Digital transformation for chiefs and owners. Volume 2. Systems thinking. Dzhimsher Chelidze

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СКАЧАТЬ business, is Eliyahu Goldratt’s restrictive theory.

      The essence of the theory is to find bottlenecks, system constraints and eliminate them, while increasing the performance of the entire system. This approach also warns of the danger of excessive productivity of one element, i.e., at times the overall success requires reducing the productivity of individual units.

      To understand the principle of this tool, consider two practical examples.

      Practical examples

      Example one.

      You need to increase the productivity of the factory, let’s say, on the production of metal doors. You can approach this issue in two ways:

      – reducing internal costs and losses by organizing lean production;

      – through modernization and technical re-equipment, i.e. there is by removing technological restrictions.

      Suppose the arrangements had exhausted their potential. You’ve digitized and visualized your processes, eliminated all the losses, and then you’ve measured the performance of the units, and you’ve discovered that the system’s limitations are now the paint shop.

      Then you went to the production manager, and he brought you a list of things to upgrade.

      According to preliminary calculations, 200 million rubles are needed for the modernization of the workshop, which will lead to an increase in productivity by 40% and a reduction in the proportion of rejects by 80%. Together, this will increase total productivity by 60%.

      You then visualized the flows in production, modeled all the scenarios depending on the product line, and found the system’s limitations inside the shop. Help in this lean production (circle Tahiti Ono, elimination of losses) and mathematical modeling.

      As a result, you saw that you can invest only 10 million rubles, and the productivity of the shop will increase by 35%, and the share of rejects will decrease by the same 80%. The total productivity of the enterprise will grow by 53—55%.

      This is the principle of system constraint theory.

      The second practical example.

      A business venture where sales are more than successful. But its limitation is production capacity: production does not have time to process and release all the orders taken, and raw materials are purchased for them. As a result, we get:

      – the stock of raw materials and semi-finished products is being overloaded, and storage capacity needs to be increased. This increases the cost of rent or new construction, requires additional staff, also increases the risk of damage to raw materials;

      – the raw material begins to be stored longer in stock, which leads to an increase in frozen working capital and future losses. Some of it will go into marriage.

      All these are losses in terms of economical production. Additionally, in the language of economists, it is frozen circulating funds, which is also very unpleasant. In addition, there are other effects:

      – cancellations of orders, which are reputational losses, risks of penalties, plus raw materials need to be sent to recycling or «perpetual storage» due to the inability to apply it to other orders;

      – deterioration of the KPI sales department and managers, which leads to conflicts between departments;

      – will start to appear «urgent» and important orders, which is already interference in the production cycle and even more reduced productivity with an avalanche effect;

      – increased pressure from owners on production, a further deterioration of the climate and an increase in staff turnover.

      As you can see, a huge number of losses are generated, which we will talk about in the next chapter. They lead to a «perfect storm» and crisis.

      This example is taken from real life. The company changed 8 managers and 90% of the production staff for the year, there were risks of penalties of 20 million rubles. And the limitation here was in the managers. Yes, the restrictions are not always technological, we will consider a detailed list below.

      As a result, it was necessary to reduce the productivity of the sales department, to restructure production processes, and then to develop commerce again.

      In terms of digitalization, the system constraint theory will help us to understand where the digit is originally implemented. And this will allow you to quickly feel the effect for a little money, which in turn will remove resistance from the team and will increase the amount of finance available for further changes.

      In transforming and increasing efficiency, it is not only changes and technologies that are important, but also the point of focus. Additionally, eventually, it will increase net profits.

      If we go back to the instrument, there are five so-called «focus stages» in the constraint theory.

      5 steps – the essence of the whole tool

      Step 1 – Finding a constraint.

      Constraint is a weak link (resource, people, technology, materials) that hampers the effectiveness of the entire system. It comes in two types: internal and external. Example of the first – the capacity of the equipment, the competence of employees. External factors are the market, its competitiveness, saturation, capacitance, seasonality, purchasing power.

      At this stage we identify key constraints. Tools that can help: brainstorming, TRIZ, simulation and flowcharts, mental maps.

      Step 2 – decide how to make the most of the limitation.

      To demonstrate this approach, let us take the example above of capacity constraints.

      How can productivity be increased without large investments?

      First, we introduced operational planning a day in advance. From the morning everyone knew what to produce and in what order. Secondly, we began to organize the importation of raw materials for the day shift in advance, as a result of which people immediately began work after the morning meeting. Third, we switched from 5/2 to 8 hours for 2/2 to 12 hours. This alone increased the number of working hours from 40 to 84, that is, more than doubled. We add a 2.5-fold increase in productivity due to loading planning (machine time increased from 30 to 70%) and we get a multiple increase in productivity. Thanks to this, the department has started to fulfill all past orders plus all major from network customers (IKEA, Leroy, Castorama).

      Step 3 – Manages the system with limitation.

      Now we begin to develop sales, understanding the maximum productivity of our workshop. In addition, we must develop a maintenance policy to avoid downtime and work with staff motivation.

      Step 4 – extend the restriction.

      We’re moving on to performance enhancement. For example, we introduce the principles of lean production, optimizing including workshop and warehouse logistics, so that there was not a large number of partially executed orders, and by the beginning of the production cycle all the raw materials were in stock. After that it is possible to plan the modernization СКАЧАТЬ