Toc for smart production- excerpts of invited lecture delivered at the colloquim of production engineers, 26th indian engineering congress-2011, bangalore, india
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Toc for smart production- excerpts of invited lecture delivered at the colloquim of production engineers, 26th indian engineering congress-2011, bangalore, india

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The document gives an overview of Theory of Constraints, TOC and describes its application to the Production System. Focusing mechanism being the basis of TOC, the document emphasises, how it makes a ...

The document gives an overview of Theory of Constraints, TOC and describes its application to the Production System. Focusing mechanism being the basis of TOC, the document emphasises, how it makes a Production System more responsive to the rapidly changing business conditions. It also highlights TOC as a management technique, that allows the organization to dramatically improve its performance and deliver astounding results quickly, without taking too much of risk and without exhausting crucial resources.
The document also summarizes status of TOC implementation in India. As, India and other Emerging Economies struggle with unpredictable macro-economic conditions, managing the TOC way, is proposed as a strong antidote, in realizing their dreams of reaching up to the prosperity of developed nations.

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Toc for smart production- excerpts of invited lecture delivered at the colloquim of production engineers, 26th indian engineering congress-2011, bangalore, india Toc for smart production- excerpts of invited lecture delivered at the colloquim of production engineers, 26th indian engineering congress-2011, bangalore, india Document Transcript

  • TOC for Smart Production Shridhar Lolla, PhD lolla@cvmark.com CVMark Consulting, Bangalore, IndiaTranscript of Guest Lecture delivered at the Colloquium of Production Engineers, in the 26thIndian Engineering Congress- 2011, at Bangalore, India, on 16th Dec 2011.Abstract:The document gives an overview of Theory of Constraints, TOC and describes its application to theProduction System. Focusing mechanism being the basis of TOC, the document emphasises, how itmakes a Production System more responsive to the rapidly changing business conditions. It alsohighlights TOC as a management technique, that allows the organization to dramatically improve itsperformance and deliver astounding results quickly, without taking too much of risk and withoutexhausting crucial resources.The document also summarizes status of TOC implementation in India. As, India and other EmergingEconomies struggle with unpredictable macro-economic conditions, managing the TOC way, isproposed as a strong antidote, in realizing their dreams of reaching up to the prosperity of developednations.KeywordsTheory of Constraints, TOC, Focusing Mechanism, Eli Goldratt, Goal- the process of ongoingimprovement, TOCICO, Thinking Process, Production, More on Less, Process of Improvement,Operation Excellence, Management Effectiveness, Productivity, Indian Engineering Congress-2011,TOC in India, Manufacturing, New Manufacturing Policy, Emerging Economies, Sustainable Growth1. The NeedIn order to be competitive, it is imperative that organizations become more responsive indealing with rapidly changing and frequently unpredictable business environment. Asignificant degree of responsiveness or the „rate‟ of delivering value to customers, is providedby an organizational function or process called „Operations‟. Operational Excellence istherefore, increasingly becoming central to the main strategy of organizations.2. The Role of a Production SystemProduction being a dominant subsystem of Operations, has a direct responsibility inimproving responsiveness of the organization. Therefore, the prime role of Production is toever improve the rate of flow of goods and services.While throughput is its prime measurement, a Production System must have a direction thatis decided by the demand in the market. The direction is set by the specific scale and scope ofsupplies required by the market. In order to be more effective, Production must, by design,Copyrights ©2011, Shridhar Lolla, All rights reserved. 1
  • deal with the changes taking place in the market place. This is fundamental to understandingof a responsive Production System.Translation of above fundamentals into shop floor (production area) language means that aProduction System must process only those work orders that are required by the market, andmust not process, those not required. Producing what is not required NOW, instead ofproducing what is required NOW, only delays the response time of what is needed in themarket. Given the short „window of time‟ of operations (one lead time), it demands fromProduction, a behaviour to avoid wasting its capacity by not processing what is not required.This also avoids chaos that could otherwise further slow down its response time.However, with time, the „specifics‟ of urgency of the market changes and so, the completeProduction System must be aligned to buffer and/or steer itself with specific changes. Inorder to achieve such flexibility, the system must operate with a single priority system andavoid creating local optima that might otherwise, prevent the organization from respondingfaster to urgencies, and prevent it from making the difference in the marketplace. A prioritysystem that helps in meeting a distinctive promise (e.g. due date, availability etc.) made tocustomers, is a good priority system.Of course, a smart Production System must operate with minimum urgencies, thoughurgencies due to statistical fluctuations and sometimes due to Murphy and Black Swan Effectcannot be avoided.As Production is aligned in the direction of changes in the market, it would reach a level ofeffectiveness, beyond which a conscious effort to seek „improvement‟ in the performance, isneeded. Lean, Six Sigma, TQM, 5S, SPC, Kanban, SMED, Poka Yoke, Agile Manufacturing,MRP, ERP, Digitization, Automation, Outsourcing, Vendor Managed Inventory etc. providespecific tools and techniques to improve Production System. All of these and many moretools have delivered excellent results to organizations across the world, across industries.However, with such a mind boggling number of tools and techniques available acrossdisciplines, an organization must know, which tool must be applied for what purpose andwhen. It also means that organizations need a methodology that allows them to naturallyidentify suitable tools necessary for carrying out improvements, it is ready to take on.3. Apparent Complexity in Improving Production SystemConsider a Production System, where manufacturing has over 500 resources and over 2500employees. It is normal for executives to know and be impressed by one of severalimprovement techniques; and start an implementation initiative in the organization. Forexample, improving performance of a production system may mean, crashing setup time, stoptime and process time in manufacturing.Going with Adam Smith‟s golden rule, “A system is sum of parts, and therefore, improvingall parts improves the complete system”, one tries to deploy the technique across 500resources. Doing so, in fact, becomes overwhelming in terms of effort, time and resources tobring the change. It becomes daunting. And at the end of prolonged implementation exercise,Copyrights ©2011, Shridhar Lolla, All rights reserved. 2
  • the organization somehow showcases, a 2-3% improvement in its performance, that does noteven account for the stress the organization goes through and the risk it takes. Not for nothingthat over 80% of initiatives promising all round transformation despite using well proventools and techniques, either fail to deliver results or are stopped mid ways. And, organizationswhich fall into the cultural backlash of resisting every subsequent improvement initiative , arenot fewer in numbers.One of the best way to understand the psychology of apparent complexity behindimprovements, is to ask managers, which of the following two systems, is more complex toimprove.Figure 1. Traditional way of looking at an organization, as “Sum of parts”. However, trying to makeimprovement in all areas does not improve the performance of the system significantly and often leads to chaos.The usual answer is, “Obviously, the second one. It contains 50% more components, it willrequire more resources, more people, more time, more effort, more money, more attention.To improve it, there will be more improvement projects.”4. Inherent Simplicity and TOCOne of the key issues, Managers realize during implementation of improvement programs, isthat Production is a system comprising a number of interrelated subsystems. Andimprovement in one area affects improvement goals of other areas adversely; thus creatingsignificant conflicts, chaos and resistance to change. And despite making an all out attempt todeploy even simple tools to improve all areas, the system (organization) as a whole does notmake significant headway.Whether there are 50 or 500 building blocks of a system, different blocks of the system areinterrelated and connected by cause and effect logic. They influence each other.Fundamentals of system dynamics says, “When the interconnections are too many, the degreeof freedom is dramatically low.” As a matter of fact, the improvement in performance of theCopyrights ©2011, Shridhar Lolla, All rights reserved. 3
  • system, comprising a number of interconnected subsystems, at any time is dictated not byeach and every subsystem, rather one or just a few, Figure 2.Figure 2. Reality of a System, “The more complex a system is, the simpler it is.”The reality is that however complex a system is, it is inherently simple. This simplicity existsdue to dependencies of different building blocks on each other. Managers, by their role, mustbe able to see these interactions between the blocks (working of the system); and in order toimprove performance of the whole system quickly, must avoid dealing with all the blocks atonce and individually in isolation (i.e. creating local optima). Once, they see the interactionsbetween different blocks, it becomes easy for them to establish the cause and effect betweenthe system goal and the building blocks, and obtain significant impact on the system withminimum effort. On the other hand, for managers are always busy, if they tend to overlookthe interactions between the building blocks, even a system with just a few componentsbecomes more complex than a system with more components but with known interactions.And therefore, at any moment, Managers in Production, must focus on just the few things thatlimit progress of the System towards its goal of improving flow. Such a limiting element iscalled Constraint. The management technique, which offers a systematic way of identifyingand leveraging Constraints, is thus called Theory of Constraints [1].Once the limiting element is identified, Managers can choose the respective technique or toolto deal with the performance of the Constraint, and thus improve performance of the system.5. TOC- A Key to Enhanced Management EffectivenessRecognizing that every system operates with finite resource base and a Production System‟soperating horizon is limited by a lead time, Managers must focus on just a few things thatprevent the plant from reaching closer to its goal (delivering goods within a short lead time).In fact, the number of things, a (Plant) Manager can give attention to, is limited by the needto deliver things within the lead time (the operating horizon). Under such a situation,management attention becomes highly scarce resource. Since managers are involved inmultitasking and are the key change agents, they need to pay attention to those things that aremore important and urgent. Therefore, managing business by managing Constraints, is theonly way in making best of whatever time they have. This is analogous to recognizing theCopyrights ©2011, Shridhar Lolla, All rights reserved. 4
  • famous proverb, „Strength of a chain is dictated by its weakest link”. Hence, as a process ofimprovement, it is imperative to strengthen the weakest link before strengthening other links.6. TOC’s 5 Focusing StepsTOC equips managers with a methodology in identifying the System Constraint (slowestresource or process) and in developing an improvement process to make “more on less”,quickly. Called as Focusing Mechanism, the methodology is captured in five focusing steps,also called as 5F steps, which are [1,2]:Step 1. Identify the system‟s Constraint.Step 2. Exploit the system‟s Constraint.Step 3. Subordinate everything else to the above decision.Step 4. Elevate the system‟s Constraint.Step 5. If a Constraint is broken, go back to Step 1. But don‟t allow inertia to become aConstraint.7. Constraint ManagementAs you would see, performance improvement by constraint management is a cyclic process,and that is why TOC is a powerful transformational methodology.Figure 3 Focusing mechanism is a cyclic process of constraint managementOf course, in Production, we are used to the term Bottleneck. However, TOC uses the wordcapacity „Constraint‟ resource. A vast majority of studies reveal that capacity of a plant iscapacity of its people to see hidden capacity and not just capacity of a resource. In fact, theway a resource is managed, often makes it a Constraint, even if its design capacity could beCopyrights ©2011, Shridhar Lolla, All rights reserved. 5
  • higher than several other resources. This is a fundamental understanding and pivot to thethinking of Constraint Management and the belief to leverage potential of the Constraint.TOC proposes that once the Constraint is identified, the complete organization must focus onthe Constraint; since any improvement in the performance of the Constraint, gives immediatebenefits to the complete organization, and takes the organization immediately closer to thegoal. Conversely, at a moment of time, other things remaining the same, trying to improveany other part of the plant than the Constraint, will not improve the system but will only leadinto exhausting scarce resource of the organization, starting with management attention.The Step-2 of focusing mechanism, therefore, is to secure the time of the Constraint, suchthat its time is not wasted. An important element in securing the time of the Constraint is bycreating a buffer of work in front of the Constraint. The intention of using a buffer is meant toinsulate the Constraint from disturbances that might take place upstream.In manufacturing, it may mean, always ensuring availability of just enough stock, in front ofthe constrained resource. This also means monitoring the Constraint closely, and figuring outits stoppages and runtime. Now if there are stoppages like changeover, lunch break, cleaningtime, inspection etc, all these must be re-engineered to reduce unproductive time of theConstraint. And if any of the essential steps within or outside the Constraint‟s process hashigh variability, it must be made more stable. Any waste reduction technique (Lean) orvariability reduction technique (Six Sigma),that protects the time of the Constraint must bedeployed here.This approach called „exploiting‟ the constraint is a profound way of, focusing improvementactivities on the most vital part (weakest link) of the system, thus turning weakness intostrength. Compare this with the traditional approach of measuring utilization of all resources,and trying to keep them busy always to achieve high utilization or justify return on asset. Andwhen one runs after so many resources, attention of the plant manager gets dilutedeverywhere, and effectiveness of precious management time is blunted. And for the samereason, piles of inventory are kept in front of all resources to prevent them from starvation.This keeps all resources very busy and make shop floor look like a battlefield. Of course, itleads to a huge work in progress(WIP), hides defects, elongates lead time, increases cost; andcreates chaos and conflicts. And then, suddenly, nobody loves production, people find theirwork and home life unbalanced and they start claiming that there is a capacity problem.The Step-2 allows you to focus on Constraint and exploit it, so that sudden capacity ofconstraint is revealed. However, Step 2 is not sufficient in itself.8. Alignment of OrganizationIn Step-3, everybody subordinates to the Constraint, as it dictates the rate of movement of theorganization, towards its goal.This is the step that aligns all the parts of Production and external system to the rhythm ofthe Constraint. It also means that TOC asks the over capacity, better performing and moreCopyrights ©2011, Shridhar Lolla, All rights reserved. 6
  • capable resources, functions, department and subsystem to subordinate to the Constraint;which calls for a dramatic change in behaviour across the flow. And this (the behaviourchange) is not trivial. In this process of alignment, when organization focuses on theConstraint, it helps people who work around Constraint to identify hidden capacity.„Subordination‟ is a dirty word in a freewheeling society. But in a team and a system,Subordination to the overall Goal and therefore, to the root cause of progress towards goal, isessence of team spirit. In the context of Production, it means that the other resources orfunctions, must ensure that serving the Constrain is on the top of their action points and theirlocal strategies are geared to maximizing utilization of the Constraint . It means that 1. The Resources upstream to the Constraint, consciously avoid becoming haughty of their overcapacity and eschew student syndrome. It is often seen that once a Resource is declared as the Constraint, others thump up their chest and relax, believing that they have huge amount of time advantage over the Constraint and can catch up with the Constraint any time. Hence, the resources that precede Constraints, often get into negligence and laziness, run into student syndrome and try to catch up at the last moment. However, Murphy is always live and kicking, and its strikes at the most unfortunate times. Any failure of feeder resource or functions to the Constraint, immediately results in loss of throughput of the complete plant or the line. 2. Eschewing student syndrome does not mean that the upstream Resources produce as much as possible and stock huge inventory in front of the Constraint. The inventory in front of the Constraint is a protective inventory (as per step-2), which is just enough to prevent it from starving. Once the protective stock is built at the Constraint, producing more than the rate of the Constraint, will only create extra inventory and create chaos upstream. Chaos in the upstream will prevent responsiveness and natural advantage of the upstream system and would jeopardize utilization of the Constraint. 3. The resources downstream of the Constraint, could also fall into such a behaviour trap. It is the responsibility of the downstream resources to be always in a ready to serve state or relay race behaviour, to pick and run, as soon as the Constraint delivers work to it. This is because, with focus on the Constraints, if the work order processes by the Constraint gets delay downstream, all the effort in improving utilization (exploitation) of the Constraint is wasted. 4. Take also the case of supporting departments like, Supply Chain, HR, Quality, Maintenance, Finance etc. All must ensure that amongst their whole lot of daily list of activities, they give priority to the needs of the Constraint, in case their attention is needed. For example, if a breakdown takes place at the Constraint, maintenance department ensures that its team first attends to the constrained resource. Similarly, if it is found that in order to exploit the Constraint, some expenses are needed, despite difficult times, Finance department must subordinate to the Constraint and release funds on fast track to speed up service to the Constraint. The same is applicable to the HR and raw material procurement policies.Copyrights ©2011, Shridhar Lolla, All rights reserved. 7
  • 9. TOC is not 80:20Invariably, increased attention at the Constraint drives improvement of capacity of theConstraint quickly, and it drives quick improvements through the complete system. And animprovement of 10% in Constraint means an improvement of 10% for the entire line or flow.Thus, TOC is not about 80:20, but a 99:1, 99.9:0.1 or 99.99:0.01 approach. Most of theseimprovements start surfacing in much less than one lead time of the plant. And that is whyTOC makes a Production System smarter.It is important to mention here that 80:20 rules is applied when there are mutually exclusivecauses or elements, i.e. when there is a clear case of independent causes to a problem. Oncethe „20‟ elements or causes are identified, it is possible to further drill down and identify theroot cause, by 5-why technique. However, this rule is inadequate, when the elements of thesystem or a problem are interdependent, especially when human behaviour and policies comeinto play.In a dependent system, cause and effect techniques, as provided in TOC, help in identifyingthe core problem or constraint. The (Effect-) Cause –Effect technique is not though a simple5-why technique, rather a logic tree that relates to different intermediate causes and effects tothe root cause and main effect (undesired effect, UDE).The Effect-Cause-Effect logic is used not only in identifying core problem but also inbuilding and implementing a robust solution to the core problem.Even when the core problem or a constraint is clearly identified, the solution or exploitationmay not be directed by the 80:20 rule; for the simple reason that a constraint need not be aresource.10. Often Constraint is not a ResourceOften Constraint is not necessarily, a physical resource in the plant; and Step-2 and Step-3 of5 Focusing Mechanism, give significant insights into this aspect. The System of Productioncomprises a number of functions and departments, while Production itself is a part of a biggerorganizational system, where each element influences some other, and the Organization as awhole. And the interrelated subsystems on an ongoing basis need to subordinate to therequirements of the Constraint, thus forcing to continuously churn their policies. Thus, itforces the organizational policies (as well as structure), to be made to help itself manage theTOC way. In fact, a vast majority of Constraints are Policy Constraints and not ResourceConstraints. A Resource Constraint may though often give a signal towards other type ofConstraint.Only when the Constraint is fully improved to the level, where further improvement leads tolaw of diminishing returns or the demand increases too much, the capacity of the Constraintis elevated, say, by increasing the scheduled hours, by additional resources, by adding moremanpower, by outsourcing the specific process etc.Copyrights ©2011, Shridhar Lolla, All rights reserved. 8
  • When the capacity of the Constraint is elevated, it does not remain a Constraint any more,and therefore the Step-5, that takes the organization to the next cycle of progressiveimprovement.Figure 4 TOC is a management technique for building the process of ongoing improvementAt Step-5, the team need to set out for the next constraint that prevents the system fromgrowing to the next level, and follow through Step-1 to Step-4. When the next constraint isidentified, some of the rules set while exploiting the previous constraints may need to berevisited.11. Recorded Benefits of TOCAs we stand today after 25 years, since Eli Goldratt introduced it, TOC has been applied inProduction, Projects, Product Development, R&D and Service Business. An independentstudy [4], of Theory of Constraints implementations around the world found that huge resultswere consistently achieved: Lead Times Reduced 69% Cycle Times Reduced 66% Due Date Performance Improved 60% Inventory Levels Reduced 50% Revenue / Throughput Increased 68%And of course, along came significant improvement in quality and cost. All these in shortertimeframes, without taking too much risk and without exhausting crucial resources. Suchimprovements are testimony to TOC‟s capability in equipping organizations in implementingimprovement projects quickly, and thus dramatically improving their ability to respond fasterto the changes taking place in the business environment.Copyrights ©2011, Shridhar Lolla, All rights reserved. 9
  • 12. The Realm of TOCThe realm of TOC, is beyond its classical application in Production. It has a systematicThinking Process (TP) that helps organizations irrespective of their nature and domain, toidentify and manage Constraints, and bring quick improvements. The Constraints would vary,depending upon the type of situation, and the Thinking Process helps in identifying them.This unique Thinking Process helps managers in blending their intuition with the availableanalytical tools.When used in a systematic way, the set of Thinking Tools, allow organizations in walkingthrough a sequence of steps involved in establishing a sustainable improvement process.These logical thinking tools are used to identify the core problem (Constraint), finding abreakthrough solution, building the solution, dealing with obstacles and reducing the negativeramification of a solution. Subsequently, they help in implementing improvement projects. Inorder to transit from the current state to a desired state, TOC also provides a tool calledTransition Tree.TOC provides a thinking tool called Strategy and Tactic Tree (S&T Tree) that connects allactions at the SOP levels to the objective of the organization. S&T Tree is also a strongcommunication tool in allowing each layer of the organization in clarifying its understandingabout the new solution, expectations and specific role in improving the organization.All these tools are in the form of logic diagrams and are very intuitive. It is this gamut oftools, with its own ontology, makes TOC a complete body of knowledge on improving theprocess of improvement. Here is the list of thinking process tools from TOC [3]:  Current Reality Tree (CRT)  Evaporating Cloud or conflict diagram (EC)  Future Reality Tree (FRT)  Negative Branch of Reservation (NBR)  Prerequisite Tree (PRT)  Transition Tree (TRT)  Strategy and Tactics Tree (S&T)13. Standard Solutions of TOCAll the TOC solutions that are built for different situations, in Production, Project, Sales,Marketing, HR, Finance etc. were originally built using the Thinking Process tools. Thesesolutions, although have a generic templatization for similar situations, there is always a fairdegree of customization required to fit them for a particular organization. And under such asituation, managers must make use of structured thinking process to build their own processof ongoing improvement.Copyrights ©2011, Shridhar Lolla, All rights reserved. 10
  • The standard solutions from TOC include: 1. Production: DBR, SDBR 2. Supply Chain : Synchronised Pull Replenishment 3. Projects : Critical Chain Project Management 4. Marketing : Irrefutable Offer 5. Sales : Buy In 6. Finance : Throughput Accounting 7. Human Resource : The Thinking Process14. Industry Wide Application of TOCTOC has been applied successfully across geographies and has given enormous benefits inManufacturing, Engineering, Health Care, Avionics, Software Development, FinancialSystems, Education Industry etc. It has been used by big as well as small organizations, bygovernments, by private organizations and by social organizations during growth, crisis,peace as well as in disaster management.If the proceedings of TOCICO conference (Theory of Constraints International CertificationOrganization) are to indicate anything then, TOC way of ongoing improvement, is at anaccelerated pace across industries. Thanks to its ability to give organizations „more on less‟quickly, without taking too much risk and without exhausting scarce resources.15. TOC in IndiaAlthough TOC was not discovered in India, the Author remembers having seen copies of thebook, Goal [1], by Eli Goldratt, on the desks of Indian Production Managers in early 90s.Then, TOC, was only being talked about. Starting with the new millennium, actualimplementation of TOC improvement projects kicked off, and currently, India has reached acritical mass of projects, from where it looks to pick up pace significantly.Group companies of TATA, Godrej, Siemens and ABB have obtained significant benefits byimplementing TOC. The companies which have found TOC way of seeking improvementvery handy, within their budget, time and culture, include names like Westside, Bharat Bijlee,Fleet Guard, Crompton Greaves, Dr Reddy‟s Labs, L&T, Rallies, Paharpur and LibertyShoes. These companies have obtained superlative results in lead time, inventory turns,throughput and cost, across different types of business environment, in manufacturing,distribution, construction or product development.The increasing adoption of TOC way of doing business in India, can be gazed from the factthat, public listed companies have started mentioning results of TOC based projects, in theirAnnual Reports. In fact, TMTC (Tata Management Training Center) now conducts a one yearresult oriented management development program, Management the TOC way, ManTOC.The increase in TOC projects in India would not have happened without the growingcommunity of TOC practitioners and consultants. Goldratt Consulting, Vector Consulting,Copyrights ©2011, Shridhar Lolla, All rights reserved. 11
  • Avenir and Mahindra Satyam, represent the front league of TOC consulting groups in India.There are several small groups, individuals and freelancers, who are engaged in pushing therate of adoption of TOC in India ahead. More recently, management schools, including theIIMs have started rolling out special sessions on TOC.The knowledge on TOC was initially created by Eli Goldratt through his popular books, andsubsequently, several Authors from abroad have made significant contribution through booksand publications. Presentations in TOCICO yearly conferences, provide a rich library ofemerging TOC concepts and case studies. Last year, the first Handbook on TOC was printedby Tata McGraw Hills and it is perhaps, the most comprehensive reference on the subject. Although, several case studies of TOC projects in India, are available on internet, anauthoritative book on the subject is yet to be published from the subcontinent. In theknowledge of the Author, the year 2012 might see release of a couple of interesting booksnarrating TOC‟s application in the local environment.16. TOC for Smarter way to GrowthWhat is the fundamental premise on which TOC is built? It recognizes that organizationsoperate within a resource constrained environment.Since, Emerging Economies are inherently resource constrained, TOC plugs into their naturalstate, very well. Last decade, they grew at scorching pace, and a vast majority of their growthhas been investment driven (read, Step-5:Elevation). Under such a situation (or the way ofgrowth), any small disturbance in the world order of economy, pushes them into despair,jeopardising the dream of improving standard of living (read, sustainable growth).Being surrounded by the worst type of macro-economic turbulence, increasingly, economistsand federal banks recognize that little correction could be done by fiscal and monetaryactions; and that presently, the situation can be improved significantly only by Executionmeasures. Which means higher throughput per capita. It is, therefore, becoming glaringlyclear that improving productivity is the only way to achieve sustainable growth for businessas well as a national economy.During the last decade, India leapfrogged into a service economy without building a criticalmass of manufacturing lineage. It is now threatened by an unsustainable service bubble builton weakening manufacturing base. Thanks to the new manufacturing policy of India,recognition to improving manufacturing throughput and productivity is dawning upon policymakers and business leaders. Now that there is a pull in the government‟s vision to improveshare of manufacturing in the GDP from 16% to 25% within a decade, there is an emergentneed to look deeper into the way production is being managed. And it just gives a feeling thatTOC could be a shot in arm for Indian manufacturers, as they strive to improve theirproductivity, quickly, without taking too much risk and without exhausting costly resources.Copyrights ©2011, Shridhar Lolla, All rights reserved. 12
  • Honestly, TOC is an imperative for emerging nations to reach to the level of productivity ofdeveloped nations. And, as we walk into the New Year 2012, let‟s hope that TOC paves theway for smarter production systems.References:[1] Eliyahu M Goldratt, The Book: Goal-The Process of Ongoing Improvement, Third Edition, GreatBarrington, MA: North River Press[2] Eliyahu M Goldratt, The Book, Production: The TOC way, Revised edition, North River Press,2003[3] James F Cox III and John G Schleier, Jr., The Theory of Constraints Handbook, Tata McGawHills.[4] Steven J. Balderstone and Victoria J. Mabi, A Review of Goldratt‟s Theory of Constraints (TOC)– lessons from the international literature.[5] Google Search, “Theory of Constraints”About the Author: Shridhar Lolla, PhD Shridhar received his doctoral degree in Electrical Engineering from the Indian Institute of Technology Delhi (IIT Delhi), obtained Masters in Technology from Institute of Technology, BHU, Varanasi and did his Under Graduation from Maulana Azad National Institute of Technology, Bhopal. His professional career includes designing and developing electrical machines mainly at ABB Motors. Later on, he was a part of the start-up team that built ABB‟s Corporate Research Centre in India. As the Head of Applications and Solutions Group, he was responsible for creating R&D programs in Manufacturing, IndustrialAutomation and Power Technology. He was also responsible for building ABB‟s R&D outsource model.During Y2K, he started up his own and almost went bust, before India‟s leading internet company SIFY, invitedhis team to build and operate online marketplaces.In December 2004, Shridhar re-entered entrepreneurial space, co-created a technology company and prepared itto a successful early stage investment.At present, he handholds entrepreneurs and business leaders, in creating organizations that are „Built toTransform‟. His clients seeking advice in the creation and operation of their businesses, come from varieddomains, including manufacturing, engineering design, software development, electronics, clean tech, smartgrid, health care, pharmaceuticals, medical devices and green housing.Shridhar is a practitioner of Theory of Constraints (TOC) and Business Model Innovation. Currently, he gives apart of his time to, presumably, world‟s largest TOC project, as an application expert. He is also a recognizedmentor with leading entrepreneurship development groups in the country.Shridhar lives in Bangalore, travels widely, listens intently to problems faced by businesses and conducts briskcoaching sessions. He can be contacted at lolla@cvmark.com or +91 94480 70081.Copyrights ©2011, Shridhar Lolla, All rights reserved. 13