In This Issue

• AGI Continues To Steadily Make Advances With The Adaptation Of TOC Into Healthcare by Tracey Burton-Houle
• AGI is Taking the Jonah^SM Program "On The Road"
  
• AGI Announces New Two-Day Introductory Workshops in TOC!
  
• New! Certification Preparation
  
• AGI Employees Honored by Their Customer
  
• Announcing New Jonah's Jonah^SM Program Dates
  
• TOC Project Management by Dee Jacob and Bill McClelland
• AGI Announces a Joint Alliance Agreement with S.P. Jain Institute of Management and Research in India
  
• Supply Chain Logistics Management: A TOC Perspective by Hugh E. Cole
  
• Update: TOC in Japan by Eric Desmet
• How Will I Be a Jonah? by Clara Holleyman, RN, MHSM
  
• TOC World^® 2002 – Don’t let the earliest Early Bird Offer fly away – Register today!
  
• TOC World^® 2002 Location - You need to see it to believe it!
  

From the Editor-In-Chief

Welcome back to the new TOC Times Quarterly! It’s been since September 2001 that we published the TOC Times Quarterly. Over the course of that time, we’ve re-designed the TOC Times to strictly an on-line publication accessible through our website at www.goldratt.com. If you choose, a printer-friendly version is an option to saving as the html version. Subsequent editions of the Quarterly edition may be retrieved through our archives. There are more changes to be revealed as time passes on – the exact nature of those changes I will leave for you to discover.

In the last edition, Tracey Burton-Houle shared her experiences with talking about TOC to health care professionals (see Partner’s Perspective: What if my organization’s goal is not to make money, TOC Times Quarterly edition, September 2001). In this edition, Tracey again shares her insights into how the TOC generic solutions translate to healthcare and for-cause organizations.

Clara Holleyman, RN, MHSM shares a creative response to the question “How will I be a Jonah?” at the conclusion of a graduate course in decision-making. Clara earned her Masters of Health Services Management from University of Mary Hardin Baylor in Waco, Texas. In addition to Clara’s article, Rick Schroeder, Associate Professor of Health Services Management, University of Mary Hardin Baylor, explains the Masters in Health Administration degree program.

In this edition, check out the article on supply chain, Supply Chain Logistics Management: A TOC Perspective by Hugh Cole, AGI Partner. Following this is Update: TOC in Japan by Eric Desmet, Executive Director of AGI - Singapore. There are a host of announcements from new two-day Introductory Workshops and the Jonah^SM Program on the road to Jonah's Jonah^SM Program dates. For those interested in the Jonah’s Jonah^SM Program, please examine the new description carefully. We’ll be happy to direct your questions to the appropriate AGI partner. If you’re a professor interested in attending this program, please contact me directly at steve.simpliciano@goldratt.com. Jonah^SM is a service mark of The Goldratt Institute.

Someone once said that the difference between business and engineering is that business reports, but engineering executes. That difference is closing quickly as businesses are finding out that more often than not they are managing on a project-to-project basis. One Institute is addressing this need directly through its Center for Project Management. We are pleased to announce an academic alliance with the S.P. Jain Institute of Management and Research in India. We believe their education model is closely aligned with our belief that higher education must deliver results as well as knowledge. We look forward to a long and mutually beneficial relationship with SPJIMR.

The Goldratt Institute announces its Expert and Masters certification in TOC Project Management and TOC Supply Chain. Two certification preparation tracks will take place during TOC World^® 2002 this coming November. Read all about it in New! Certification Preparation with links to our web site for even more information.

Speaking of TOC World^®, have you registered yet?

AGI Continues To Steadily Make Advances With The Adaptation Of TOC Into Healthcare
By Tracey Burton-Houle, AGI Partner

Recently, I was privileged to have co-authored an article entitled, "Applying the Theory of Constraints in Health Care: Part 1 - The Philosophy" (Breen, Burton-Houle, Aron) that was published in Quality Management in Healthcare (Spring 2002). Being that this covered the topic I was planning to write about in this edition of TOC Times, I thought I would take advantage of this opportunity to write about how the generic TOC solutions can be applied in healthcare and other for-cause organizations, especially with the TOC World^® 2002 Conference fast approaching on the horizon. (For clarity’s sake, for-cause organizations, as is healthcare, are organizations whose purpose or goal is something different than to make more money now and in the future.)

In this article, I’ll focus on Drum-Buffer-Rope (DBR), Replenishment (Market Demand Pull^SM), Critical Chain Project Management and the development of UnRefusable Offers (UROs - or what’s referred to as Mafia Offers in It’s Not Luck). I hope this topic will assist you in being better able to:

• Sift out and leverage the good TOC information available out there by helping you bridge these solutions to your own environment;
• Customize, focus and increase the take-away value from your personal explorations of TOC;
• Identify which generic TOC solution is best suited to resolve some of the problems with which you’ve been struggling, with some amount of customization - there is no such thing as a “silver bullet;”
• Understand the applicability of the many introductory, new and advanced topics at TOC World^® to you and your organization;
• Get a preview of one of the topic areas to be explored at the Healthcare Forum at TOC World^®; and ultimately,
• See the value of joining us at the Mohegan Sun, November 4-7, 2002 for TOC World^® 2002.

Drum-Buffer-Rope (DBR)
This is the generic TOC solution that you were introduced to in Eli Goldratt’s book, The Goal. Often, it’s referred to as TOC’s Production Solution, although, as many of you already know, it has relevance to any environment that is characterized by a process. Whether that process operates on people, paper or things, or provides a service, product or combination thereof, DBR uses the 5 Focusing Steps of TOC (see The Theory of Constraints and its Thinking Processes: A Brief Introduction to TOC) to maximize the performance of that process and focus improvement efforts where they can yield the greatest overall benefit to the system.

The applications of DBR to for-cause organizations, including healthcare, are many. A manager in the billing department at a large hospital was able to wipe out the entire backlog in his department (tallying up to just under one million US dollars) and avoided the expense of putting in a new computer system (priced at about $350,000) by simply recognizing where the bottleneck in his department was, exploiting it and synchronizing the other resources around it. The wait times (a key indicator at many healthcare facilities) in more than just a few specialty and outpatient clinics have been significantly reduced by identifying the bottlenecks in the flow and managing the resources accordingly, much to the delight of their patients, staff and providers, as have lead times in pharmacies and diagnostic laboratories. [We are currently exploring the impact that DBR and Buffer Management (the control mechanism that identifies when the cumulative effects of variation have exceeded the norm and that it’s time to intervene to prevent any impact on throughput, T, before it occurs) can have on the recruiting process for one of the branches of the Armed Services and are seeing the potential for huge gains.] When I first began working at one hospital, it was common to cause an MRI machine and its operator to sit idle for insignificant periods of time because there weren’t enough volunteers or orderlies with wheelchairs available to move all the patients that needed to be moved from their rooms to radiology. At another hospital, the ER was so backlogged that its doors were closed to the public for over 36 hours one month, shutting down its primary T and revenue stream! The cause was later identified as a bottleneck created by reducing staff in housekeeping! So, to cut costs by laying off some of the lowest paid staff in the entire facility, the hospital forced some of its most highly paid staff and most expensive equipment to sit idle. The impact on T, revenues and ROI was devastating!

Indeed, this last case highlights one of the greatest challenges to fixing our healthcare systems today – re-establishing the infrastructure that has been all but dismantled by the years of “improving” our healthcare systems by focusing on cost cutting efforts instead of T and revenues, making it virtually impossible to exploit our most expensive and highly skilled resources to the benefit of society. This is not news that any administrator wants to hear, however, it seems to be the unfortunate truth.

In fact, I had yet another conversation with a healthcare professional who was talking about the huge capacity constraint that appears to exist in US hospitals and the lack of resources available – time, money and resources – to rebuild that infrastructure and satisfy the demand. When I shared with him some of the above examples of the waste in the system – waste of time, money, resources, capacity, etc. – he ended up conceding that perhaps the real problem had nothing to do with a lack of resources, but how we manage and/or utilize the resources we have. I dare wonder, if we reclaimed all that waste that exists as a result of our best intentioned, albeit misguided, efforts at cost cutting, would we have all the time, money and resources needed to rebuild that infrastructure and expose the capacity needed to satisfy the demand... and then some?

DBR and Buffer Management are exactly the tools needed to allow organizations to begin to rebuild that infrastructure in such a way that any improvement would be immediately leveraged to offset the cost, increase capacity, and increase T and revenues.

Replenishment, or Market Demand-Pull^SM
This solution is all about having the right inventory (i.e., materials, supplies, equipment) in the right place at the right time in the right quantity. Think about the part of a healthcare system that exists to ensure that when a doctor, a nurse,… anyone, reaches for an aspirin, that aspirin will be there. Or, the part of the system that exists to ensure that when a pint of O+ blood is needed, it will be there for the taking. Those are the sub-systems that will provide real benefit from deploying the replenishment solution.

A lot of organizations claim that they are already using replenishment – even claim that they are using it as introduced by the cosmetics company solution written about in It’s Not Luck! Yet, they still suffer from chronic outages at the point(s) of consumption. And in most cases, on the surface, it looks as if they’re right until you begin to dig ever so slightly into the details of what they’re doing. When we do, what we find is that, in fact, they are not implementing replenishment as prescribed by TOC at all. When you implement Market Demand-Pull^SM, you rarely if ever experience outages, let alone chronic outages. Indeed, there are so many different interpretations of what replenishment is that AGI made the strategic decision to establish Market Demand-Pull^SM to encompass a very specific interpretation of what replenishment is – one where we have trimmed the typical negative branches experienced with so many other replenishment-based solutions.

What are just some of the typical differences between “other” replenishment solutions and Market Demand-Pull^SM that cause the problems “they” experience? People typically associate buffers with physical assets such as inventory. Therefore, buffer sizes are often not set correctly to reflect the actual demand patterns in the time it takes to reliably replenish inventory. In addition, Min-Max reorder points are used at the point of consumption to communicate what’s been pulled from the buffer (batching), rather than sending “real-time” actual quantities back to the replenishment points (where batching can be done only when needed to avoid excessive costs or bottlenecks, without jeopardizing outages). Also, Replenishment or rebuild quantities are based on forecasted demand rather than actual demand pulled. Today, the tendency is to stock only the most frequently used supplies rather than stocking all supplies (even if in very small quantities!). Not supplying these less frequently used supplies at all wastes critical time and resources when those supplies really are needed and nothing else will suffice.

How does a healthcare or hospital system benefit from correcting such misperceptions about replenishment with Market Demand-Pull^SM? The direct impact can be quantified in dollars through warehouses or stockrooms full of obsolete or out-of-date supplies, pharmaceuticals, blood, or the quantification of the T and revenues lost when things like a surgical suite is sitting idle waiting for the right kit to arrive. The indirect impact is the difference between having the correct supplies needed to begin an emergency procedure when needed or not, having the right chemo-therapy drugs available when a patient arrives for treatment or not, or having the appropriate sutures available to minimize the scarring that the face of a young child will incur or not – all real-life examples of deficiencies that existed in healthcare systems that I’ve worked in the past several years. In essence, current replenishment practices in healthcare narrow the choices medical professionals have available in treating patients – the T of the system.

Critical Chain Project Management
Many examples of the application of Critical Chain Project Management in industry are directly transferable to healthcare and other for-cause organizations, e.g., managing the construction or renovation of a hospital or a building, managing improvement projects, and managing the many projects in an IS (Information Systems) or Maintenance department. The results of these applications have been a significant increase in an organization’s ability to bring projects in on time, in budget and in scope often with a decreased in lead-time for all projects. There is another important application of CCPM in healthcare that I believe exists, although to-date has not been rigorously tested that is in some inpatient care services.

When determining if a particular situation is better suited to using DBR or CCPM, there are three main characteristics or criteria that one looks at:

1. What is the ratio of “touch time” to lead-time? The more time that the patient (our “inventory”) is being “processed” compared to the length of stay (or overall lead time), the more one would tend to use CCPM. If one considers the time that a patient needs to heal, or respond to an intervention, as a “task” that needs to occur before the next step in their care plan (project plan) can take place, the amount of time a patient is being “processed” during their stay is (or should be!) very close to their length of stay, making it better suited to CCPM.

2. What is the “repeatability” of the “project?” If a procedure is something that is basically done once, it’s more akin to a project than a production line, making it more suitable for CCPM than DBR. Using this criterion, the medical side of the house might tend more to using CCPM than DBR, whereas some/many surgical services might be better suited to DBR.

3. The less predictability there is about what tasks need to be performed and the durations of those tasks, the more one would tend to use CCPM than DBR. Again, in medicine, where the predictability of such things is relatively low compared to some/many surgical services, one would tend to use CCPM rather than DBR.

Overall, it appears that there’s a good deal of evidence to suggest that CCPM has a role in inpatient care. Considering this question from a more macro perspective, wouldn’t it make sense that when a patient is diagnosed with some ailment that a “project plan” be created that identifies all of the tasks, dependencies and resources needed to restore that patient to their optimal level of health? That project plan would then be the basis for carefully coordinating the team of resources involved in their care, empowering the patient and their family, and monitoring the buffers to ensure that the patient is moving along the care plan according to expectation or when the patient’s progress may be in jeopardy? These plans would then be used to synchronize resources just as project plans are used in any multi-project management environment utilizing CCPM. The question: Is there any reason to expect that the results that would be achieved in healthcare would be any different from the results achieved in industry?

Creating UnRefusable Offers (UROs, or Mafia Offers)
I have yet to find a significant difference between the tools and processes for constructing UROs (à la It’s Not Luck) for healthcare and for-cause organizations, and constructing them for industry. In areas where there is stiff competition for patients, a URO for the “marketplace” could be constructed to attract the patients we’re seeking to attract to our facilities just as an industrial organization might construct a URO to increase the demand and/or revenues generated for their products or services? The huge nursing crisis in this country practicality mandates a URO to be developed and implemented, as does the mass exodus of highly skilled and experienced doctors that some believe is occurring. If you were the heading an organization that depended upon charitable donations, wouldn’t it behoove you to have the deep understanding of what needs drive your donor base to continue donating that a URO would give you? If you were a politician seeking election, wouldn’t it be advantageous to understand the fundamental needs that your constituent base is seeking to have satisfied and what your platform should be to win that election?

In Conclusion
It is no longer a question of whether the generic TOC solutions that have proven to be so powerful in industry apply to healthcare and other for-cause organizations. The question is how do we extrapolate from the results achieved thus far in healthcare and for-cause organizations to determine the magnitude of the impact they will have. In order to do that, we need to identify organizations who are willing to step up to the plate and chart the course for implementing these solutions, to allow their success to be shared with others and to set the standards by which others can compare their progress.

At TOC World^® 2002 we are bringing together top professionals from across the healthcare supply chain to further explore the application of TOC in healthcare, and to develop a plan for overcoming the challenges of making TOC “best practice.” Implementing TOC in healthcare and other for-cause organizations shows the promise of yielding results unprecedented not only by healthcare standards, but even industry standards. I hope you will join us November 4-7, 2002 at TOC World^® 2002.

AGI is Taking the Jonah^SM Program "On The Road"

To accomodate the needs of clients throughout the United States, AGI is now scheduling the Jonah^SM Program in cities across the country. Here is information regarding who should consider attending the Jonah^SM Program and what will be learned.

Why should I become a Jonah?
You should seriously consider attending The Goldratt Institute’s Jonah Program if:

1. Despite sincere efforts, some of your or your organization’s problems persist.
2. You or your organization seeks a robust and systematic process for solving problems that begins with problem identification and ends with the detailed tactics to successfully implement a strategy that resolves the problems once and for all.
3. Attempts to create organizational change have not been fully successful.
4. You need a systems approach to designing business (process) improvements.
5. You and your team need to develop a value proposition for your market (or your suppliers and vendors) so that increased demand is matched to delivery capacity.
6. You and your team need to think through large-scale integration issues.

What will I learn in the Jonah Program?
In the Jonah Program you will learn, step-by-step, how to apply the TOC Thinking Processes using a subject matter of your own choosing (i.e., Increasing company throughput via product life-cycle management, Improving student retention at..., Developing an Unrefuseable Market Offer to..., Creating a community-based health clinic). The result of your efforts will be a robust and detailed plan for deploying a strategy that resolves the problems identified in your subject matter (and the ability to apply the tools to any subsequent subject that you choose).

The challenges of getting the requisite approval, buy-in or collaboration for any change often far outweigh the more tangible aspects of implementing a strategy. In the Jonah Program, you will also invest time internalizing TOC’s Six Steps to Buy-In. These steps are a systematic process that enables you to circumvent resistance to change by building understanding, ownership and consensus on What to Change?, To What to Change? and How to Cause a Change?. When people are able to answer these questions in a meaningful way, you’re able to secure the commitment and conviction needed for them to go to work on the deployment plan.

View full program description.

2002 Schedule
Seattle, WA - Aug 26-30 & Sept 9-13
New Haven, CT - Sep 9-13 & Sep 23-27
Houston, TX - Oct 7-11 & 21-25
Chicago, IL - Oct 7-11 & 21-25
New Haven, CT - Nov 18-22 & Dec 9-13

2003 Schedule
Cape Canaveral, FL - Jan 13-17 & 27-31
Long Beach, CA - Feb 10-14 & 24-28
St. Louis, MO - Mar 10-14 & 24-28
New Haven, CT - Apr 28-May 2 & May 12-16
Wichita, KS - June 23-27 & July 14-18
Philadelphia, PA - Aug 11-15 & 25-29

If you’d like to suggest a city for additional Jonah Programs or would like to host a Jonah Program at your own facility, please contact us! We also conduct Dedicated Jonah Programs tailored to meet the unique needs of your organization. Please contact AGI at info@goldratt.com for more details!

Jonah^SM is a Service Mark of The Goldratt Institute.

AGI Announces New Two-Day Introductory Workshops in TOC!

• Introduction to Market Demand-Pull^SM - September 17-18, 2002 and December 5-6, 2002

• Introduction to TOC Logistical Solutions – August 12-13, October 21-22, 2002 and January 13-14, 2003

• Introduction to TOC Strategic Planning - December 4-5, 2002, February 3-4, 2003 and April 3-4, 2003

And don’t forget our other introductory-level classes:

• Introduction to TOC Project Management – August 14-15, 2002, October 23-24, 2002 and January 15-16, 2003

• Introduction to TOC Supply Chain – July 15, 2002, September 16, 2002, and December 2, 2002

• Introduction to TOC Production - September 19-20, 2002 and December 3-4, 2002

New! Certification Preparation

AGI has a full offering to create Experts and Masters in TOC Project Management(PM) and TOC Supply Chain(SC). The first level is called Technical Expert. To become certified as a Technical Expert (in either TOC PM or TOC SC), one must demonstrate practical and written expertise in the technical aspects of the appropriate solution.

During TOC World^® 2002, AGI will be offering two Certification Preparation Tracks: one for TOC Project Management and one for TOC Supply Chain. These tracks each consist of three sections, open only to those that have taken Technical Training in the subject and have pre-registered. These tracks also consist of selected open breakout sessions. The combination of sessions will prepare the participant to utilize the Technical Solution better in their organization and to be prepared to pass the written portion of the certification process. Register for TOC World^® 2002 today to take advantage of this opportunity!

AGI Employees Honored by Their Customer

Goldratt Institute employees Kathleen M. Austin and Jacob Munson had their contributions formally recognized on April 18, 2002, when the Process Transformation and Implementation Team (I-Team) received the Quarterly Director’s Award from the Project Management Directorate, 412th Test Wing, Edwards Air Force Base, California.

Kathy and Jay have been on-site at Edwards since September, 2001, supporting the implementation of TOC Project Management(PM), in partnership with Speed to Market.

The I-Team successfully completed the Prototype Phase of the contract in November, 2001, and is now well into the year-long Pilot Phase where TOC PM is being implemented and evaluated in two multi-project portfolios. The Pilot Phase, itself, is being managed as a single TOC PM project.

For additional information on this project, see the reprint from the Edwards AFB newspaper, Desert Wings, available in AGI's online library.

Announcing New Jonah's Jonah^SM Program Dates

Jonah, are you ready to take your TP knowledge and skills to the next level? When you complete the Jonah’s Jonah^SM Program you will have confidence in your abilities to effectively facilitate a group through a TOC:

• TP Roadmap Analysis
• Business Unit Strategy
• Large-Scale System Integration Design

This means that we will sharpen and refine your TP skills even further as the issues switch from yours (in the Jonah^SM Program) to helping others systematically resolve theirs. Throughout the program, we will use existing TOC case studies as well as your subject matter and those of your colleagues. To ensure that these strategies don’t wind up on the shelf collecting dust, you will learn how to:

• Integrate proven, existing TOC generic solutions into the strategies you will develop with others
• Employ AGI’s established processes to develop and deploy integrated, system-wide tactics
• Identify and overcome resistance to change by employing TOC’s Steps to Buy-In
• Align organizational culture with its strategy and tactics to sustain improvements

You must have previously completed the Jonah^SM Program and have had practical experience using the TOC Thinking process to register for this course.

Week 1: September 23-27
Week 2: September 30-October 4
Week 3: October 14-18

For more information, please email us at info@goldratt.com.

TOC Project Management
by Dee Jacob and Bill McClelland, AGI Partners

Whether your organization manages stand-alone or multiple projects, whether those projects are small or large, whether your customers are internal or external, or whether the nature of the work performed is product development, construction, design, IT, or service; most projects are difficult to manage because of two things:

• They involve uncertainty, and
• They involve three different and opposing commitments: due date, budget, and content

In organizations that attempt to manage multiple concurrent projects with common, shared resources, the job is even more challenging. Managers can quickly find themselves on “project overload” with continual resource shortages and great difficulty in determining which tasks are truly the most important.

If this is beginning to sound familiar, then you are probably experiencing some of these problems in your organization:

• There are difficulties completing projects on time, within budget and with full content.
• There is too much rework activity.
• Promised lead times are longer than desired.
• Existing project work is not complete before new projects require a shifting in priorities.
• Project Managers and Resource Managers have frequent conflicts about priorities and resource commitments.
• Existing project work is not complete before new projects require a shifting in priorities.
• Problems in one project cascade into problems in other projects.
• Some projects are abandoned or completed without the organization gaining the promised benefit.
• The organization is too slow responding to important opportunities.

For the forthcoming White Paper on this subject, please come back to our web site at www.goldratt.com.

AGI Announces a Joint Alliance Agreement with S.P. Jain Institute of Management and Research in India

The Goldratt Institute is pleased to announce a Joint Alliance Agreement with Bharatiya Vidya Bhavan's S. P. Jain Institute of Management and Research (SPJIMR), Mumbai, India. Under the terms of the Agreement, SPJIMR will offer TOC PM (Critical Chain Project Management) as part of its Master's Certificate in Project Management (MCPM) and in short courses based on the MCPM architecture. SPJIMR will also teach TOC PM in their MBA and Executive MBA programs. The program and courses are available through SPJIMR's Center for Project Management. AGI Australasia (Ms. Kathryn Leishman, Partner) will work jointly with SPJIMR in bringing Critical Chain Project Management education, training and implementation experience to India.

Today, with organizations becoming leaner and flexible, people are working on a project-to-project basis, crossing geographic as well as functional boundaries. To be effective in this environment, project-based skills and competencies that blend multi-disciplinary roles is essential. The executive working in a project must have knowledge of PM concepts, tools and techniques to achieve the project goals in time and on budget. Sensitive to this need, SPJIMR has responded with The Center for Project Management. The goal of this center is to build a forum of excellence in the progressive area of project management, providing professionals with knowledge, system and tools to manage, plan and control projects.

For more information about SPJIMR, please contact:
Professor Ajay Parasrampuria
S.P. Jain Institute of Management and Research
Munshi Nagar
Dadabhai Road, Andheri (W),
Mumbai 400 058,
India
Tel: 623 0396/2401/7454
Fax: +91.22.623 7042
cpm@spjimr.ernet.in

Supply Chain Logistics Management: A TOC Perspective
By Hugh E. Cole, AGI Partner

Supply Chain. Even its definitions differ. Some define the term very broadly – including the work of engineering, marketing and sales. Others narrow the focus to the more operations-oriented functions.

If our objective is to address the problems in a specific part of a business, it probably makes sense for us first describe the “boundaries” on the area of focus. The Goldratt Institute’s approach to Supply Chain Logistics Management centers on the issues that fall within the definition of Supply Chain offered by the American Production and Inventory Control Society:

Supply Chain: The processes from the initial raw materials to the ultimate consumption of the finished product linking across supplier-user companies.

What are the Problems?
The problems encountered depend upon one’s perspective. Every supply chain is made up of links: some links tend to convert raw materials into something of greater value (hopefully), and other links tend to store and move materials through distribution channels.

Those who are more involved with “conversion” links see a set problems more associated with Production:

• Production lead times are too long.
• There is too much expediting.
• Overtime is too high.
• Vendors are unreliable.
• Production plans are short-lived.
• It’s difficult to respond to urgent orders.
• We miss too many due dates.

Those who are involved with the “store and move” links commonly have complaints that are more closely tied to Distribution:

• There is too much inventory.
• We are short (or out) of the things we need.
• Too many orders are shipped incomplete.
• Inter-company shipment costs are too high.
• There are too many returned goods.
• Obsolete inventory is above plan.
• We miss too many sales.

Of course, there are “problem overlaps.” For instance, a complaint of unreliable vendors in a Production link is basically the equivalent of being short (or out) of the things we need in a Distribution link. A little closer examination shows that there is actually a significant amount of similarity in the problems encountered. A little further study may even show some cause-effect relationships!

What is the Direction of the Solution?
The noted management guru, Peter Drucker, has said that being effective is "doing the right things" while being efficient is "doing things right." Our first objective in the TOC Supply Chain Logistics Management application is focused on effectiveness. Doing the right thing in supply chain management means utilizing our resources on the products that will – with high probability – increase sales and net profit.

Of course, most efforts to accomplish this objective today are based on getting better and better forecasts. While we know that the ability to forecast in aggregate is quite good, we also realize that the capability to drive the forecast down to product code detail by location and timing is, well...not so good. It could be said that it is the inability to predict with certainty that is a root cause of the inventory problems. This combined with finite capacity resources that are often unable to make up for inaccurate predictions, cause us to lose sales while we build inventory, gaining a whole host of other problems at the same time.

The first part of the TOC Supply Chain Logistics Management solution is, therefore, to put in place “Buffers” of inventory properly sized to meet demand considering our capabilities and capacity to re-supply. That requires an initial prediction. Once created, a system of “Buffer Management” is established to ensure that we do not create over-supply or shortages. The signals from these Buffers are used to translate the real market need – what we call “Market Demand-Pull^SM” - to the links that are involved with conversion, the Production resources.

The next step required is to synchronize the resources within Production.

This effort begins with an analysis of the “network” through which raw materials become finished goods. Of course, there are a number of variations and many types of resources that are potentially involved in the production processes. System design typically involves a slower, or a potentially higher utilized resource, to act as a “Drum” around which to synchronize production. It is the beat of this drum that determines when materials are released into the production network. This release mechanism is referred to as a “Rope”.

The remaining elements of the system are designed to ensure that the drum schedule is always met, and that materials that move through the drum have sufficient time to meet the due date at shipping. The units of time expected / used are monitored as a means of control, and are called “Buffers”. (Note that here we are discussing time buffers, where previously we noted inventory buffers.)

This Production system is known in TOC as “Drum-Buffer-Rope”.

A logistically well-synchronized supply chain has, in effect, the demand of the market (Market Demand-Pull^SM) tied to the drum in Production (Drum-Buffer-Rope). The drum is sequentially tied to the materials release into the Production system, which, in turn, ties into the demand from the vendors. This works across entire supply chains, both inter-company and across organizations. Set up properly, the whole system is “doing the right things”. The next step is to use Buffer Management to give focus to improvement efforts. This way we ensure that we get the greatest return for using other TOC tools, as well as Six Sigma, Lean, etc, in our “do things right” efforts!

Update: TOC in Japan
By Dr. Eric Desmet, Executive Director of AGI Singapore

Even before the introduction of the Japanese version of The Goal, AGI started its activities to bring TOC to the Japanese market. AGI has been working with the Consulting Business Unit of Japan Research Institute (JRI), to significantly improve their performance by applying TOC.

JRI is a well-recognized organization in the Japanese market. Besides being a well-renowned “think tank” in the local market, it also provides services like Business Management Consulting, Supply Chain Management and System Integration. JRI is part of SMBC (Sumitomo Mitsui Banking Corporation), one of the largest banks in Japan.

The TOC Thinking Processes was used to develop an executable, integrated business strategy for JRI’s consulting arm. JRI is executing its strategy with AGI mentoring. Here are some of the results they have achieved to date:

• Supply Chain Analysis has been reduced from typically six months to about 1½ month.
• Successfully delivery of SCM (supply chain management), followed up by IT system integration, and internal supply chain implementation leading to system integration opportunity.

If you’re attending TOC World^® 2002, you’ll find out more about their success stories.

The AGI - JRI relationship has been developed into a solid partnership, whereby AGI provides the TOC Body of Knowledge, a solid implementation process, and fully customized services in terms of mentoring, consulting, training and auditing. Our objective is to fully support JRI to deliver bottom-line results.

Together, JRI and AGI continue to create market awareness. Recently "TOC-based SCM solutions" was presented at I2 Planet Tokyo and in a similar event organized by SAP.

Eric may be contacted at:
Avraham Y. Goldratt Institute - Singapore 8 Temasek Blvd #42-01
Suntec Tower Three
Singapore 038988
SINGAPORE
Tel: +65-832-7631
Fax: +65-448-0302
singapore@goldratt.com
www.goldratt.com/singapore
www.goldratt.com/japan

Our popular white paper, TOC and its Thinking Processes: A Brief Introduction is now available in Japanese.

How Will I Be a Jonah?
By Clara Holleyman, RN, MHSM

Clara Holleyman, RN, BSN, MHSM, BSN - Southeastern Louisiana University, 1977 MHSM - University of Mary Hardin Baylor, 2001. Clara has been a RN in several clinical settings prior to advancing into a management position. She is a regional director for First Care, a managed care firm, in Waco, Texas. She may be reached at: cholleyman@firstcare.com

I was assigned to read The Goal as part of a graduate course in decision-making. From my reading of the book I recognized some of the challenges that managers face and how TOC can be used to improve processes. As I thought about the many concepts and processes, I considered what I would need to do to incorporate these into my professional and personal life.

At the conclusion of the course I was asked to answer the question, “How will I be a Jonah?” Recognizing that TOC emphasizes creative problem solving, I thought it would be appropriate to present a creative response to that question. The following is taken from my class presentation at the end of the semester:

I WILL BE A JONAH

I will be a Jonah.
I have personal needs.
I have personal goals.
I will get to know myself so that I can help others.
I will learn to manage my time wisely.
I will balance my political, social, economic, family, and spiritual life.

I will ask questions.
I will be self-directed.
I will be an ethical role model.
I will learn to think both inductively and deductively.

I will set priorities.
I will discipline myself.
I will teach others.
I will not be a “Herbie”.

I will be a Jonah.
I know the goal.

View full text...

I passed the course that semester and went on to complete my Master of Health Services Management degree. Since graduation, I have found many opportunities to carry the thinking processes of Jonah beyond the classroom. I have also discovered that the concepts presented in The Goal are not limited to constraints on a plant floor but are applicable to any situation where there is a constraint that interferes with the accomplishment of a goal. TOC has been a useful tool in finding creative solutions to problems in my professional as well as my personal life.

The Master in Health Administration at the University of Mary Hardin Baylor prepares individuals for leadership positions in a variety of health care organizations: hospitals, physician practices, insurance firms, HMOs, and federal and state health agencies. The program focuses on the leadership skills necessary to succeed in a health care organization. In the professional health care environment, the manager is faced with staffs that are highly educated within their own right in numerous clinical areas. Further, in order to change the system the manager must be able to manage the numerous processes that occur in every health care organization. Using the Socratic method to lead highly educated employees and independent physicians, and using the TOC method to address processes is essential for success as a leader in healthcare. Therefore, health leaders must not only understand the lessons Jonah teaches, they must become a Jonah themselves.

For more information, please contact: Rick Shroeder, Associate Professor of Health Services Management at RSchroeder@UMHB.edu.

TOC World^® 2002 – Don’t let the earliest Early Bird Offer fly away – Register today!

Register by August 3rd and receive a $1495 Educational Credit! And don’t miss out on the great Conference with Hotel Package offers!

If you’re new to TOC and want a behind the scenes look at how the phenomenal success stories in Dr. Eli Goldratt’s books were actually achieved – what makes TOC work, why such improvements are common, and how it can be put to work for you, OR

If you’re already familiar with TOC and want to hear the latest thinking, expand your knowledge into other areas of TOC, or find out how to spread TOC awareness in your organization, OR

If you’re an experienced practitioner and seek to explore new and advanced topics, user groups, or possibly prepare for AGI’s Expert Certification in TOC Supply Chain or TOC Project Management, ...

• Choose from Four Tracks of Breakout Sessions in Strategy, Supply Chain (SC), Project Management (PM) and the TOC Thinking Processes (TP), each with a rich array of introductory, new and advanced topics.

• Hear AGI’s Clients Present their successes, "lessons learned" and results of implementing TOC in their organizations. – Featuring presentations by CAE, Air Force Flight Test Center (AFFTC), Indo Asian, The Japan Research Institute, MACTac and many others!

• Network with other participants, presenters, expert implementers and AGI Partners and staff.

• Participate in User Groups designed to share tricks-of-the-trade, experiences and "lessons learned" with others implementing TOC and TOC-related software packages, and

• Attend the Expert Certification Preparation Track and prepare for your AGI Certification Exam in TOC Supply Chain or TOC Project Management.

Whether you’re taking your first step, or one of many in your ongoing journey with TOC, you will leave TOC World^® 2002 with a clear understanding of what your next steps should be to achieve your ultimate success.

TOC World^® 2002 Location - You need to see it to believe it!

With it’s brand new hotel and meeting space, the Mohegan Sun, owned by the Mohegan Tribe, is one of the largest, most distinctive and spectacular entertainment, gaming, shopping and meeting destinations in the United States!

Situated on 240 acres along the Thames River in scenic southeastern Connecticut, Mohegan Sun is within easy access of New York, Boston, Hartford and Providence and located 15 minutes from the museums, antique shops and waterfront of Mystic Places.

Fantastic features include:

• Over 300,000 square feet of total gaming space
• More than 40 retail shops and dining venues ranging from food court-style to gourmet
• 10,000-seat Mohegan Sun Arena for world-class sporting events and concerts
• An intimate Cabaret
• A 34-story luxury hotel, featuring 1,200 guest rooms and suites
• Premier meeting and convention space
• A world-class spa.

The Mohegan Sun Hotel features 1,200 elegantly appointed guestrooms. Each of the guestrooms measures a minimum of 450 square feet, and features deluxe amenities and sweeping views of the New England countryside or the Thames River. Standard amenities include marble baths, comfortable lounge chairs and the latest in telecommunications technologies, including: three two-line telephones with dataports and voice mail, web and e-mail access, video in-room dining menus and ordering, bill review and check-out accessibility and a state-of-the-art security entry system.

Dining & Entertainment
Choose from over 40 dining and shopping options, from casual to elegant. Enjoy a cocktail with your friends in front of Taughannick Falls - a 55-foot indoor waterfall flowing down to Chahnameed's Island. Or unwind with a cocktail on Wombi Rock, an amazing three-story crystal mountain that houses an exquisite martini bar. Choose from over 50 specialty martinis created by Mohegan Sun's own "mixologists." Take in a show at the Mohegan Cabaret, a free concert in the Wolf’s Den, or a sporting event at the Mohegan Arena.

Spa
Guests can also enjoy the new Elemis Spa by Mohegan Sun, which encompasses fifteen private spa-therapy rooms, a relaxation area, hair and beauty salon, three private facial rooms and a fitness center. Steiner Leisure Ltd., based in Coral Gables, Florida is the parent company of the Elemis Spa at Mohegan Sun, which provides a harmonious and serene environment where guests can cultivate inner peace and truly relax and unwind.

KIDS QUEST – Bring your family with you!
Youngsters from six weeks to 12 years will never want to leave the fun at Kids Quest. Located in The Shops at Mohegan Sun Retail Promenade, the children's center features licensed, supervised child care with professionals who know what bona fide playing is!

All of the care professionals are trained in First Aid and CPR techniques. Each child is checked in with pertinent information; a photo ID is entered into a computer and must be presented upon pick up in order for the child to be released.

While there, your children will have the time of their lives in Barbieland^TM, Construction Quarry and our Kids Quest Recording Studio, or crawling through tunnels and tubes, climbing up ladders and spilling down chutes. We also feature, Techno Quest, an arcade with the best Sony, Sega^TM, Nintendo^TM and Microsoft have to offer, at no extra cost.

The TOC Times Published by: AGI, 442 Orange Street, New Haven, CT 06511, USA +1.203.624.9026     agi@goldratt.com Editor-in-Chief ..... Steve Simpliciano Content & Copy Editor ..... Robbin Inorio Content & Copy Editor ..... Shannon Lange Content & Copy Editor ..... Sylvia Ebbson Technical Editor ..... Jennifer Foley All contributions to TOC Times should be sent to AGI, 442 Orange Street, New Haven, CT 06511, USA or agi@goldratt.com. Reproductions of articles contained in TOC Times is prohibited unless prior written permission is obtained from the editor-in-chief.

Copyright ©2002, Avraham Y. Goldratt Institute. All Rights Reserved.