10.09.2015 Professor Tony Bendell TOCICO Workshop Slides

2015 TOCICO International Conference
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2015
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Anti-Fragility & The Theory of
Constraints
TWO DAY WORKSHOP 10-11 September 2015
Tony
Bendell,
Services
Limited
and

The
An>-‐Fragility
Academy

http://www.theanti-fragilityacademy.com/
http://servicesltd.co.uk/
tony@servicesltd.co.uk
tony@theanti-fragilityacademy.co.uk

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3
Ques/ons
you
might
ask

1.  Why
should
I
consider
developing
An>-‐Fragility
within
my
organiza>on,

what
does
that
mean
in
prac>ce,
and
why
is
a
focus
on
robust
safeguards

insuﬃcient
protec>on?

2.  What
is
the
rela>onship
between
An>-‐Fragility
and
the
Theory
of

Constraints
(TOC)?

3.  How
and
where
do
I
start
applying
this?

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Learning
Objec/ves

1.  To
extend
the
Theory
of
Constraints
model
and
the
emphasis
on
the

pursuit
of
efficiency
&
effec>veness,
in
order
to
enable
delegates
to

transform
organiza/onal
design
and
management
thinking
and
prac>ce

within
their
organiza>ons
taking
account
of
the
links
between
flow
and

fragility
in
their
systems
and
organiza>ons.

2.  To
enable
delegates
to
undertake
an
organiza>onal
Stocktake
of
current

fragili>es
within
their
organiza>ons,
and
iden>fy
immediate
areas
for

aCen/on.

3. 
To
enable
each
delegate
to
develop
an
Ac/on
Plan
to
transform
their

organiza>on
from
fragile
or
robust
to
An>-‐Fragile.


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Book
may
be
ordered
at:

www.gowerpublishing.com/isbn/9781472413888

35%
discount
code
G13iCO35

Or
for
signed
or
dedicated
copies
go
to:

h^p://www.thean>-‐fragilityacademy.com/#!book/c1enr


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Programme
Day
1

am:

Introduc>on
to
An>-‐Fragility

Answering
Ques>on
1

pm:

Guest
Speaker(s)


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Programme
Day
2

am:
Answering
Ques>on
2
-‐
Extending
TOC

Answering
Ques>on
3
-‐
Organisa>onal
stocktake

pm:
Building
Your
Personal
Ac>on
Plan

Review
&
Close


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Day
1
am

•  Introduc>on
to
An>-‐Fragility

•  Answering
Ques>on
1:

Why
should
I
consider
developing
An4-‐Fragility
within

my
organiza4on,
what
does
that
mean
in
prac4ce,
and

why
is
a
focus
on
robust
safeguards
insuﬃcient

protec4on?


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2015
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Anti-Fragility (Nassim Taleb)
•  Fragile
refers
to
systems
and
organisa>ons
that
can
be

easily
damaged
by
changes
or
shocks
in
the
external
or

internal
environment.

•  Robust
refers
to
systems
and
organisa>ons
that
are
able
to

withstand
such
adverse
condi>ons
up
to
a
limit.

•  An0-‐Fragile
refers
to
systems
and
organisa>ons
that,
like

biological
systems,
are
more
than
just
robust
and
within
limits

actually
improve
their
resilience
through
being
stressed.


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Are you anti-fragile?

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People are fragile

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People are fragile & anti-fragile
………but sometimes only robust

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Are
natural
systems
Fragile,
Robust
or
An/-‐
Fragile?


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Are
natural
systems
Fragile,
Robust
or
An/-‐
Fragile?

E.G.
a
Meadow,
a
Person,
a
Community
of
Bees


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Are
natural
systems
Fragile,
Robust
or
An/-‐
Fragile?

E.G.
a
Meadow,
a
Person,
a
Community
of
Bees

•  Incorporate
aspects
of
all
3


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Are
natural
systems
Fragile,
Robust
or
An/-‐
Fragile?

E.G.
a
Meadow,
a
Person,
a
Community
of
Bees

•  Incorporate
aspects
of
all
3

•  Simultaneously,
even
in
the

‘same’
aspect/dimension


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Are
natural
systems
Fragile,
Robust
or
An>-‐
Fragile?

Are
manmade
systems
Fragile,
Robust
or
An/-‐
Fragile?


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Are
manmade
systems
Fragile,
Robust
or
An/-‐
Fragile?

•  Fragile
&
Robust,
possibly
simultaneously
in

‘same-‐ish’
dimensions

•  But
un>l
now
not
focused
on
An>-‐Fragility


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What
about
Organisa/ons?


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What
about
Human
Organisa/ons?

•  Have
characteris>cs
of
both
manmade
&
natural

systems


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Nature Got There First

•  Natural
systems
have
An>-‐Fragile

features

•  Un>l
now,
we
have
only
focused
on

making
human
systems
Robust.

•  But
now
we
know
beCer!


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The
Fragility
of
Human

Organisa/ons

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Is
it
GeRng
Worse?

•  Professor
Richard
Foster
from
Yale
University
states
that
the
average
lifespan
of
a

company
listed
in
the
Standard
and
Poor’s
500
index
(S&P)
of
leading
US

companies
has
decreased
by
more
than
50
years
in
the
last
century,
from
67
years

in
the
1920s
to
just
15
years
today.

•  Foster
es>mated
that
by
2020,
more
than
three-‐quarters
of
the
S&P
500
will
be

companies
‘that
we
have
not
heard
of
yet’.

•  There
is
no
proof
that
age
makes
a
company
any
more
proﬁtable
than
younger

companies;
If
the
S&P
500
were
made
up
of
only
the
companies
that
were
part
of

the
index
in
1957,
overall
performance
would
be
some
20
per
cent
worse.

•  The
immediate
causes
of
failure
are
numerous;
changing
markets,
simple

insolvency,
corporate
crime,
inability
to
adapt.

The
Fragility
of
Human

Organisa/ons

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•  Organisa>onal
failures
are
now
commonplace,
including
those
of
iconic

ﬁrms

•  Conven>onal
management
and
management
systems
have
proved

inadequate
to
protect
both
private
and
public
sector
organisa>ons
from

catastrophic
incidents,
adverse
publicity
and
failure

•  Fragility
associated
with:

Ø  Vola>le
Environment

Ø  Weaknesses
in
Systems
&
Processes

Ø  Weaknesses
in
Behaviours
&
Management

Ø  Rush
to
Eﬃciency

Organisational Failures – The Failure of
Management & Management Systems

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The Problem of Risk Management
•  Numerous
repeated
and
well
publicised
failures
of
Risk
Analysis
and

Management

–  Inherent
Flaw
in
the
Approach:

Much
of
Risk
Analysis
and
Management
as
we

know
it
today
is
part
of
the
problem,
not
of
the
solu4on

•  Reac/ve
Approach
–
Uncertainty
&
Risks
will
occur;
we
need
to
predict
&

reduce/contain
it.

–  We
have
to
be
able
to
conceive
the
risk.

•  Ignores
aspects
of
the
internal
and
external
condi>ons
in
the
system,
including

its
complexity
and
loading,
&
assumes
stability.

•  Assumes
full
/mely
informa/on,
cri/cal

awareness
&
senior
management

aCen/on

•  Assumes
no
“Black
Swans”


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Enterprise Risk Management
–  A
New
Business
School
Discipline

–  Great
Poten>al,
But…

–  In
its
infancy

–  Not
Being
Used,
Not
Being
Used
Well

–  Educa>on
&
Governance
Issues

–  Risk
silos


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The Desire for Robust Systems
Ø  Whilst
they
exist
to
protect
people,
organisa>ons
and
communi>es,

human
systems
are
naturally
fragile.

Ø They
fail
individual
people
&
stakeholders,
and
some>mes
they
fail

systema>cally
&
some>mes
drama>cally.

Ø Weaknesses
are
caused
by
people,
by
processes
and
by
environment

excess.

Ø We
try
to
make
such
systems
robust,
but
how
can
we
establish
that

they
are
robust
enough
since
a
robust
system
just
waits
for
something

more
powerful
than
it
to
overcome
it?
Like
the
Thames
Barrier
the

robust
is
always
wai>ng
for
a
wave
that
is
bigger
than
it,
that
will

destroy
it.

Ø Robustness
may
imply
Rigidity


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The Problems with Robustness

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There
is
no
prac/cal
level
of

robustness
that
is

`Strong
enough`


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Robust
systems

don’t
themselves

get
beCer

There
is
no
prac/cal
level
of

robustness
that
is

`Strong
enough`


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Forensic Accounting, Fraud &
Mismanagement
•  Forensic
Accoun>ng
is
a
Safeguard,
But..

•  Can
be
a
bit
late..

•  The
Whole
Governance
Issue

–  Shortcomings
of
Current
Prac>ce

–  Arguable;
Diﬀerent
Perspec>ves
on
Risk
&
‘Skin
in
the
Game’

–  Board
Responsibility,
Understanding,
Educa>on,
Knowledge
&

Access
to
Informa>on

•  The
Tip
of
the
Iceberg?


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Where Fragility Exists
•  At
all
Levels/Layers…

–  Strategy
&
Governance

–  Opera>ons,
Processes
&
Supply
Chain

–  People
&
Culture

–  Informa>on
&
Technology

–  Markets,
Products
&
Services

•  Global
&
Local
Fragility/Macro
&
Micro


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Some Sources of Anti-Fragility
•  Learning

•  Awareness
of
environment
&
internal
condi>ons

•  Informa>on
systems

•  The
ability
to
take
decisions
&
act

•  Flexibility
&
Agility

•  Good
decision
making

•  Shared
&
spread
risk

•  An>-‐Fragility
(or
not)
is
deﬁned
by
the
Organisa/onal
Strategy,

Structure
and
Systems,
its
People,
Rela/onships
and
its
Culture.

We
can
then
Build
An>-‐Fragility
(or
not)
into
our
products
&

services,
use
of
informa>on
and
technology
base.


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•  Safeguarding
Systems

–  All
organisa>onal
and
system
informa>on
gathering
and
feedback
loops,

that
poten>ally
use
current
performance
as
the
basis
for
control
and/or

change,
represent
An/-‐Fragility
Features.

•  Strategy
Review;
Risk
Management;
Budgetary
Control;
Internal
&
External

Audit;
Quality
Control;
Quality
Assurance;
Developmental
and
Evalua>ve

Performance
Appraisals;
HSE
Assurance;
Con>nuous
Improvement,
Kaizan,
Six

Sigma,
Lean
Improvement,
Agile
Deployment,
&
Organisa>onal
Assessment

against
the
EFQM
or
Baldrige
Excellence
Models.

An/-‐Fragility
Features
of
Organisa/ons
and

Systems


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•  A
key
part
of
the
An>-‐Fragile
mechanism
in
all
these
cases
is
the
human

role.

•  Risk
Management
is
an
An/-‐Fragility
Feature
of
our
organisa>ons
and

systems.
But,
this
An>-‐Fragility
Feature,
is
itself
oVen
implemented
in
a

Fragile
way.
(Second
Level
Fragility)

•  Lack
of
a
holis4c
approach
to
Fragility
Minimisa0on
and
Management
in

current
prac4ce
in
organisa4onal
or
system
design
and
opera4on.

Anti-Fragility Features of
Organisations and Systems

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But the limitations are in how these
Safeguarding Systems are implemented
–  Owen
designed
for
Robustness,
not
An>-‐Fragility

–  Incomplete
informa>on
ﬂow

–  Assume
some
stability
&
no
“Black
Swans”

–  OVen
delegated
to
middle
management,
formalised
and
standardised,
so
in
danger
of

becoming

compliance-‐driven
rituals,
with
incomplete
informa>on;
with
most
importance
being

given
to
the
integrity
of
the
paper
trail
for
audi>ng
purposes,
&
inadequate
senior

management
a^en>on.


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Is
an
An/-‐Fragile
Organisa/on
possible?

•  High
Reliability
Organisa>ons
(HROs)

•  Japanese
Shinise

–  more
than
20,000
companies
in
Japan
that
are
more
than
100
years
old

– 
a
handful
that
are
more
than
1,000
years
old

–  small,
mostly
family-‐run

–  focus
on
a
central
belief
or
credo
that
is
not
solely
>ed
to
making
proﬁt

–  focus
primarily
on
the
Japanese
market

–  avoide
the
mergers
and
acquisi>ons


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A Basic Fragility Test for Your Organisation
(Score out of 100; (0-10 :10=maximum optimisation)
•  How
good
is
our
current
Approach?
(0-‐10)

•  Do
we
include
deliberate
Diversity
of
Approach
and
Deployment?
(0-‐10)

•  How
Aware
are
we
of
our
Environment?
(0-‐10)

•  Do
we
Learn?
(0-‐10)

•  Do
we
Implement
what
we
Learn?
(0-‐10)

•  Do
we
Learn
fast?
(0-‐10)

•  Do
we
have
the
Infrastructure
to
Learn?
(0-‐10)

•  Do
we
Evolve?
(0-‐10)

•  Do
we
have
the
Infrastructure
to
Evolve?
(0-‐10)

•  How
Op>mised
are
Our
Processes?
(0=highly
op>mised)


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Ten Ways An Organisation Can Become More
Anti-Fragile
1.  Don’t
think
you
are
there;
Realise
that
Never
Completely
get
there/never
completely
not

there.

2.  Be
aware,
scan
the
external
&
internal
environment,
risks,
scenarios
&
possible
black
swans.

3.  Be
joined
up
&
nimble,
keep
learning,
apply.

4.  Avoid
rigidity,
ultra
eﬃciency
&
relying
on
robustness.

5.  Don’t
automate,
engage.

6.  Reduce
the
fragility
of
an>-‐fragile
systems.

7.  Use
diversity.

8.  Apply
precau>onary
principles.

9.  Fail
owen
&
small.

10.  Stress
test.


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Where Can We Start?
•  How
ideal
is
your
world?

•  The
Board.

•  Execu>ve
management.

•  Opera>ons
management.

•  Supply
chain.

•  Front
line.

•  Risk

•  The
Quality
Department-‐
organisa>onal
quality/TQM/excellence


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Getting Started
•  Take
stock.

•  Further
develop
the
vision
&
business
case.

•  Plan
&
Manage
Change.

•  Help
develop
the
inﬂuencers.

•  Constant
review.


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Anti-Fragility as an Holistic Theory
of the Firm
•  No
single
current
Business
School
Discipline
unifies
our

view
of
the
Organisa/on

•  Also
tells
us
that
a
naive
focus
on
Op/mising
Efficiency,
or

even
Effec/veness,
is
Wrong

•  Unifies
and
provides
both
structure
around,
and

safeguards
in
applying,
change,
improvement
&
quality

approaches
such
as
Lean,
Six
Sigma,
EFQM
Excellence

Model,
Benchmarking,
QA
etc.


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©
The
An>-‐Fragility
Academy
50

Efficiency
Fragility
Robustness
An/-‐Fragility

Process
Throughput
rate,

OEE

No.
Of
breakdowns,

lost
>me

Up>me
Rate
of
decline
in
no.
of

breakdowns
&
lost
>me

People
U>lisa>on,
output

per
head

Absenteeism,
turnover
Aêndance,

reten>on

Rate
of
decline
in

absenteeism,
turnover

Technology
U>lisa>on,

Output

Failure
rate,
non

availability

Availability
Rate
of
decline
in
Failure
rate

&
non
availability

Informa>on
Timely,
reliable,

accurate.

Delay,
inaccuracy.
Timely,
reliable,

accurate.

Rate
of
decline
in
Delay,
&

inaccuracy.

Supply
Chain
Throughput
rate,

OEE.

No.
of
breakdowns
in

supply,
unsa>sfied

demand.

Con>nua>on
of

supply.

Rate
of
decline
in
number
of

breakdowns
in
supply,
&

unsa>sfied
demand.


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Stress or Time in Denominator of Rate
of Decline?
•  Using
>me
enables
us
to
establish
easy
to
measure
metrics,

which
can
be
used
to
monitor
the
an>-‐fragility
of
the

organisa>on

•  Like
“nega>ve
velocity”

•  Stress
may
also
be
useful
in
speciﬁc
“red
ﬂag”
condi>ons.


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Anti-Fragility & the Theory Of Constraints
•  TOC
op>mises
system
throughput

•  Op>mised
throughput…

…

stresses
the
system

&
may
cause
fragility

•  Opportunity
to
extend
the

TOC
Model
to
incorporate
An>-‐Fragility

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2015
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Tony
Bendell,
Services
Limited
and
The
An>-‐Fragility
Academy
England

Èvery
day
organisa>ons
fail,
unnecessarily,
with
massive
financial
and
human
cost.
We
need
to
change.

An>-‐Fragility
is
the
most
important
poten>al
breakthrough
in
business
thinking
in
my
career.
It

provides
a
language
and
unifica>on
for
all
of
the

improvement
and
produc>vity
methodologies

I
have
been
assis>ng
companies
with
for
over
20
years.
It
makes
us
realise
that
our
current
op>misa>on

criteria
are
wrong
and
efficiency,
and
even
effec>veness,
are
not
such
a
good
idea.
It
unifies
our
business

model,
giving
a
new
coherence
to
the
disjoint
func>onal
specialisms
in
our
business
schools.

Go
out
and
tell
people,
they
need
to
know
what
you
know
..
and
soon.`


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Exercise
-‐
Ques/on
1:

•  Why
should
I
consider
developing
An4-‐
Fragility
within
my
organiza4on?

•  What
does
that
mean
in
prac4ce?,
and

•  Why
is
a
focus
on
robust
safeguards

insuﬃcient
protec4on?


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Issues
with
Developing
An>-‐Fragility
within
an

Organisa>on

•  Understanding
objec>vely
the
current
state,
complacency
&
lack
of
awareness

•  Overreliance
on
Human
Role
&
Lack
of
Systema>c
Processes
for
An>-‐Fragility

•  Paradigm
issues
with
pursuing
ultra
eﬃciency
&
relying
on
robustness

•  Paradigm
issues
in
using
diversity
within
the
organisa>on,
pursuing
precau>onary

principles,
&
encouraging
broad
stress
tes>ng
&
failure

•  Paradigm
issues
in
challenging
current
governance,
vested
interests

•  Danger
of
introducing
Second
Order
Fragility


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Issues
with
Developing
An>-‐Fragility
within
an

Organisa>on

•  GeRng
Started

•  S>cking
to
it


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Ten
Common
Pi`alls
of
Fragile
Organisa/ons

1.  Not
knowing
that
they
are
fragile.

2.  Not
being
joined
up.

3.  Knowing,
not
doing

4.  Doing
Risk
Management
incorrectly.

5.  Too
much
emphasis
on
money
and
short-‐termism.


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Ten
Common
Pi`alls
of
Fragile
Organisa/ons

6.
Bureaucracy
and
emphasis
on
control.

7.
Badly
managing
change.

8.
Weak
processes
or
an
emphasis
on
ini>a>ves.

9.
Non-‐transparent
decision
making.

10.
Naive
oﬀshoring
and
ignoring
customers.


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Has Management of Constraints added to
Fragility?
•  Managing
constraints
can
reduce
process
fragility

•  But
TOC
op>mises
system
throughput

•  Op>mised
throughput…

…

stresses
the
system

&
may
cause
fragility

•  Opportunity
to
extend
the
TOC
Model
to
incorporate
An>-‐
Fragility

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Exercise

•  Which,
if
any,
of
the
10
Common
Pi{alls
of
Fragile

Organisa>ons
Apply
to
Our
Organisa>ons?

•  How
Can
We
Get
Around/Manage
These?

•  Where
&
How
Should
We
Start
to
Apply
An>-‐Fragility?

•  How
Does
this
Impact
on
Management
of
Constraints?


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64
Change
includes:

•  Developmental:
correc>ng
exis>ng
aspects
of
an

organisa>on

•  Transi4onal:
to
achieve
a
known
desired
state
that
is

diﬀerent
from
the
exis>ng
one:

•  unfreezing

•  moving
and

•  refreezing

•  Transforma4onal:
radical,
may
result
in
a
diﬀerent

organisa>on


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65
Resistance
to
Change

•  Fear:

•  Personal
standing

•  Loss
of
job

•  Increases
in
workload

•  Change
is
being
‘imposed:’

•  Not
chosen

•  Lack
of
faith
in
those
making
the
change:

•  Limited
respect

•  Something
has
been
overlooked:

•  Own
insight
or
area
of
exper>se

•  Habit:

•  ‘we
have
always
done
it
this
way’

•  Economic
implica>ons:

•  Pay
and
condi>ons
of
service


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66
An
Approach
for
Managing
Change
-‐
Force
Field

Analysis

•  Based
on
the
concept
of
‘forces’

•  driving
forces

•  restraining
forces

•  Three
fundamentals

•  Increasing
driving
forces
can
result
in
an
increase
in

restraining
forces

•  Reducing
resis>ng
forces
is
preferable

•  Group
norms
are
an
important
force


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D
R
I
V
I
N
G
F
O
R
C
E
S
R
E
S
I
S
T
I
N
G
F
O
R
C
E
S
MANAGERIAL
PRESSURE
NEW PEOPLE
NEW TECHNOLOGY
FEAR
COMPLACENCY
ESTABLISHED WORK
PATTERNS
SKILLS DEFICIT
V29
67
COMPETITION
CURRENT
STATE
DESIRED
STATE

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DISPOSITION RESPONSE TO CHANGE
Commitment Want change to happen, will work to this goal, create whatever structures,
systems and frameworks
Enrolment Want change to happen, will devote time & energy within given frameworks.
Genuine compliance See virtue in what is proposed, do what is asked of them, act within the letter of
the framework
Formal compliance Can describe the benefits of what is proposed and not hostile to them. Do what
they are asked but no more
Grudging compliance Do not accept benefits, do not go along with it, voice opposition, hope for failure
Non-compliance Do not accept benefits, have nothing to lose by opposing the proposition, will not
do what is asked of them
Apathy Neither in support nor in opposition, just serving time.
V29
68

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CURRENT
STATE
DESIRED
STATE
1. Creating a sense of urgency
2. Put together a guiding team
3. Create vision and strategy
4. Communicate the changing vision
5. Empowerment
6. Short-term ‘wins’
7.Consolidation
V29
69
8. Culture

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70
Kotter’s Recipe for Successfully Managing Change
§ Establish a sense of urgency: changes necessitate motivation
§ Create a guiding team: forming a powerful group of enthusiasts
§ Create vision and strategy: create a vision that will help to direct and
guide the change
§ Communicate for buy-in: use every medium and vehicle possible to
constantly communicate the new vision and strategies
§ Empower people: removing the obstacles, appropriate support and
resources

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71
Kotter’s Recipe for Successfully Managing Change
§ Short-term wins: creating short-term organisational and personal wins
§ Consolidating achievements: build momentum through consolidating
gains
§ Implant the new approaches into the organisational culture: unless part of
culture long-lasting results may not be achieved

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72
Exercise: Successfully Managing Change Towards Anti-Fragility
§ How will you manage change towards Anti-Fragility, what are the
challenges for you? Use a SWOT analysis to help
§ Identify the Driving and Resisting forces to change for Anti-Fragility and
construct a Force Field Analysis
§ What responses to change do you expect and who is crucial to
managing change for Anti-Fragility?
§ What strategies will you use to overcome resisting forces and people?

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Day
1
pm

Guest
Speaker(s)


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Day
2
am
(&
pm)

•  Answering
Ques>on
2
-‐
Extending
TOC

What
is
the
rela4onship
between
An4-‐Fragility
and
the

Theory
of
Constraints
(TOC)?

•  Answering
Ques>on
3
-‐
Organisa>onal
stocktake

How
and
where
do
I
start
applying
this?


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75
Theory
of
Constraints

•  All
systems
have
constraints
that
constrain/control
ﬂow

•  In
a
process
there
are
only
a
few
capacity
constraint
resources

•  We
put
buﬀers
in
front
of
these
to
keep
them
working

•  Types
of
constraints

-‐
physical

-‐
policy

-‐
paradigm

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76
-23-
‘BUFFER MANAGEMENT – CARDIFF & VALE NHS TRUST
Split the patients journey to discharge into 3 zones: green, amber, red
Actively manage patients in the amber buffer zone. Patients n the
Red buffer zone to be ‘expedited’ (advance) through their journey to
prevent breaching into Black buffer zone
Green
Amber
Red
Black

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77
CARDIFF & VALE NHS TRUST
Buﬀer
Mee>ngs

•  Weekly
mul>disciplinary
ward
mee>ng

•  Top
5
delayed
pa>ents
or
pa>ents
who
are
predica>vely

delayed
–
project
plan/escalate

•  Monthly
mee>ng
to
address
system
constraints

•  Monthly
health
community
execu>ve
mee>ng
–

commissioning
&
policy
issues
&
top
pa>ents
to
test
new

ideas/ways
of
working

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78
An
underlying
premise
of
TOC
is
that
organiza/ons
can
be

measured
and
controlled
by
varia/ons
on
three
measures:

THROUGHPUT
-‐

The
rate
at
which
the
system
generates
money
through
fulﬁlling
customer

requirements

INVENTORY
-‐

Everything
that
the
system
invests
in
that
it
intends
to
use
to
fulﬁl
customer

requirements

OPERATING
EXPENSE
-‐

All
the
money
the
system
spends
in
turning
inventory
into
throughput

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Managing
Constraints
Allows
Us
to
Increase

Throughput

BUT,
are
these:

•  The
Wrong
Set
of
Constraints?,
or

•  The
Wrong
Way
of
Looking
At
Them?


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2015
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Managing
Constraints
Allows
Us
to
Increase

Throughput

BUT,
are
these:

•  The
Wrong
Set
of
Constraints?,
or

•  The
Wrong
Way
of
Looking
At
Them?

IS
TOC
TOO
ONE
DIMENSIONAL?


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83
Spreading troops means high inventory. Closely packed troops means lower
inventory.
INPUTS JOBS COMPLETED
Classical
TOC


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84
Put the slowest soldiers at the front and the strongest ones in the rear.
In other words, restructure operations so that the most loaded operations (the
primary capacity constraints) are at the first operations and have the operations
with large excess capacity downstream
1

Classical
TOC


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85
Put a drummer at the front to set the pace
Have the sergeants constantly urge the soldiers to close any gaps
e.g. in manufacturing, the sergeant is the expeditor and the drummer is the
computerised material management system.
2

Classical
TOC


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86
Policy
&
Paradigm
Constraints

Typically
the
drum
beats
according
to

unrealis>c
assump>ons….

Like:

• 

Fixed,
constant
batch
sizes

• 

Predetermined
lead
>mes

• 

Inﬁnite
capacity

Classical
TOC

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88
Synchronized
Opera/ons

Assembly
Lines
and
Kanbans

Predetermined
inventory
buffers
(limited
by
space,
number
of
cards

etc.)
regulate
the
rate
of
processing
for
opera>ons
and
Kanban

systems.

The
instruc>on
given
to
the
worker
is

“Stop
working
when
the
buffer
is
filled!”

The
work
is
synchronized,
inventory
is
low…
but
any
significant

disrup>on
will
cause
the
en>re
system
to
stop

Classical
TOC

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89
The drum is held by the excess capacity of the gating operations (strong
soldier in front)
RESULT:
§  Inventory is high
§  Current throughput is protected
§  Future throughput is in danger
§  MUDA!
Inputs
Jobs completed
Just-‐in-‐Case
System
(Tradi/onal)


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90
The drum is held by customer demand
RESULT:
§  Inventory is low
§  Current throughput is in danger
§  Future throughput is increased
§  FRAGILE!
Inputs Jobs completed

Just-‐in-‐Time
System
(Lean)


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91
§  To prevent spreading, tie weakest soldier to the front row
§  To protect overall pace, provide some slack in the rope (time buffer)
§  Note that only one soldier is tied to front row
Drum-‐Buﬀer-‐Rope

4

Classical
TOC


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93
Time buffer The Capacity Constraint Resource
should dictate the schedule based on
demand and its own potential
The schedule for succeeding operations
should be derived accordingly
The schedule of preceding operations
should support the time buffer and thus
be derived backwards in time from the
C.C.R. schedule
rope
FINAL OPERATION (assembly)
Devising a
DBR System
for
Synchronized
Operations
Classical
TOC


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94
Assuring High Due-Date Performance
§  All other operation schedules must support
the final operation schedule
§  To avoid harm due to disruptions, they should
support a time buffer in front of any final
operation (assembly) that is based on a CCR
operation
§  Inventory is low, but nevertheless any
disruption that can be overcome within the
buffer time will not affect the throughput of
the plant
rope
rope
rope
Classical
TOC


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96
•  Iden/fy
the
constraint
of
the
system

•  Exploit
the
constraint

•  Subordinate
everything
else
to
the
above
decisions

•  Elevate
the
constraint

•  Prevent
iner/a,
go
back
to
the
ﬁrst
step

•  Do
not
focus
your
people,
4me
and
money
on
a
NON-‐CONSTRAINT
opera4on

within
the
process.

It
will
only
increase
WIP
prior
to
the
constraint
and
it
will
not

improve
the
cost
eﬀec4veness
of
the
process,
in
fact
it
will
achieve
the
opposite

Classical
TOC


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97
•  The
view
of
the
organisa/on
as
a
series
of
dependent
links
–
a
chain

•  Only
strengthening
the
weakest
link
improves
the
whole

•  Most
improvements,
in
most
links,
has
no
eﬀect
on
the
whole

•  The
chain
starts
in
the
supply
base
and
ends
with
the
customer

•  Global
management
is
diﬀerent
to
the
sum
of
the
local
management

Classical
TOC


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98
Iden/fy
the
Constraint

•  What
is
controlling
the
ﬂow?

–  What
is
the
rate
limi>ng
factor?

•  Informa>on?
Resource?
Skill?
Demand?

•  If
external,
select
an
internal
control
point

Classical
TOC


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2

Increased
Fragility
due
to
increased
features
&
Complexity

•  Process
failure
(job
not
delivered)
&

•  System
failure
(systema/c
e.g.
system
stops)

Put
a
drummer
at
the
front
to
set
the

pace

Have
the
sergeants
constantly
urge
the

soldiers
to
close
any
gaps.

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103
A Rope tying the Gating
operation to the Buffer
Inputs
Jobs completed
Synchronised
Opera/ons/

Major

Capacity

Constraint
Time

buﬀer

4

Less
fragile
than
Assembly
line
&
Kanban,
but
s/ll
fragile

due
to
Loading
&
low
inventory.

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Capacity
Constraints

•  Volume
Constraints

Bo^lenecks

Constrain

Flow
&

Throughput

System
Failure&/or
Degrada>on

•  Time
Constraints

The TOC Model
The
TOC
Model

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Capacity
Constraints

•  Volume
Constraints

Bo^lenecks

Constrain

Flow
&

Throughput

System
Failure&/or
Degrada>on

•  Time
Constraints

The TOC Model
The
Extended
TOC
Model

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Capacity
Constraints

•  Volume
Constraints

Bo^lenecks

Constrain

Flow
&

Throughput

System
Failure&/or
Degrada>on

•  Time
Constraints

The TOC Model
The
Extended
TOC
Model

EXAMPLES?

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Capacity
Constraints

•  Volume
Constraints

Bo^lenecks

Constrain

Flow
&

Throughput

System
Failure&/or
Degrada>on

•  Time
Constraints

The TOC Model
Managing
Buﬀers
in
TOC
to
Feed

BoClenecks
&
Increase
Flow

Buﬀer
Stocks

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Capacity
Constraints

•  Volume
Constraints

Bo^lenecks

Constrain

Flow
&

Throughput

System
Failure&/or
Degrada>on

•  Time
Constraints

Increases
Loading

The TOC Model
BUT…..

Buﬀer
Stocks

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Capacity
Constraints

•  Volume
Constraints

Bo^lenecks

Constrain

Flow
&

Throughput

System
Failure&/or
Degrada>on

•  Time
Constraints

The TOC Model
The
Extended
TOC
Model

Buﬀer
Stocks

Increases
Loading

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2015
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Reserved.

Capacity
Constraints

•  Volume
Constraints

Bo^lenecks

Constrain

Flow
&

Throughput

System
Failure&/or
Degrada>on

•  Time
Constraints

The TOC Model
The
Extended
TOC
Model

Buﬀer
Stocks

Increases
Loading

EXAMPLES?

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2015
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Capacity
Constraints

•  Volume
Constraints

Bo^lenecks

Constrain

Flow
&

Throughput

System
Failure&/or
Degrada>on

•  Time
Constraints

The TOC Model
The
Extended
TOC
Model

BoClenecks
may
protect
the
system

from
failure
&
degrada/on:

A
bo;leneck
has
a
purpose

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2015
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Capacity
Constraints

•  Volume
Constraints

Bo^lenecks

Constrain

Flow
&

Throughput

System
Failure&/or
Degrada>on

•  Time
Constraints

The TOC Model
The
Extended
TOC
Model

BoClenecks
may
protect
the
system

from
failure
&
degrada/on:

A
bo;leneck
has
a
purpose

EXAMPLES?

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113
•  Iden/fy
the
constraint
of
the
system

–  Now,
NOT
just
in
rela/on
to
Flow,
but
also
Fragility

•  Exploit
the
constraint

–  Management
of
Constraints
is
now
seen
as
Two
Dimensional

•  Subordinate
everything
else
to
the
above
decisions

•  Elevate
the
constraint

–  Now,
NOT
just
in
rela/on
to
Flow,
but
also
Fragility

•  Prevent
iner/a,
go
back
to
the
ﬁrst
step

•  Do
not
focus
your
people,
4me
and
money
on
a
NON-‐CONSTRAINT
opera4on

within
the
process
AND
do
not
ignore
Fragility
in
considering
constraints.

Extended
TOC
Model


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114
•  What
are
the
possible
implica>ons
and
unintended
consequences
of

the
applica>on
of
the
Theory
of
Constraints
within
an
organiza>on?

•  What
changes/
addi>ons
need
to
be
made
in
applying
TOC
within

an
organisa>on
bearing
in
mind
fragility?

•  How
can
we
do
this
in
prac>ce?

EXERCISE


10.09.2015 Professor Tony Bendell TOCICO Workshop Slides

10.09.2015 Professor Tony Bendell TOCICO Workshop Slides

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10.09.2015 Professor Tony Bendell TOCICO Workshop Slides