budgets

TODAYTODAYTHE PASTTHE PAST THE FUTURETHE FUTURE

The GAP

High EfficiencyS

yste

m

Sys

tem

P

erfo

rman

ce

Per

form

ance

Projection based on extrapolation of the current performance

The vision of a well-run system (what the system can achieve)

Potential Improvement


Examples of ResultsExamples of ResultsAchieved by Achieved by

TOC ImplementationsTOC Implementations

Public testimonialsPublic testimonials


Goals

• Increase Throughput

• Decrease costs

• Decrease Work In Process WIP

• Reduce Repair Cycle Time • Make schedule 90+% of the time

Maintenance Center, Albany, GA

The Honorable Diane K. MoralesDeputy Under Secretary of Defense(Logistics and Materiel Readiness)

• The center belongs to the U.S.A MoD

• Receiving yearly budget for performing yearly plans.

• The objective of the initiative was to give better service for the same budget


MK-48 - Full Refurbishment

0102030405060708090

100110120130140150

Qua

ntity

FY-02 Produced 6 20 36 52 67 86 109

FY-01 Produced 11 21 31 41 51 58 63 74 84 88 91

FY-02 Scheduled 14 28 42 68 86 104 124 139 151

FY-01 Scheduled 10 20 30 40 50 57 61 65 75 91

Jun Jul Aug Sep O ct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep O ct Nov Dec

Output Per Month, Cumulative

Data Source: Master Work Schedule vs. Completions

*On 20 Jul 02, July’s requirements changed from 14 to 26.**On 04 Sep 02, 10 vehicles were added to the schedule for Nov and Dec.


Before TOC, the repair cycle time average was 167 days. After TOC, the average is 51 days.

MK-48 - Full Refurbishment

20406080

100120140160180200220240

0 5 10 15 20 25 30 35 40 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 9510010

511

0

Vehicle Numbers

Days FY-00

FY-01

FY-02

Articulation hitch problems

Repair Cycle Time (Days)

Data Source: Concerto: Activity By Project Records

0

250

500

750

1000

1250

1500

1750

Vehicle Numbers

Hours

FY-00FY-01

FY-02

Labor Hours - MK-48

Data Source: Essex Replacement Program (ERP)

Starting with vehicle #161981, includes installation

of the Antilock Braking System (ABS) Modification.

Starting with vehicle #2MK115, includes 100% replacement

of Articulation Hitch. No additional funds required.

How was it achieved?

CCPM - 26 Mar 01SDBR - 6 Jun 01

TOC Implementation

Lean

TOC

Lean + TOC


TOC Implementation Repair Cycle Time (Days) WIP Reduction

Production Line CC S-DBR Before TOC CC

Actual Before TOC CC Actual

MK48 26 Mar 01 6 Jun 01 167 53 51 55 35 35

LAV-25 9 Oct 01 11 Oct 01 212 99 114 13 7 7

LAV-AT 9 Oct 01 11 Oct 01 200 100 117

LAV-C2 9 Oct 01 11 Oct 01 147 99 120

LAV-L 9 Oct 01 11 Oct 01 190 100 119

LAV-M 9 Oct 01 11 Oct 01 158 92 111

LAV-MEWSS 9 Oct 01 11 Oct 01 No data 92 119

LAV-R 9 Oct 01 11 Oct 01 194 106 167

MK14 Trailer 11 Apr 02 13 May 02 56 23 35 8 3 1

MK15 Trailer 11 Apr 02 3 Jun 02 229 69 95 2 2 3



M931 5-ton 22 Apr 02 29 May 02 113 48 70 5 4 5

M936 Wrecker 22 Apr 02 29 May 02 278 63 6 0 0

M970 Refueler 25 Apr 02 20 May 02 282 82 133 8 6 6

M149A2 Water Trailer 25 Apr 02 20 May 02 No data 18 36 17 7 8

M88 Tank Retriever 29 May 02 1 May 02 213 159 146 5 3 3

Small Arms - 20 May 02 - - - - - -

AAV–P7 9 Aug 02 1 May 02 66 66 5 4 2

AAV–C7 9 Aug 02 1 May 02 66 74 22 9 9

AAV–R7 9 Aug 02 1 May 02 No data 74 0 6 0

M-977 HEMTT Truck, Heavy Mover 20 Sep 02 20 Sep 02 No data 45 0 6 6

Implementation, Repair Cycle Time, and Work In Process (WIP)

Critical Chain Simplified Drum Buffer Rope Represents entire LAV line. No current production line. Production line completed. AAV hull repair and assembly after receipt of hull from UDLP.The AAV critical chains have been established to cover the work performed after the hull has been modified by UDLP.

-9-

The improvement was implemented across all services of

the center


Areas for Improvement

State Involvement:•Services Provided by the State:

Defense, Health, Infrastructure, Education, Welfare, Security (Police), Prison (rehabilitation), Agriculture etc.

•State Initiatives: Special Investment Projects

•State Owned Businesses•Suppliers/Providers to State Services •Non-State Businesses

Reaching Highest Efficiencies on State(Country) Level


TOC offers a general approach to achieve improvements. It contains three blocks:•Mindset – commitment of the system’s officers to achieving the highest possible performance of their systems.•Short term improvements – implementing Solutions that make modifications – technical and managerial - to the way the current systems are run. These solutions should provide quick results for demonstrating improvements are possible and for fueling the desire to improve.•Continuous Improvement – establishing mechanisms and behaviors for supporting On Going Improvements - POOGI.

TOC Approach to Improvement


• Standard TOC Logistical Solutions – Production, manufacturing, operations – TOC for MTO (make to

Order) and TOC for MTA (Make to Availability) Supply Chain Management – TOC Distribution CCPM – Critical Chain for Project Management

• Applications of TOC Logistical Solution TOC for the Health Service

• TOC for Flow Management – developing special solutions to improve the flow of systems (such as Welfare services)

• TOC Methodology – developing new strategic solutions for improving systems’ performance

• TOC for Education – Use of the TOC Thinking Processes for enhancing the ability of the young generation to learn, solve problems and achieve ambitious targets.

TOC Offering for specific Systems


• Example: Health Service India

Application of TOC Logistical Solution

Applying TOC in Day Care Eye Surgery in an Eye Hospital

an experience

Extracts from a presentation given at the TOCPA conference in Moscow, May 2012, by

Debashish Naik

Founder & Principal Consultant, MEVOCON, India


Day Care Eye Surgery: OT Process

Pre Operation activities OT Complex Post OperationPatient

arrives at Hospital

Patient leaves the Hospital

Admission (5 min)

Dilatation (45 min or more)

Billing 5 to 15 min

OT ComplexPre Operation activities

Post OperationPatient

arrives at Hospital

Patient leaves the HospitalReception

5 minBlock / Vitals

15 min

Operation Theater

Pre surgery prep 5

min

Surgery


Lead Time before implementing TOC Solution

13 th Jan 14th Jan 16 th jan 17th Jan 18th Jan 19th Jan 20th Jan 21st Jan 25nd Jan03:35 02:45 03:00 02:47 04:40 02:00 02:25 03:50 04:0504:55 05:30 03:40 02:25 04:15 02:25 03:35 01:51 02:2003:15 02:15 03:10 02:52 02:35 02:55 02:00 04:10 02:0003:05 03:07 03:05 03:30 02:50 02:05 01:46 01:45 01:3502:40 02:10 02:27 02:56 01:45 02:30 04:50 02:30 02:1003:40 02:20 02:55 02:13 01:44 03:50 02:10 01:35 01:1503:10 04:00 02:25 02:15 02:10 01:30 02:00 02:45 01:3503:35 03:15 02:47 02:27 04:20 01:30 03:10 02:30 02:1002:00 03:00 01:45 03:23 03:05 03:10 03:15 03:00 04:1001:55 02:45 02:15 02:13 02:20 03:00 02:10 02:03 05:1504:21 02:17 01:40 03:30 02:50 01:35 01:40 00:45 02:4003:56 02:20 03:10 02:20 03:00 01:15 02:30 03:35 02:3002:55 03:50 04:30 02:02 01:45 02:30 01:30 02:10 01:4002:15 03:50 02:00 02:35 01:50 02:10 02:4503:45 03:05 02:30 03:20 02:10 01:5003:25 02:20 03:05 02:3502:35 02:00 02:30 02:15

02:20 02:10 01:3502:05 02:40 04:0003:50 02:45 02:4002:05 02:20 01:25

02:25 01:4002:50

Total Lead Time OT process_ Pre TOC Solution


Data on Lead Time: Before implementing TOC Solution

Data Pre TOC Solution

Average Lead Time 2 hr:43 min

Max Lead Time 5 hr: 30 min

Min Lead Time 0 hr: 45 min

Lead Time for % of patients (Pre TOC Solution)

For around 79% patients the lead time is more than 2 hr

45 min to 1 hr

1 hr to 1 hr 30 min

1 hr 30 min to 2 hr

2 hr to 2 hr 30 min

2 hr 30 min to 3 hr

3 hr to 3 hr 30 min

3 hr 30 min to 4 hr

4 hr to 4 hr 30 min

4 hr 30 min to 5 hr

5 hr to 5 hr 30 min

Pre TOC 0.7% 3.9% 17.0% 30.1% 18.3% 12.4% 9.8% 4.6% 2.0% 1.3%

Note: data collected over one week


Solution Components Summary• Solution Components: The solution is adaptation of the TOC

MTO solution as defined in “Ever Improve” and further Lean is

integrated with TOC

Doctor’s surgery time decides the schedule

Patients schedule is done as per doctors surgery schedule (so

unnecessary waiting of patient is reduced)

All others subordinate to surgery time so doctor’s time is not

wasted

Introduce “expedite” principles in OT process area

Cycle time of each operation /tasks that subordinate and impact the

lead time are reduced or improved on a continuous basis applying

Lean philosophy /Kaizen

Doctor also put himself on continuous improvement to reduce the

surgery time without compromising the quality


Bringing Improvement

Current System

Stopped/Replaced

Current System

Stay

Proposed Solution

New

Improved performance

While designing the solution we looked into:

1. Which parts of the system are “erroneous” and have to be replaced

2. The new parts that must be introduced to replace the erroneous parts

3. All the other parts of the system stay as they are!

Source: Ever Improve by Oded Cohen


TOC Solution

Strategy (what do we want to achieve):The patient waiting time is as minimum as possible

without keeping the doctor idle at any time during the surgery {Reduce the lead time for day care eye surgery to 1.5 hr/2 hrs from around 2.5 hr/3 hr in the beginning for at least 70% of patients}

Why 2 hr was decided to start with in the beginning?• Actual touch time at present is 80 min to 90 min for

the patients who are fit and do not develop high BP/Sugar just before the surgery or do not take a long time for dilation.

• For Pre dilated patients it is between 40 min to 60 min


TOC Solution

Tactics (how are we going to achieve the strategy)

By implementing: Principles of Flow Mechanism of DBR – Drum Buffer Rope for planning Buffer Management – For Controlling the execution of the plans POOGI – Process of Ongoing Improvement

Leveraging the improvement

• As a continuous improvement process, start working on how to bring more patients and do more surgery with the existing resources, increase the revenue and profit and lower the cost without compromising quality


Lead Time after implementing TOC Solution

26th Mar 27th Mar 28th Mar 29th Mar 30th Mar 31st Mar 5th April 6th April2:00 1;55 1:45 1:15 1:40 0:55 1:55 4:052:00 2:00 1:50 0:45 2:00 1:25 1:30 1:402:00 1:50 2:00 1:40 2:00 1:30 0:55 1:302:00 1:10 1:55 2:45 1:25 1:50 1:40 1:552:00 1:25 2:15 1:55 1:35 1:50 1:20 1:503:20 2:30 1:50 1:25 1:55 1:55 1:20 1:053:35 2:00 2:00 1:25 1:50 2:00 1:35 2:452:35 1:40 2:00 1:15 1:50 2:00 1:35 0:552:00 1:40 2:00 1:30 2:00 2:00 3:00 1:001:10 1:40 2:00 1:50 2:40 1:50 1:201:40 1:25 2:00 1:15 2:00 1:05 2:001:20 1:25 2:25 1:25 1:55 1:50 1:451:45 2:40 1:25 1:50 1:55 1:35 1:55

01:55 01:30 1:10 2:00 1:20 2:001:40 2:40 1:15 2:00 1:55 3:25

02:35 01:30 1:10 1:55 1:3001:50 01:45 1:10 1:25 1:5501:35 1:05 1:50 2:0001:50 2:35 2:0001:55 2:50 1:4501:50 1:5503:10 1:5502:00 2:25

1:251:302:001:25

Total Lead Time OT process_Post TOC solution


Data on Lead Time: Pre and Post TOC Solution

Data Pre TOC Solution Post TOC Solution

Average Lead time 2 hr:43 min 1 hr: 57 min

Max Lead Time 5 hr: 30 min 4 hr: 05 min

Min Lead Time 0 hr: 45 min 0 hr: 45 min

Lead Time for % of patients (Pre and Post TOC Solution) Average lead Time reduced by 28%

HH:MM 0:00-0:45 1:00-1:30 1:30-2:00 2:00-2:30 2:30-3:00 3:00-3:30 3:30-4:00 4:00-4:30 4:30-5:00 5:00-5:30Pre TOC 0.7% 3.9% 17.0% 30.1% 18.3% 12.4% 9.8% 4.6% 2.0% 1.3%Post TOC 3.5% 26.1% 57.0% 2.8% 7.0% 2.1% 0.7% 0.7% 0.0% 0.0%

•Pre TOC, for around 49% patients the lead time was more than 2 hour 30 min and Post TOC for around 86% patients the lead time is less than 2 hour


Benefits derived from the project

• Reduction in Lead time• Entire OT staff started working as One Team • Increase in Patient satisfaction • A few measurement that drives improvement and hence does

not create any confusion• Bringing further improvement becomes easy as team knows

where to Focus• Many small issues got resolved • Team feels motivated• CEO is quite happy and now showing interest to take the

journey forward• Doctors and staffs are able to visualize more capacity• And many more…..


Is it worth to strive to achieveIs it worth to strive to achieveOperational ExcellenceOperational Excellence

A study of ABB’s Operations Improvement projects (TOC+LEAN)

confirm an average payback time of less than 3 months !

1) Source: Copenhagen Institute for Futures Studies and Larry Keeley: www.doblin.com (3000 projects examined)


The key conditions for Successful TOC Implementation:

1.A real need/desire for improving the performance of the system. The may be imposed externally or driven internally by the officers of the system.

2.A good solution that fits the reality of the system and can provide the desired results.

3.Leadership with clear vision and the ability to take their people on the journey of improvement

4.Supporting troops that are willing to go through and to contribute to the suggested change. Many times condition (4) highly depended on condition (3).

Where to Start?

Leadership for TOC demands:

Capability, Willingness and Confidence


Two potential directions: Top-Down, Bottom-Up.

Ideally, both.

1.Develop a State Centers for Improvement (or use existing ones) and make them the custodians of the knowledge and the host of solutions.

2.Provide Support – budget, resources and knowledge – to State Systems that want to improve.

3.Initiate Learning Projects (Pilots) in some State Systems, record and publish the experiences.

4.Continuously measure the performance of the State Systems and urge their officers to improve.

Where to Start?


• Services Provided by the State: Defense – MRO of existing equipment and facilities, New Developments and special projects

Health – ERs, Hospital Wards, Theaters etc.

Infrastructure – Projects

Agriculture, Forest

Education – TOC For Education

Welfare – Specially developed specific solutions

Security (Police) – Thinking Processes and Strategic Solutions

Justice – use and modification of existing applications

Prison (rehabilitation) – Thinking Processes

Where to Start?


To be able to initiate System’s Improvements we must establish:

I. Clear Goal of the System – what is the purpose of having the system?

II. Clear Measurements that can mark the progress of the system towards its goal.

There are State Systems that do not clear goals and measurement. Traditionally, these systems have been performing on State Budgets. The introduction of clear goals and measurements can be challenging, yet, potentially rewarding to all stakeholders.

Challenges


Get input from the State bodies that deal with problems with the State Systems, such as:

I. Public Ombudsman – for public complains

II. The State Auditor (excluding criminal issues)

III. State Bureau of Statistics – benchmarking against other countries

IV. Public criticism (press etc.)

Opportunities for Start


• State Initiatives: Special Investment Projects TOC CCPM for Project Management

• State Owned BusinessesFor Profit or Self Sustained non-for-profit

Use the Standard TOC solutions, make modifications if necessary.

If standard solution is not available – consider using assistance of a TOC expert.

• Suppliers/Providers to State ServicesInfluence them to implement improvements

• Non-State BusinessesInfluence and Support

Where to Start?


The State has interest in the improving of the Non-State Businesses as that can lead to increase in Tax and in improving the standard of living.

The State can influence non-state systems to improve such as:•Suppliers to State services and projects (like Israel MoD, Japan MLIT etc.)•Companies and organizations that seek State financial support:

In Crisis In a major investment/expansion Start up

•Companies that the State has some ownership (especially after bailing out after Crisis)

Opportunities


WHAT to change?Pinpoint the core problem

WHAT to change TO?Construct simple practical solutions

HOW to cause the change? Induce the proper people to make the change

(to invent such solutions)

What creates the process of ongoing improvement? Create a mechanism to determine what to improve

next

Problem

Solution

Implementation

POOGI

Why TOC?

TOC provides a systematic approach to develop plans for the pursuit of a significant improvement of their systems


CONSTRAINTS –factors or elements that determine

how much the system can accomplish

TODAYTODAYTHE PASTTHE PAST THE FUTURETHE FUTURE

The GAP

Block

Lift

What prevents us from achieving the goal?


System Constraints

Main types of constraints of a commercial system:

Capacity Constraint – a resource which cannot provide timely capacity the systems demands for it

Market Constraint – the amount of customers orders is not sufficient to sustain the required growth of the system

Time Constraint – The response time of the system to the requirement of the market is too long to the extent that it jeopardizes the system’s ability to meet its current commitment to its customers as well as the ability of winning new business


1. Identify (choose) the system’s constraint

2. Decide how to exploit the system’s constraint

3. Subordinate everything else to the above decision

4. Elevate the system’s constraint

5. If the constraint is broken go back to step one but do

not allow Inertia to cause the system’s constraint

Managing the TOC Way means using the constraint as a leverage to manage and grow the system

TOC - The Five Focusing Steps


• Every system is built for a purpose and hence has its

goal and measurements. State systems were built for

the nation.

• Every System can be improved – and so State systems.

• Given a methodology backed up by techniques,

procedures and knowledge – can generate significant

results in improving systems

• TOC has been around since 1975, with a significant

amount of solutions and applications, in a vast

spectrum of systems around the globe.

Conclusion

How to reach the highest efficiency on state (country) level. Oded Cohen

Business

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