In This Issue

TOC World^® 2004 Fast Approaching
Delivery Span: A Continuous Improvement by Tom Cacace
TOC Project Management in Aircraft Assembly by David K. Christ
Open Courses in March
2004 Asia Pacific Schedule Announced
Buffer Management by Bill McClelland

Letter from the Editor
by Dee Jacob, AGI Partner & Guest Editor

As a subscriber to TOC Times, you are interested in learning more about the subject of TOC and its real world application. At AGI, we try to provide this through this newsletter, articles, courses, implementations and, of course, our world wide conference, TOC World^®.

TOC World^® 2004
TOC World^® 2004 will be an exciting event where anyone interested in TOC, whether a veteran practitioner or someone just starting their journey, can find value. There are four different ways TOC World^® provides exceptional value.

The first way is through many case studies presented from the U.S. Air Force to consumer products companies, from a financial institution to a college, from aircraft maker to aircraft parts and systems makers. These studies take us from mining minerals from the Dead Sea to supporting the war fighter in the sky, to securing a mortgage or apparel. These stories are given by the actual implementers and cover not only their successes, but their lessons learned so others can be more effective in their own implementations of TOC.

The second way is through the educational breakout sessions in the areas of TOC Supply Chain and Market Demand-Pull^SM, Strategy and Thinking Processes, and Project Management. There will be fifteen different breakouts this year. Of the fifteen breakouts, ten are brand new sessions, two are new expansions of topics and three are repeat sessions, back by popular demand.

The third way is through providing three Project Management software users sessions. These sessions will allow users of ProChain, Concerto and PS8 to gather with other users and a resident expert to connect and share learnings. These sessions are geared to those who have used a tool in a Critical Chain application.

The final way TOC World^® 2004 provides exceptional value is through the three networking receptions, on Tuesday, Wednesday and Thursday evenings. Besides providing culinary and beverage treats for the palate, these sessions allow attendees to interact with presenters and experts, and network with each other in a casual but enjoyable atmosphere.

Don’t forget to register by February 15th to take advantage of the best early bird registration rate currently available.

New Articles in this Edition
This edition of TOC Times also brings three new articles which will be of interest. The first one is Delivery Span: A Continuous Improvement Measure by Tom Cacace of Gray-Syracuse. It describes the customer delivery metric the company has developed.

The second is TOC Project Management in Aircraft Assembly by David K. Christ of The Boeing Company. This white paper covers the group's TOC Project Management implementation and, ultimately, how the factory made TOC PM, Lean Manufacturing and Earned Value Management System work together.

The third is Buffer Management by Bill McClelland, AGI Partner. Topics covered include project buffer calculations; decreasing size buffer management; and buffer recovery when the Critical Chain is, and is no longer, the dominant chain.

Enjoy!

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TOC World^® 2004 Fast Approaching

Register and pay by February 15 to receive an early registration discount!

TOC World^® will make its return to the exciting Mohegan Sun in Uncasville, Connecticut, April 13–16.

Why go to TOC World^® 2004? Whether you’re a TOC veteran or relatively new, this conference is the place to hear in-depth case studies in TOC Strategy, Supply Chain and Project Management from companies like

• The Boeing Company F/A-22 Program
• Dead Sea Works
• Eastern Financial Florida Credit Union
• Gray-Syracuse
• Gunze
• Honeywell Defense & Space Electronic Systems
• Lafayette College
• Pratt and Whitney
• United States Air Force (AFFTC 412th Test Wing)
• and a Multi-National Consumer Products Company

You will understand what they did, how they achieved their results and most importantly, the lessons they learned in order to help you in your strive for success.

Breakout Sessions
There will be 15 breakout sessions that will provide hands-on learning in the TOC Thinking Processes and Strategy, Supply Chain and Market Demand-Pull^SM, and Project Management. Among the breakout sessions:

• Henry Ford’s Lean Vision & TOC - A Comparison & Contrast will summarize the alignment of Ford’s philosophy and the origins of TOC.

• So Many Tools...So Little Time, a two-part session, will demonstrate how TOC, Lean, and Six Sigma can work in an integrated fashion to accelerate your results

• Shrinking Critical Chain Schedules without Putting Your Schedules at Risk will show you through real-life examples ways to significantly take time out of your schedules and still be well-immunized from the affects of uncertainty.

• The Practical Application of the Six Steps of Buy-In Where Buy-In is Critical will demonstrate how to effectively use the six steps when obtaining buy-in is essential.

• The Rest of the Story: More Details of Supply Chain Buy-In will present in detail how to move a large organization and how to deal with external organizations.

• TOC Supply Chain: It's Based on Market Demand-Pull^SM ...but there's more will introduce the TOC Logistical Solutions that are needed if you're really serious about improving your supply chain.

• Hands-On Network Building will use a case study to show participants not only the how-tos, but also the tricks of the trade.

• Properly Accounting for & then Managing Uncertainty with TOC Project Management will provide a deeper understanding of how to model iterative work sequences within a project, how to protect against special cause variability, and how to properly manage safety throughout project execution.

• Integrating TOC Project Management with the Earned Value Management System will show how these two systems can work together seamlesly and demonstrate how it all came together for CAE Systems.

• TOC Project Management - Experience it for Yourself! is a live, interactive game in which you manage the priorities, resources and buffers using the TOC Project Management solution.

• A Practical Guide to Creating an Executable Strategy introduces a methodology for using the TOC Thinking Processes in a group setting and provides anecdotal evidence of the significant benefits - even for leadership teams that some might describe as dysfunctional.

• Organizational Alignment will demonstrate how the TOC Thinking Processes help to align local actions to global organizational needs in ways that don't ignore important employee needs.

• TOC Thinking Processes: Evaporating Clouds and TOC Thinking Processes: Negative Branches will provide hands-on training in resolving day-to-day conflicts and addressing unintended consequences of proposed actions, respectively.

And, TOC World^® 2004 includes three evening receptions where the emphasis is on networking and interacting over food and drinks, allowing each participant to learn from the experts and presenters in a relaxed atmosphere.

For more information, please visit www.goldratt.com/tocworld2004 or call 1.800.394.GOAL or 1.203.624.9026.

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Delivery Span: A Continuous Improvement Measure
by Thomas Cacace
ESCO Turbine Group, Gray-Syracuse, Inc.

This article is reprinted with permission from INCAST Magazine, international magazine of the Investment Casting Institute, Vol. 15, No. 6, pp. 20-21.

With the ongoing pressure to improve delivery performance comes the need to measure results. Although a number of methods exist for measuring on-time delivery, to be effective, the measure must:

• Truly reflect the needs of the customer,
• Be easily communicated and understandable to the work force, and
• Drive effective, reliable decisions and actions on a daily basis.

Since 2000, the company has begun exploring and applying more fully the theory of constraints management philosophy developed by Dr. Eli Goldratt. Full-time dedicated resources were allocated to synchronous manufacturing in 2001, and additional resources have been dedicated to Six Sigma for process controls in 2002.

Both of these decisions resulted from the realization that effective change management can only be accomplished through non-stop 100% focus. Organizations have a natural tendency, or “inertia” which pulls us back to old ways of doing things. Without dedicated resources, positive change is almost impossible to sustain. One challenge going forward will be the integration of these tools into one seamless process.

Relevant Measures
Over the past five years Gray-Syracuse has pursued an overall measurements system that is relevant and which aligns the entire organization around a balance of operational excellence and customer satisfaction. While not formally acknowledged, the company has strived to ensure that the measures it creates will first and foremost be global in nature. Localized measures only assure local optimums and do nothing to assure the success of the overall business.

Second, the measures are defined in clear, simple terms that can be understood by everyone in the company. Each individual must be able to understand their ability to impact the targets. They must also understand what global activities have occurred that have positively or negatively impacted results. The greater the awareness level, the greater the probability that the right actions will be taken.

Finally, the question must be asked: “would the customer care if we met this measure?” Meeting targets must translate to customer value. Supplier metrics provided by customers have proven to be good tests.

Another consideration has been in understanding the difference between activity focusing measures and activity outcome measures. Focusing measures are used to direct or redirect decisions and actions to be taken. Outcome measures represent just that, the outcome or result from decisions and actions already taken. A common error is to rally people around a measure that is misapplied in the first place resulting in confusion.

The frequency and timing in which measures are communicated have also been known to enhance or diminish their effectiveness. Measuring the effectiveness of today’s activities two weeks from now does little to improve learning or performance. The sooner the feedback occurs, the more useful it is to managers and operators.

Customer Delivery
“Span” Measure
In 2001, Gray-Syracuse developed a new customer delivery measure entitled “Span” to replace a four-year-old exception based measure. Span is defined as a measure of time – the time between the date of scheduled completion and the date of actual completion, of any activity. This represents a much more complete leading indicator of customer satisfaction.

The target is to ship all orders between 0 and 5 days prior to the committed scheduled ship date. Shipments at -1 or later and +6 or earlier are considered defects in the execution of the production plan. Late shipments obviously indicate that the customer may be affected by the defect. Orders available “too early” indicate inventory was produced sooner than necessary to compensate for variations in flow, and therefore probably contributed to a misallocation of production resources. While the overall outcome measure is the Shipping Span, Gray-Syracuse also tracks localized Span Measures at key milestones in the process. Week-to-week comparisons of these milestone spans provide clear indications of where variation takes effect as well as the ultimate effects of the stack-up of variation upon shipping results. Currently these localized spans are tracked at wax (release) and when parts are sent out and returned from subcontracted services.

Buffer Zone Management
Possibly the most critical element of a good Theory of Constraints (TOC) production application is buffer management. This activity-focusing measure provides instant visibility to which work-in-process jobs need immediate attention and therefore directly supports the attainment of the delivery span target. Maintaining the lowest possible inventory levels makes it possible for this tool to work.

The desired outcomes of the buffer management process are:

1. Improved decision skills and daily action,
2. Global awareness,
3. Coordinated efforts of all production departments, and
4. Continual feedback to the planning system.

Ohno was known to say, “when production control is properly understood, there is no need for inventory control.” In essence Gray-Syracuse makes every effort through its production planning and master scheduling process to assure that only the right jobs are released at only the right time.

The second principle is from Dr. Eli Goldratt. Dr. Goldratt maintains “the essence of control is to answer three questions...

1. Where is the inventory?
2. Where does it belong?
3. Who is responsible?”

An additional question has been added to the daily review process by the operations team at Gray: “What are the sources of repetitive variation and who is responsible?”

Small teams then attack these root causes that are flushed out naturally by the buffer management process. In this way the company attempts to continually strengthen the production system by removing variation.

Master Scheduling Stabilizes the System
Effective controls, overall execution, processes like buffer management, and delivery span targets are all unattainable without a stable production system. Early on planners recognized the importance of a standardized master scheduling process, but ultimately it has taken more than two years to firmly establish this function.

Each week, release schedules are established using standardized parameters for all product lines and work centers. Many companies use or attempt to use “forward-finite” scheduling features, an outgrowth of traditional Materials Requirements Planning (MRP) systems, and this is somewhat similar to the Gray-Syracuse approach. This is balanced by additionally reconciling more than 30 product mix and constraint management parameters before creating the final schedule.

Gray-Syracuse is just beginning to understand variations in flow at the level it would like to. This understanding is primarily a result of the buffer management and span metrics. The final scheduling consideration is the application of time buffers to each job or product line, based on the level of variation expected to be encountered. As defects to the targeted delivery span are recognized, the time buffer application is continually refined.

All of the scheduling parameters remain dynamic in that the more that is learned, the more modifications and improvements can be made. As Kaizen workshops remove inventory and transportation waste, corresponding planned cycle time is reduced from scheduling bills.

The Role of Information Technology
Just as a stable production system depends upon a standardized master scheduling process, master scheduling in turn is dependent upon a robust ERP database. Since 1993, Gray-Syracuse’s systems have gone through two major revisions and since 2000, several synchronous-based applications have been custom written as “bolt-ons” to the ERP.

The most important decisions are usually not related to the software programs, but instead to the data, how it is stored and structured, and how well it is maintained. Everybody experienced the realities of “garbage in – garbage out;” the only insurance policy is constant scrutiny of the data.

Gray-Syracuse is extremely fortunate to have a talented I.T. staff with an excellent user support rapport and track record.

Foundation for Control: The Production System
The production system at Gray-Syracuse has increasingly become one of the foundations for control and for the improvement process. In pursuing a culture that welcomes change, Gray-Syracuse has worked to adopt the practices of a learning organization. Shared vision and understanding of mental models are key elements to becoming a Learning Organization. Some key learning that has been applied to the production system includes:

1. Constraint management and buffer management must be at the core of everything we do.
2. Kaizen must be deployed in direct support of our Synchronous objectives.
3. Variation is still “Production Enemy #1” and we are just learning to attack it vigorously and within a short-cycle from detection.

Essentials for Progress
Time and time again the middle management becomes aware that without top management support, progress is next to impossible. Top management must be engaged, and visibly supportive of any improvement initiative, short term or long term. But while this is vital, it doesn’t end with top management. Champions must emerge from all levels in the organization to create the type of momentum required to sustain positive change.

It is very often surprising where these champions emerge from – often they are the most unexpected candidates.

Acknowledgements
The author acknowledges the Gray-Syracuse Synchronous Management Team for its ongoing learning and teaching that made this article possible.

References

1. All TOC references, Theory of Constraints, Eliyahu M. Goldratt.
2. Drum-Buffer-Rope references, A. Y. Goldratt Institute.
3. Measure Types, Synchronous Management Volumes I & II, Spectrum Publishing Company.
4. Span control concept, GE Power Systems.
5. Taiichi Ohno quote, Taiichi Ohno; Robert Reary, Peoplesoft Corp. presentation at Syracuse University Lean User’s Group meeting, July, 2000.
6. Learning Organization references, The Fifth Discipline, Peter M. Senge.

The author of this article, Tom Cacace, will be presenting at TOC World^® 2004.

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TOC Project Management in Aircraft Assembly
by David K. Christ

The Avraham Y. Goldratt Institute is pleased to host Mr. David K. Christ’s white paper, TOC Project Management in Aircraft Assembly (Copyright © Boeing, 2001. All rights reserved).

Introduction
What does one do when program performance in the initial Engineering Manufacturing Development (EMD) phase could result in program cancellation or relocation with significant loss of jobs, and have negative consequences on potential future contracts? What does one do when traditional scheduling measurements indicate work progress is satisfactory and earning value, but buffer management reports indicate project complete date is threatened?

In this paper, Dave shares the dilemma of needing to quickly improve schedule and cost performance, yet not wanting to lose ground introducing a new, but unproven application of TOC Project Management (TOC PM). He tells of managers, schedulers and workers who make the tough calls against established practices as they pilot TOC PM in the factory on an EMD program – and gradually implement TOC PM factory-wide. Dave describes the meaning of the logistical and cultural changes required to make the program successful. Ultimately, the factory makes TOC PM, Lean Manufacturing and Earned Value Management System work together.

At TOC World^® 2001, Dave presented the experiences and results to date of TOC PM in aircraft assembly. In April 2004, Dave joins us at TOC World^® 2004 to present an exploration of the core objectives, motivations, and mutual benefits supporting the marriage of Earned Value and Critical Chain.

Click for instructions on downloading the complete white paper.

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Open Courses in March

Below are the Open Courses scheduled in March. 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.

Introduction to TOC Supply Chain & Market Demand-Pull^SM
March 1-2

Supply Chain Expert Training Program
March 22-26 (week 1), March 29-April 2 (week 2), May 3-7 (week 3), May 17-21 (week 4)

Introduction to TOC Project Management
March 3-4

Project Management Expert Training Program
March 8-12 (week 1), March 15-19 (week 2), May 3-7 (week 3), May 17-21 (week 4)

Jonah^SM Program
March 8-12 (week 1), March 22-26 (week 2)

External Constraints Course
March 8-12 (week 1), March 22-26 (week 2)
March 29-April 2 (week 1), April 26-30 (week 2) - Malaysia

Jonah's Jonah^SM Program
March 22-26 (week 1), March 29-April 2 (week 2), April 26-30 (week 3)

Please note, Introduction to TOC Project Management dates have been added in Tampa, FL.

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2004 Asia Pacific Schedule Announced

Avraham Y. Goldratt Institute Asia Pacific has announced its 2004 Open Schedule. Below are upcoming dates in Singapore and Malaysia. A complete listing can be found at www.goldratt.com/openschedulesap.htm.

External Constraints Course
March 29-April 2 (week 1), April 26-30 (week 2) - Malaysia

Introduction to TOC Market Demand-Pull^SM
May 13-14 - Malaysia

Introduction to TOC Logistical Solutions
May 24-25 - Singapore

For more information on the offerings in the Asia Pacific region, please visit their website at www.goldratt.com/asiapacific or contact the office at asiapacific@goldratt.com.

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Buffer Management
by Bill McClelland, Partner, AGI

This article discusses:

• Project Buffer Calculations
• Decreasing Size Buffer Management
• Buffer Recovery When the Critical Chain is the Dominant Chain
• Recovery When the Critical Chain is No Longer the Dominant Chain

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