How to reach the highest efficiency on state (country) level. Oded Cohen

How to Reach the Highest
Efficiency on State (Country)
Level
Oded Cohen
Vilnius, September 2012

Copyright © 2012 by Oded Cohen Reaching the Highest Efficiencies September, 2012

Oded Cohen
Oded has nearly 35 years of experience in
developing, teaching and implementing TOC
methodology, solutions and implementation
processes working directly with Dr. Goldratt all
over the world. Among the countries to which
Oded brings his expertise are the USA, Canada,
Japan, India, China, the UK, Poland, Russia,
Ukraine, Colombia, Chile, Peru, Turkey and
many others.
Oded has authored multiple TOC articles and
contributed to several TOC books.
Oded in the is the author of Ever Improve – A
Guide to Managing Production the TOC Way,
published in June 2010. Oded co-authored the
book Deming & Goldratt: The Theory of
Constraints and the System of Profound oded.cohen.gs@gmail.com
Knowledge – The Decalogue.
www.toc-strategicsolutions.com
Together with Jelena Fedurko Oded has co-
authored the book TOC Fundamentals, recently
published in Russian.

Reaching Highest Efficiencies

• High Efficiency
• Areas for Improvements
• TOC Approach to Improvement
• TOC Portfolio
• Where to Start?


High Efficiency
The objective:
Get higher performance of the existing systems
while making the most (exploiting) the available
resources – especially state budgets
The vision of a well-run system (what the system can achieve)
Performance
System

The Potential
GAP Improvement

Projection based on extrapolation
of the current performance

THE PAST TODAY THE FUTURE


Examples of Results
Achieved by
TOC Implementations

Public testimonials


Maintenance Center, Albany, GA
The Honorable Diane K. Morales
Deputy Under Secretary of Defense
(Logistics and Materiel Readiness)

Goals
• Increase Throughput
• Decrease costs
• The center belongs to the U.S.A MoD
• Decrease Work In Process WIP
• Receiving yearly budget for performing
• Reduce Repair Cycle Time yearly plans.
• Make schedule 90+% of the time
• The objective of the initiative was to give
better service for the same budget


MK-48 - Full Refurbishment
Output Per Month, Cumulative
150
140
130
120
110
100
90
Quant it y

80
70
60
50
40
30
20
10
0
Jun Jul Aug Sep O ct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep O ct Nov Dec

FY-02 Produced 6 20 36 52 67 86 109
FY-01 Produced 11 21 31 41 51 58 63 74 84 88 91
FY-02 Scheduled 14 28 42 68 86 104 124 139 151
FY-01 Scheduled 10 20 30 40 50 57 61 65 75 91

Data Source: Master Work Schedule vs. Completions

*On 20 Jul 02, July’s requirements changed from 14 to 26.
**On 04 Sep 02, 10 vehicles were added to the schedule for Nov and Dec.


MK-48 - Full Refurbishment
How was it achieved? Lean + TOC

Lean Labor Hours - MK-48
1750
1500

TOC Repair Cycle Time (Days) 1250 FY-00
FY-01

Hours
1000 FY-02
TOC CCPM - 26 Mar 01 750
Implementation SDBR - 6 Jun 01 500
240 250
Articulation hitch problems
220
0
200 Data Source: Essex Replacement Program (ERP)

0
5
10
15
20
25
30
35
0
5
10
15
20
25
30
35
40
45
50
55
60
65
70
75
80
85
90
0
5
10
15
20
25
30
35
40
45
50
55
60
65
70
75
80
85
90
10 5

115
0
100
9
180
160 Vehicle Num bers
F Y-00
Days

140 F Y-01
120 F Y-02
Starting with vehic le #161981, i ncl udes i nstallation
100 of the A nti lock Braking Sys tem (ABS ) M odification.
80 Starting with vehic le #2MK115, includes 100%
60 replacement
40 of A rticulation Hitch. No additional funds required.
20
10

25

35

60

70

80
85

10

70

80
85

10 5
0
5
10
15
20
25
30
35
40
0
5
15
20

30

40
45
50
55

65

75

90
0
5
15
20
25
30
35
40
45
50
55
60
65

75

90

115
100
0
9

Vehicle Numbers Data Source: Concerto: Activity By Project Records

Before TOC, the repair cycle time average was 167 days.
After TOC, the average is 51 days.


Implementation, Repair Cycle Time, and
Work In Process (WIP)
TOC Implementation Repair Cycle Time (Days) WIP Reduction

Production Line CC S-DBR Before TOC Actual Before TOC CC Actual
CC


MK48 26 Mar 01 6 Jun 01 167 53 51 55 35 35

LAV-25 9 Oct 01 11 Oct 01 212 99 114 13 7 7

LAV-AT 9 Oct 01 11 Oct 01 200 100 117

LAV-C2
The improvement was
9 Oct 01 11 Oct 01 147 99 120

LAV-L 9 Oct 01 11 Oct 01 190 100 119

LAV-M implemented across all services of
9 Oct 01 11 Oct 01 158 92 111

LAV-MEWSS the center
9 Oct 01 11 Oct 01 No data 92 119

LAV-R 9 Oct 01 11 Oct 01 194 106 167

MK14 Trailer 11 Apr 02 13 May 02 56 23 35 8 3 1

MK15 Trailer 11 Apr 02 3 Jun 02 229 69 95 2 2 3

MK16 Trailer 11 Apr 02 20 Jun 02 126 22 42 2 2 0

MK17 Trailer 11 Apr 02 20 Jun 02 269 49 85 3 2 1

M931 5-ton 22 Apr 02 29 May 02 113 48 70 5 4 5

M936 Wrecker 22 Apr 02 29 May 02 278 63  6 0 0

M970 Refueler 25 Apr 02 20 May 02 282 82 133 8 6 6

M149A2 Water Trailer 25 Apr 02 20 May 02 No data 18 36 17 7 8

M88 Tank Retriever 29 May 02 1 May 02 213 159 146 5 3 3

Small Arms - 20 May 02 - - - - - -

AAV–P7 9 Aug 02 1 May 02 66 66 5 4 2

AAV–C7 9 Aug 02 1 May 02 66 74 22 9 9

AAV–R7 9 Aug 02 1 May 02 No data 74 0 6 0

M-977 HEMTT Truck, Heavy Mover 20 Sep 02 20 Sep 02 No data 45 0 6 6
Critical Chain Sim pli fied Drum B uffer Rope Represents entire LAV line. No current production line.

P roduction li ne completed. AAV hul l repair and assembly after receipt of hul l from UDLP .
T he AAV c riti cal chai ns have been establ ished to cover the work performed after the hull has been modified by
UDLP.
Copyright © 2012 by Oded Cohen Reaching the Highest Efficiencies
-9- September, 2012

Reaching Highest Efficiencies on
State(Country) Level
Areas for Improvement
State Involvement:
•Services Provided by the State:
Defense, Health, Infrastructure, Education, Welfare,
Security (Police), Prison (rehabilitation), Agriculture
etc.
•State Initiatives: Special Investment Projects
•State Owned Businesses
•Suppliers/Providers to State Services
•Non-State Businesses

TOC Approach to Improvement

TOC offers a general approach to achieve
improvements. It contains three blocks:
•Mindset – commitment of the system’s officers to achieving
the highest possible performance of their systems.
•Short term improvements – implementing Solutions that
make modifications – technical and managerial - to the way
the current systems are run. These solutions should provide
quick results for demonstrating improvements are possible
and for fueling the desire to improve.
•Continuous Improvement – establishing mechanisms and
behaviors for supporting On Going Improvements - POOGI.


TOC Offering for specific Systems
• Standard TOC Logistical Solutions –
 Production, manufacturing, operations – TOC for MTO (make to
Order) and TOC for MTA (Make to Availability)
 Supply Chain Management – TOC Distribution
 CCPM – Critical Chain for Project Management
• Applications of TOC Logistical Solution
 TOC for the Health Service
• TOC for Flow Management – developing special solutions
to improve the flow of systems (such as Welfare services)
• TOC Methodology – developing new strategic solutions
for improving systems’ performance
• TOC for Education – Use of the TOC Thinking Processes
for enhancing the ability of the young generation to learn,
solve problems and achieve ambitious targets.

Application of TOC Logistical
Solution
• Example: Health Service India

Applying TOC in Day Care Eye
Surgery in an Eye Hospital
an experience
Extracts from a presentation given at the TOCPA
conference in Moscow, May 2012, by
Debashish Naik
Founder & Principal Consultant, MEVOCON, India


Day Care Eye Surgery: OT Process

Pre Operation activities OT Complex Post
Patient Patient
arrives at Admission Dilatation (45 Operation leaves the
Hospital (5 min) min or more) Hospital

Billing 5 to
15 min

Pre OT Complex Post
Patient
Patient
Operation Operation Theater
Operation leaves the
arrives at
Reception Block / Hospital
Hospital activities 5 min Vitals Pre
surgery Surgery
15 min prep 5
min


Lead Time before implementing TOC Solution
Total Lead Time OT process_ Pre TOC Solution
13 th Jan 14th Jan 16 th jan 17th Jan 18th Jan 19th Jan 20th Jan 21st Jan 25nd Jan
03:35 02:45 03:00 02:47 04:40 02:00 02:25 03:50 04:05
04:55 05:30 03:40 02:25 04:15 02:25 03:35 01:51 02:20
03:15 02:15 03:10 02:52 02:35 02:55 02:00 04:10 02:00
03:05 03:07 03:05 03:30 02:50 02:05 01:46 01:45 01:35
02:40 02:10 02:27 02:56 01:45 02:30 04:50 02:30 02:10
03:40 02:20 02:55 02:13 01:44 03:50 02:10 01:35 01:15
03:10 04:00 02:25 02:15 02:10 01:30 02:00 02:45 01:35
03:35 03:15 02:47 02:27 04:20 01:30 03:10 02:30 02:10
02:00 03:00 01:45 03:23 03:05 03:10 03:15 03:00 04:10
01:55 02:45 02:15 02:13 02:20 03:00 02:10 02:03 05:15
04:21 02:17 01:40 03:30 02:50 01:35 01:40 00:45 02:40
03:56 02:20 03:10 02:20 03:00 01:15 02:30 03:35 02:30
02:55 03:50 04:30 02:02 01:45 02:30 01:30 02:10 01:40
02:15 03:50 02:00 02:35 01:50 02:10 02:45
03:45 03:05 02:30 03:20 02:10 01:50
03:25 02:20 03:05 02:35
02:35 02:00 02:30 02:15
02:20 02:10 01:35
02:05 02:40 04:00
03:50 02:45 02:40
02:05 02:20 01:25
02:25 01:40
02:50


Data on Lead Time:
Before implementing TOC Solution

Data Pre TOC
Solution
Average Lead Time 2 hr:43 min
Max Lead Time 5 hr: 30 min
Min Lead Time 0 hr: 45 min

Lead Time for % of patients (Pre TOC
Solution)
For around 79% patients the lead time
is more than 2 hr

45 min 1 hr to 1 hr 1 hr 30 min 2 hr to 2 hr 2 hr 30 min 3 hr to 3 hr 3 hr 30 min 4 hr to 4 hr 4 hr 30 min 5 hr to 5 hr
to 1 hr 30 min to 2 hr 30 min to 3 hr 30 min to 4 hr 30 min to 5 hr 30 min

Pre
TOC 0.7% 3.9% 17.0% 30.1% 18.3% 12.4% 9.8% 4.6% 2.0% 1.3%

Note: data collected over one week

Solution Components Summary
• Solution Components: The solution is adaptation of the TOC
MTO solution as defined in “Ever Improve” and further Lean is
integrated with TOC
 Doctor’s surgery time decides the schedule
 Patients schedule is done as per doctors surgery schedule (so
unnecessary waiting of patient is reduced)
 All others subordinate to surgery time so doctor’s time is not
wasted
 Introduce “expedite” principles in OT process area
 Cycle time of each operation /tasks that subordinate and impact the
lead time are reduced or improved on a continuous basis applying
Lean philosophy /Kaizen
 Doctor also put himself on continuous improvement to reduce the
surgery time without compromising the quality

Bringing Improvement
Improved performance

Current Current Proposed
System System Solution
Stopped/Repl New
aced Stay

While designing the solution we looked into:
1. Which parts of the system are “erroneous” and have to be replaced
2. The new parts that must be introduced to replace the erroneous parts
3. All the other parts of the system stay as they are!

Source: Ever Improve by Oded Cohen

TOC Solution
Strategy (what do we want to achieve):
 The patient waiting time is as minimum as possible
without keeping the doctor idle at any time during the
surgery {Reduce the lead time for day care eye
surgery to 1.5 hr/2 hrs from around 2.5 hr/3 hr in the
beginning for at least 70% of patients}
 Why 2 hr was decided to start with in the beginning?
• Actual touch time at present is 80 min to 90 min for
the patients who are fit and do not develop high
BP/Sugar just before the surgery or do not take a
long time for dilation.
• For Pre dilated patients it is between 40 min to 60
min


TOC Solution
Tactics (how are we going to achieve the strategy)
By implementing:
 Principles of Flow
 Mechanism of DBR – Drum Buffer Rope for planning
 Buffer Management – For Controlling the execution of the plans
 POOGI – Process of Ongoing Improvement

Leveraging the improvement
• As a continuous improvement process, start working on
how to bring more patients and do more surgery with the
existing resources, increase the revenue and profit and
lower the cost without compromising quality


Lead Time after implementing TOC Solution
Total Lead Time OT process_Post TOC solution
26th Mar 27th Mar 28th Mar 29th Mar 30th Mar 31st Mar 5th April 6th April
2:00 1;55 1:45 1:15 1:40 0:55 1:55 4:05
2:00 2:00 1:50 0:45 2:00 1:25 1:30 1:40
2:00 1:50 2:00 1:40 2:00 1:30 0:55 1:30
2:00 1:10 1:55 2:45 1:25 1:50 1:40 1:55
2:00 1:25 2:15 1:55 1:35 1:50 1:20 1:50
3:20 2:30 1:50 1:25 1:55 1:55 1:20 1:05
3:35 2:00 2:00 1:25 1:50 2:00 1:35 2:45
2:35 1:40 2:00 1:15 1:50 2:00 1:35 0:55
2:00 1:40 2:00 1:30 2:00 2:00 3:00 1:00
1:10 1:40 2:00 1:50 2:40 1:50 1:20
1:40 1:25 2:00 1:15 2:00 1:05 2:00
1:20 1:25 2:25 1:25 1:55 1:50 1:45
1:45 2:40 1:25 1:50 1:55 1:35 1:55
01:55 01:30 1:10 2:00 1:20 2:00
1:40 2:40 1:15 2:00 1:55 3:25
02:35 01:30 1:10 1:55 1:30
01:50 01:45 1:10 1:25 1:55
01:35 1:05 1:50 2:00
01:50 2:35 2:00
01:55 2:50 1:45
01:50 1:55
03:10 1:55
02:00 2:25
1:25
1:30
2:00
1:25


Data on Lead Time: Pre and Post TOC Solution

Data Pre TOC Solution Post TOC Solution
Average Lead time 2 hr:43 min 1 hr: 57 min

Max Lead Time 5 hr: 30 min 4 hr: 05 min

Min Lead Time 0 hr: 45 min 0 hr: 45 min

Lead Time for % of patients (Pre and Post TOC Solution) Average lead Time reduced by 28%

HH:MM 0:00-0:45 1:00-1:30 1:30-2:00 2:00-2:30 2:30-3:00 3:00-3:30 3:30-4:00 4:00-4:30 4:30-5:00 5:00-5:30
Pre TOC 0.7% 3.9% 17.0% 30.1% 18.3% 12.4% 9.8% 4.6% 2.0% 1.3%
Post TOC 3.5% 26.1% 57.0% 2.8% 7.0% 2.1% 0.7% 0.7% 0.0% 0.0%

•Pre TOC, for around 49% patients the lead time was more than 2 hour 30 min and
Post TOC for around 86% patients the lead time is less than 2 hour

Benefits derived from the project
• Reduction in Lead time
• Entire OT staff started working as One Team
• Increase in Patient satisfaction
• A few measurement that drives improvement and hence does
not create any confusion
• Bringing further improvement becomes easy as team knows
where to Focus
• Many small issues got resolved
• Team feels motivated
• CEO is quite happy and now showing interest to take the
journey forward
• Doctors and staffs are able to visualize more capacity
• And many more…..


Is it worth to strive to achieve
Operational Excellence

OC+LEAN)
rations Im provement projects (T ths !
A study of ABB’s Ope ayback time of less than
3 mon
confirm an average p
1) Source: Copenhagen Institute for Futures Studies and Larry Keeley:
www.doblin.com (3000 projects examined)


Where to Start?
The key conditions for Successful TOC Implementation:
1.A real need/desire for improving the performance of the
system. The may be imposed externally or driven
internally by the officers of the system.
2.A good solution that fits the reality of the system and
can provide the desired results.
3.Leadership with clear vision and the ability to take their
people on the journey of improvement
4.Supporting troops that are willing to go through and to
contribute to the suggested change. Many times
condition (4) highly depended on condition (3).

Leadership for TOC demands:
Capability, Willingness and Confidence

Where to Start?

Two potential directions: Top-Down, Bottom-Up.
Ideally, both.

1.Develop a State Centers for Improvement (or use
existing ones) and make them the custodians of the
knowledge and the host of solutions.
2.Provide Support – budget, resources and knowledge –
to State Systems that want to improve.
3.Initiate Learning Projects (Pilots) in some State
Systems, record and publish the experiences.
4.Continuously measure the performance of the State
Systems and urge their officers to improve.


Where to Start?

• Services Provided by the State:
Defense – MRO of existing equipment and facilities,
New Developments and special projects
Health – ERs, Hospital Wards, Theaters etc.
Infrastructure – Projects
Agriculture, Forest
Education – TOC For Education
Welfare – Specially developed specific solutions
Security (Police) – Thinking Processes and Strategic
Solutions
Justice – use and modification of existing applications
Prison (rehabilitation) – Thinking Processes

Challenges

To be able to initiate System’s Improvements we must
establish:

I. Clear Goal of the System – what is the purpose of
having the system?
II. Clear Measurements that can mark the progress of
the system towards its goal.

There are State Systems that do not clear goals and
measurement. Traditionally, these systems have been
performing on State Budgets. The introduction of clear
goals and measurements can be challenging, yet,
potentially rewarding to all stakeholders.


Opportunities for Start

Get input from the State bodies that deal with problems
with the State Systems, such as:

I. Public Ombudsman – for public complains
II. The State Auditor (excluding criminal issues)
III. State Bureau of Statistics – benchmarking against
other countries
IV. Public criticism (press etc.)


Where to Start?
• State Initiatives: Special Investment Projects
TOC CCPM for Project Management

• State Owned Businesses
For Profit or Self Sustained non-for-profit
Use the Standard TOC solutions, make modifications
if necessary.
If standard solution is not available – consider using
assistance of a TOC expert.
• Suppliers/Providers to State Services
Influence them to implement improvements
• Non-State Businesses
Influence and Support

Opportunities
The State has interest in the improving of the Non-State
Businesses as that can lead to increase in Tax and in
improving the standard of living.
The State can influence non-state systems to improve
such as:
•Suppliers to State services and projects (like Israel MoD,
Japan MLIT etc.)
•Companies and organizations that seek State financial
support:
 In Crisis
 In a major investment/expansion
 Start up
•Companies that the State has some ownership
(especially after bailing out after Crisis)

Why TOC?
TOC provides a systematic approach to develop plans for the
pursuit of a significant improvement of their systems

WHAT to change?
Problem Pinpoint the core problem

WHAT to change TO?
Solution Construct simple practical solutions

HOW to cause the change?
Induce the proper people to make the change
Implementation (to invent such solutions)

What creates the process of ongoing improvement?
POOGI Create a mechanism to determine what to improve
next

What prevents us from achieving
the goal?

CONSTRAINTS –
factors or elements that determine
how much the system can accomplish

Lift
The
GAP

Block

THE PAST TODAY THE FUTURE


System Constraints

Main types of constraints of a commercial system:

Capacity Constraint – a resource which cannot provide timely
capacity the systems demands for it

Market Constraint – the amount of customers orders is not
sufficient to sustain the required growth of the system

Time Constraint – The response time of the system to the
requirement of the market is too long to the extent that it
jeopardizes the system’s ability to meet its current commitment to
its customers as well as the ability of winning new business


TOC - The Five Focusing Steps

Managing the TOC Way means using the constraint
as a leverage to manage and grow the system

1. Identify (choose) the system’s constraint
2. Decide how to exploit the system’s constraint
3. Subordinate everything else to the above decision
4. Elevate the system’s constraint
5. If the constraint is broken go back to step one but do
not allow Inertia to cause the system’s constraint


Conclusion

• Every system is built for a purpose and hence has its
goal and measurements. State systems were built for
the nation.
• Every System can be improved – and so State systems.
• Given a methodology backed up by techniques,
procedures and knowledge – can generate significant
results in improving systems
• TOC has been around since 1975, with a significant
amount of solutions and applications, in a vast
spectrum of systems around the globe.


How to reach the highest efficiency on state (country) level. Oded Cohen

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