In This Issue

• TOC World^® 2004 Recap
  
• North Island RIFLe Team Wins Admiral Stanley Arthur Award for Logistics Excellence
  
• 20th Anniversary Edition of The Goal Released
  
• Upcoming Open Courses
  
• "Should I Attend the Jonah^SM Program or Technical Training?"
  
• Resource Behavior by Dee Jacob
  
• "Which Book Should I Read?"
  
• TOC World^® 2004 Presentations Available
  

TOC World^® 2004 Recap
by Sylvia Ebbson & Robbin Seipold

TOC World^® 2004 returned to The Mohegan Sun in Uncasville, Connecticut for another extraordinary conference. With attendees representing nine countries and over 77 different companies and organizations, it was a wonderfully diverse crowd that spent an entertaining and educational time together.

Daily raffles offered such prizes as two-day workshops and Jonah^SM Programs, along with Starbucks gift certificates, wine, and Mohegan Sun and APICS bookstore merchandise. Once again, surprise raffles involved a little bit of musical chairs, so to speak, and the winners were rewarded with Mohegan Sun merchandise.

The conference opened with a traditional Mohegan welcome ceremony by Chief Two Dogs, and kicked off the conference in a way that only the Mohegan Sun can do. Attendees spent their days hearing clients such as NIKE and Eastern Financial Florida Credit Union present their hands-on TOC experiences and then headed off to numerous breakout sessions covering such topics as Hands-on Network Building and So Many Tools...So Little Time: TOC, Lean and Six Sigma. A pre-conference day was added this year, that offered a full-day introductory workshop in either Logistical Solutions, or an Overview of the TOC Thinking Processes.

Conference evenings were filled with several receptions, including a well-received Beer Tasting. The APICS bookstore was in attendance, providing a wide variety of TOC-related merchandise, and software user group sessions were held regarding PS8, Concerto and ProChain software. With the Mohegan Sun offering their world-renown casino, multiple shopping options, luxurious spa and numerous restaurants, there was something for everyone to enjoy.

On the final two days of the conference, TOC World^® overlapped with a Harley-Davidson convention in adjacent meeting space, and believe it or not, there were several Harley representatives in attendance that were familiar with TOC! But, unfortunately, they weren’t interested in trading a case or two of The Goal for a Harley!

Stay tuned to the AGI website for information on TOC World^® 2005!

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North Island RIFLe Team Wins Admiral Stanley Arthur Award for Logistics Excellence
From NAVAIR Public Affairs Office

The Combined Integrated Maintenance Activity (CIMA), which includes the Aviation Intermediate Maintenance Department (AIMD) and Aviation Supply Department (ASD), at Naval Air Station North Island was recently honored with the prestigious 2003 Admiral Stanley Arthur Award for Logistics Team of the Year. The award, which includes a plaque and check for $10,000, was presented at a Pentagon ceremony on June 28, 2004.

The Admiral Stanley Arthur Awards for Logistics Excellence are bestowed annually to individuals and teams who epitomize logistics professionalism and excellence. Nominees may be involved in any or all phases of Navy logistics from early life-cycle planning to in-service logistics support, and are judged on their contributions which: advance logistics technology, products, services and processes; resolve major logistics issues and result in substantial tangible or intangible benefits; and provide innovative logistics planning and execution that merits adoption for standard usage.

The CIMA won the award by working to make Naval Air Station North Island the first Naval Air Station to implement the Relevant Information for Leadership (RIFLe) philosophy across the AIMD and the ASD. The RIFLe program, which is currently referred to as Basic Theory of Constraints (BTOC) with RIFLe and a key element of the AIRSpeed program, was created by the USMC and sponsored by NAVAIR. The RIFLe implementation core team consists of members from Aviation Support Logistics (ASL), Head Quarters Marine Corps (HQMC) and NAVAIR 3.0 senior enlisted and officers. The NAS North Island and core RIFLe team revolutionized the approach to cross-functional problem solving in aviation logistics and maintenance.

Using Theory of Constraints (TOC) to focus on critical local and wholesale systems barriers to aircraft readiness, they achieved unprecedented supply and maintenance improvements and their innovative ideas and quantifiable benefits modeled the way ahead for TOC implementation across the entire Naval Aviation Enterprise.

According to the award citation, the performance of the team “is a benchmark for any further comparison of what the combined aviation logistics team – Maintenance and Supply – can accomplish with a single focus and a single goal. By their exceptional professional ability, unprecedented initiative and dedication to duty the Integrated Maintenance Activity at Naval Air Station North Island reflected great credit upon themselves, upheld the highest traditions of the United States Naval Service and are most worthy of being awarded the 2003 Admiral Stanley Arthur Award for Logistics Team of the Year.”

Members of the Combined Integrated Maintenance Activity include CDR William T. Ainsworth, USN; CDR John C. Smajdek, USN; CDR David C. Meyers, SC, USN; LT Gary S. Joshway, USN; LT Vinsant D. Evans, SC, USN; LTjg Jeffry M. Peltonen, SC, USN; AMCS Jon S. Smith; AECS David M. Willard; and SK1(SW) Victor H. Moreno.

For more information about the Admiral Stanley Arthur Awards, visit the Web site at https://ucsobdom02.hq.navy.mil/stanarthur.

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20th Anniversary Edition of The Goal Released

To commemorate the 20th anniversary of The Goal, a special edition was recently released. To date, more than three million copies of The Goal have been sold in 21 languages.

This new edition features interviews by David Whitford, Editor At Large, Fortune Small Business. Among those interviewed are co-author Eli Goldratt, and representatives from General Motors and the United States Marine Corps.

This edition is priced at U.S.$24.95, and available at www.goldratt.com.

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Upcoming Open Courses

Below are the Open Courses scheduled for the remainder of 2004. All programs listed will take place in New Haven, except where noted. For more information on individual classes or to register, please contact our Client Relations department at info@goldratt.com, 1.203.624.9026 or 1.800.394.GOAL.

Project Management Expert Training Program
September 13-17 (week 1), September 20-24 (week 2), November 1-5 (week 3), November 15-19 (week 4)

Introduction to TOC Project Management
September 22-23 (Tampa, FL)
October 6-7

Introduction to Market Demand-Pull^SM
October 4-5

Supply Chain Expert Training Program
October 11-15 (week 1), October 18-22 (week 2), November 1-5 (week 3), November 15-19 (week 4)

Jonah^SM Program
November 29-December 3 (week 1), December 6-10 (week 2)

External Constraints Course
November 29-December 3 (week 1), December 6-10 (week 2)

Introduction to TOC Logistical Solutions
December 7-8

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“Should I Attend the Jonah^SM Program or Technical Training?”

We often hear the above question, or a statement like, “I need to get smart on the TOC tools.” The questions that need to be answered are, “What is it I need to accomplish?” and “How do I best gain the knowledge necessary to accomplish it?”

The Jonah^SM Program provides the tool set that enables one to identify What To Change, What To Change To and How To Cause The Change in their organization. The Jonah^SM Program provides a broad set of generic tools that may be utilized either as a process or individually, and must be applied to specific subject matter. The subject matter is chosen by the attendee and may be strategic or tactical in nature. It may be related to supply chain or project management (although most would recommend against that, but it is very unlikely that attendance at a Jonah^SM Program would provide the level of technical detail necessary to implement either a Supply Chain or Project Management solution.

Technical training, on the other hand, provides the knowledge set and answers to the questions posed above with regard to the specific needed details of the Supply Chain or Project Management solutions, i.e. the necessary technical knowledge to implement the logistical aspects of Market Demand-Pull^SM (Drum-Buffer-Rope/Buffer Management and Replenishment) or Project Management as well as the cultural elements required to lead personnel through the technical elements.

Those with a need to implement a Supply Chain or Project Management solution will certainly be best served by attending the Technical Training program for that discipline.

Those with more of a strategic interest would be better served by attending a Jonah^SM Program.

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Resource Behavior
by Dee Jacob, Partner, AGI

In the TOC logistical solutions, there are behavioral changes that enable the full potential of the solution. In operations and production environments, we describe the way we want the resources to work as “Road Runner” behavior, after the cartoon character (beep, beep). The behavior implied is work as fast as you can, with quality, when you have work; then stop and wait.

As the TOC logistical solutions developed into the world of Project Management, a different set of behaviors needed to be described. An analogy of a World Class Relay Team and relay runner behavior more clearly described the kind of changes needed for the project and multi-project environments. The attached article expounds on behavioral changes and the analogy.

The World Class Relay Team
In TOC Project Management, the behavioral changes and logistical changes can be modeled using the analogy of a world class relay team. The first task in a path is like the first leg of the race – just because the runner is available to run the first leg, they should not begin before the scheduled start – the firing of the gun. The consequence of jumping the gun in a relay race is disqualification of the team – the consequence of actions taken by the first person affect the entire team.

The consequence of jumping the gun on a project path start is that subsequent tasks are more likely to start earlier than necessary – potentially creating incorrect priorities and serious conflicts for resources – disqualifying the intent of the planning process.

Once the relay race has started, each runner must run as fast as they can, given the conditions of the track they are on. As soon as the completion criteria (run 100 meters and hand off the baton at the earliest qualifying moment) are met for one leg, the subsequent leg must begin immediately – even if the preceding leg finished faster than it ever has before.   

Likewise, in this project management paradigm, resources work to achieve the best times they can, based on the conditions within which they must work. Meeting the completion criteria and conducting a timely and accurate handoff of work to the next resource will minimize delays and task variability caused by poor quality inputs.  

A new leg in a relay race begins when a different runner utilizes the output of the previous runner – this same concept applies to defining a task.

The times that runners are asked to meet for each leg need to be sufficiently challenging that each believes they can achieve their goal by trying hard. Collectively, the team also needs to believe that there is a possibility to win the race. Impossible targets cause some runners to give up before they start. Less challenging targets prevent some runners from trying to achieve their full potential.

The goal of the relay team is to win the race. This requires that each runner runs hard, avoids disqualification, and makes/takes solid, timely handoffs. Meeting or beating a personal target means little if a sloppy handoff hurts the next leg and causes the team to lose.

In project work, it is also the team that must win. Having many resources pace themselves to finish “on-time” robs the project of chances to take advantage positive variation. Ultimately, it is the team that loses. To avoid this, each resource needs to act in the best interest of the team – working hard and continuously until the completion criteria are met and providing a solid, timely handoff. If each resource does the best they can for the conditions within which they must work, overall the project should be okay.   

A relay team that wants to win the Olympic gold medal runs many trial races. As long as they have a resource available that can run each leg, they do not have to use the same person on the same leg for each trial and final race.

Project performance may ultimately be enhanced by recognizing the interchangeability of different resources. Flexibility of assignment can avoid unnecessary delays associated with waiting for “the” (currently tied up) resource to perform an available task.

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Which Book Should I Read?

Posed as a general question or in anticipation of attending a TOC program, this is truly a frequently asked question. Below is a simple primer on the TOC subject matter of each book. Listed in order of their original date of publication, with the exception of The Haystack Syndrome, all are in novel form.

Production
The Goal by Eli Goldratt and Jeff Cox is the business novel that revolutionalized the way the world thought of its factories. Given three months to turn around his plant or have it shut down, Alex Rogo’s chance meeting with Jonah, an old college professor, is the only source of help that Alex has to save his plant. Unfortunately, Jonah doesn’t provide answers, he asks questions, causing Alex to “figure it out for himself." The Goal will help you to understand how TOC’s 5 Focusing Steps can be used to more effectively manage production.

Production, Scheduling, Information Systems
The Haystack Syndrome by Eli Goldratt is a text that relates the objectives of an organization to data, information and the decision process(es) to attain the objectives. For different people or even for the same person at different times, the same string of characters might be data or information. The Haystack Syndrome helps sort out this apparent dilemma.

Thinking Processes, Sales, Marketing, and Distribution
It’s Not Luck by Eli Goldratt is a business novel that begins a few years after The Goal ends. Alex Rogo is now a group executive charged with significantly increasing the market value for his diverse companies while, at the same time, ensuring he has a worthwhile position when all the maneuvering is done. It’s Not Luck shows that the TOC Thinking Processes can be used to define customer value, by understanding the problems and needs of the customer.

Project Management
Critical Chain by Eli Goldratt is the novel that does for project management what The Goal did for production. Rick, an associate professor at a business school is assigned to teach a course in project management for the Executive MBA Program. This assignment leads Rick to discover the problems with conventional Critical Path methodologies and create the basic tenets of TOC’s Critical Chain. While the premise of Critical Chain is based on a single-project environment, implications for multi-project environments are ever present.

ERP/MRP Systems Integration
Necessary But Not Sufficient by Eli Goldratt, Eliyakim Schragenheim and Carol Ptak. Good information, that which can be used to make intelligent decisions is necessary in today’s fast paced environment, especially in the high tech computer software environment. In and of itself, though, this information is not a sufficient solution. In Necessary But Not Sufficient you will discover what else is required and why.

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TOC World^® 2004 Presentations Available

When attendees were asked to rate the TOC World^® presentations on a scale of 1 to 10, with 10 being the highest, four earned ratings of 10+. Those presentations were by Boeing, AFFTC, Nike, and Pratt & Whitney.

Below is a list of all of the presentations available. Offerings from this conference mark several "firsts" -- the first time these are available on DVD (in addition to VHS or PAL), the first time we are offering a Conference Proceedings CD, and the first time presentations are available in either English or Japanese (Gunze and Sumino only).

JCT-01 Gray-Syracuse
Presenter:
Tom Cacace, General Manager

"Excellent briefing." - Conference Attendee

Expanding from Production to Project Management with TOC
ESCO Turbine Technologies is a global network of companies and alliances that manufacture components including investment castings for the aerospace, industrial gas turbine, armament, micro-turbine, turbochargers and premium industrial market segments. Gray-Syracuse manufactures investment castings, utilizing super alloys cast in vacuum or air melt, for customers in the aerospace, industrial gas turbine and armament markets.

Gray-Syracuse is in its seventh year of ongoing improvement using TOC in the production environment. The impact of 9/11 on the aircraft industry made clear other significant improvement had to be made. As if that event wasn’t enough, the Enron collapse rippled through the industrial gas turbine supply chain. The constraint had very clearly moved to the market.

With its sights set on improving its new product development process, the company expanded into TOC Project Management in early 2003. Preliminary results since the TOC Quick Start^SM training began include a 59% improvement in product development lead time and a near tripling of on-time project completion. This presentation explores the associated cultural challenges as they work to break with decades-old assumptions and further refine their TOCPM implementation.

JCT-02 Eastern Financial Florida Credit Union
Presenter:
Kendrick Smith, Chief Financial Officer

Creating a Competitive Advantage in the Mortgage Lending Business
Eastern Financial Florida Credit Union is the largest credit union in South Florida, and among the top 35 in the nation. A full-service financial institution with $1.8 billion in assets and more than 183,000 members nationwide, Eastern Financial still acknowledges the common bond and ideals it shares with credit unions worldwide: not for profit, but for service.

In 2003, Eastern Financial's Mortgage Department was faced with the problem of having more applicants than they were able to process in a timely manner. This problem was amplified by low interest rates that encouraged every mortgage owner to refinance their loan. By applying TOC principles, a new workflow was implemented to focus on obtaining complete applications up front, processing and closing loans using trigger dates, reducing dysfunctional multi-tasking work habits, and increasing loan closings.

Results include greatly improved on-time delivery, increased member satisfaction and an improved work environment. Profits are up due to a 24% per month increase in loan closings coupled with a near elimination of outsourcing and overtime. This afforded them an opportunity for a First Mortgage Product Offering and enabled a strategic decision to double the capacity of the system.

This presentation examines Eastern Financial Florida Credit Union’s journey towards creating a competitive advantage in the mortgage lending business, lessons learned and the ability to quickly modify their product offerings.

JCT-03 The Boeing Company
Presenter:
David Christ, Critical Chain Coordinator, F/A-22

"Excellent presentation!" - Conference Attendee

Critical Chain with Earned Value - Partnering for Success
Boeing is partnered with prime contractor Lockheed Martin on the F/A-22 Air Dominance Fighter. Boeing designs, builds and supplies the wings, aft fuselage and other components to Lockheed Martin.

On this project, Boeing is using TOC Project Management (Critical Chain) in conjunction with Earned Value Management. They have found that using these two systems in harmony creates an integrated cost and schedule system providing all the benefits of the Critical Chain method with all the budget, cost and schedule performance visibility of Earned Value Management.

This presentation is an exploration of the core objectives, motivations and mutual benefits supporting the marriage of Earned Value and Critical Chain. It covers process rather than results.

JCT-04 Lafayette College Alumni Association
Presenters:
Ed Alkire, Executive Consultant, Alkire Consulting
John Leone, Director of Alumni Affairs, Lafayette College
Dee Bradbury Jacob, Partner, AGI and Lafayette Alumna

Breaking Through Functional Silos with Strategic Planning
Like many organizations, Lafayette College tended to operate in functional silos. As the Alumni Association began the task of creating its five year Long Range Plan, it was faced with the challenge of either focusing on improving itself for its own sake, or specifically tying what it would do to the College’s success. It was decided that the intent of the plan is to be responsive to the College’s goal and strategic initiatives, to align the Alumni Association’s mission and activities with those of the College and to integrate the “Lafayette Experience” into the lives of their alumni.

The TOC process for planning broke down silos through the cross-organizational participation in analyzing what to change, creating what to change to and how to cause the change. As a result, the planning process and alumni organization gained new respect, access and participation to ensure its success. The issues the Association faced and the buy-in route are applicable to many other organizations.

This presentation describes the problems faced, the process used to identify and achieve the Association’s goals, and results to date.

JCT-05 Air Force Flight Test Center 412th Test Wing (AFFTC)
Presenters:
Mark Watson
Don Johnson, Chief, Project Implementation Division
Larry Joe Dale, Reengineering Implementation PM

"Superior presentation - best in show!" - Conference Attendee

Project Management with the Right Stuff, Part Two
The 412th Test Wing, located at Edwards Air Force Base, California, plans, executes, and reports on test and evaluation projects dealing with airframe, propulsion, and avionics and electronic warfare for the United States Air Force, as well as commercial and foreign customers. The acknowledged global leader in test and evaluation, the Test Wing oversees over 300 projects with an annual budget of $650 million. They are now in their third year of a complex, organization-wide, TOC multi-multi-project implementation.

In this presentation, AFFTC shares its experiences regarding the technical, cultural, and strategic implications of implementing and using TOC Project Management and the TOC Thinking Process Tools, as well as their “next steps” and the obstacles they will face.

2 tapes or 1 DVD

JCT-06 Nike
Presenter:
Bruce Watson, Director of Demand-Pull Implementations

"Worth the price of admission." "A home-run. Must come back." "Has reenergized and motivated me to achieve success." - Conference Attendees

Gaining Buy-In in Large Organizations
Nike is a global marketer and wholesaler of sports and fitness related consumer products with approximately 20,000 employees. Its products are manufactured in over 40 countries with significant distribution and sales in the United States, Europe, Asia and Latin America.

Implementing the TOC Supply Chain Solution in a large organization presents unique problems. How do you gain agreement in an organization environment that is matrix oriented, has competing goals, and where the scope of the implementation seems too large to accomplish?

This presentation focuses on the lessons learned in navigating the organizational complexities to determine scope and gain buy-in both internally and externally, and reports impressive results achieved in a very short period of time. Whether you’re in a large or small organization examining real supply chain improvement the lessons learned are equally applicable, making this a must see presentation.

JCT-07 Pratt & Whitney
Presenter:
Jim Weisheit, Critical Chain Project Leader

Pratt & Whitney is an aerospace company with over $7 billion in sales of gas turbine engines for commercial, military, space and industrial applications. In 2003, their facility in North Berwick, ME began a pilot TOC Project Management implementation in a development engineering environment, as Mr. Weisheit’s thesis research.

This presentation covers the goals of the implementation, the measurements of success established, projects implemented, cultural changes experienced and key results to date.

JCT-08 Sumino
Presenter:
Mr. Ryoji Nakagawa, Manager, Sales & Purchasing Group

Sumino is a US$50 million automotive parts manufacturer based in Japan. The company employs 160 and has a product line of approximately 2500 items. Sumino’s major customer is Mazda, a subsidiary of the Ford Motor Company.

When Sumino began its TOC Internal Supply Chain (Drum-Buffer-Rope) implementation in the early part of 2003, the company had some familiar problems they wanted to solve: too much WIP and finished goods, missed due dates, long lead times, lots of expediting... They weren’t achieving their desired bottom line results using Kaizen.

This presentation discusses Sumino’s issues, details of the implementation process and lessons learned. Also covered are results-to-date, which include a net profit increase of US$1.7 million and order fulfillment lead time reduction of 83%.

Available in English or Japanese.

JCT-09 Dead Sea Works
Presenters:
David Issahary, Ph.D, Head of Statistics & Process Control
Alex Klarman, Ph.D, President, Goldratt Institute (Israel)

"Emphasis on statistical underpinnings of TOC was useful." - Conference Attendee

Dead Sea Works is one of the world's leading manufacturers of potash, and makes a wide range of other products based on extraction of Dead Sea minerals. The company is situated on the shore of the Dead Sea -- the lowest point on the face of the Earth. It employs approximately 1600 and has an annual turnaround of over $500 million. Most of its production is generated using solar energy.

The presentation includes a description of the plant, its processes and the flow of material through it, as well as the improvements the company was able to implement applying TOC in conjunction with Six Sigma. A key focus of this presentation is the statistical method based on TOC principles that Dead Sea Works used for identification of bottlenecks in a chemical continuous-stream industry, and the way to break them.

JCT-10 Gunze
Presenter:
Masaki Hisamichi, Executive Senior Consultant, Japan Research Institute

"A great job stressing results." - Conference Attendee

Gunze is a top-five apparel and fabric company in Japan. It began its TOC journey in ELMA, one of its electronics divisions, where it successfully developed a new business system based on the TOC Internal Supply Chain model. Based on the results achieved in ELMA, Gunze used TOC to reassess its Apparel division business strategy and developed new functional strategies based on the Market Demand-Pull^SM solution to support the changes in the market conditions.

Key targets, such as reduction in production lead time and supply chain inventory, and improved customer service level were established. An implementation plan was developed and enacted.

This presentation discusses the planning and implementation process, challenges faced and lessons learned.

Having met the project’s objectives to date, Gunze is now planning to roll out the TOC SCM model both upstream and downstream, and will be using TOC PM to address product development constraints.

Available in English or Japanese.

JCT-11 Honeywell
Presenters:
Bo Kowalsky, PMP, Project Manager, CCPM

Network Building: Lessons Learned and the Importance of Daily Reporting
Honeywell International is a $23 billion diversified technology and manufacturing leader. Based in Phoenix, Honeywell’s aerospace business is a leading global provider of integrated avionics, engines, systems and service solutions for aircraft manufacturers, airlines, business and general aviation, military, space and airport operations.

Honeywell DSES Albuquerque began its Critical Chain Project Management implementation in February of 2001. Even though Project Management was a long established discipline in the organization, this new way was somewhat of a culture shock. Project networks were known about but seldom used, and status reporting was typically done monthly, and on a very few projects, weekly. Mindsets needed to change, and in attempting this, many lessons were learned. This presentation explores some of these lessons, and focuses on process rather than results.

JCT-12 Nike: The Rest of the Story

"Worth the price of admission." "A home-run. Must come back." "Has reenergized and motivated me to achieve success." - Conference Attendees

Presenters:
Bruce Watson, Director of Demand-Pull Implementations
Hugh Cole, Partner, AGI

The Rest of the Story: Dealing With the Issues of Buy-In for a TOC Supply Chain Implementation
Nike is a global marketer and wholesaler of sports and fitness related consumer products. The company manufactures in over 40 countries with significant distribution and sales in the United States, Europe, Asia and Latin America.

“It’s all about trying to understand this thing called buy-in.” How do you gain agreement in an organization environment that is matrix oriented, has competing goals, and where the scope of the implementation seems too large to accomplish? This presentation is an audience interactive session discussing the actual series of buy-in events that occurred during the Nike TOC Supply Chain implementation.

Topics include the handling of concerns and obstacles that arose during the process, achieving buy-in from top management, taking the solution to the suppliers, and a listing of the key points that are critical to ensure success. This discussion is probably the most detailed review of an actual buy-in process following the TOC Six Layers that you’ve ever seen. (By the way, this same process works for small organizations as well!)

JCT-CD Conference Proceedings

Conference Proceedings from TOC World^® 2004. Included on this CD-ROM are materials from Breakout Sessions and Client Presentations in PDF format (Adobe Acrobat Reader version 5.0 or greater required).

Note: Material from the PreConference sessions not included.