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Diagnosis of Theory of Constraints — autumn 2013
Marek Wrona
March 30, 2014
1 Introduction
This document describes results of a survey conducted as a part of the research for an EMBA
dissertation of the author. The subject of the dissertation was “Gaining competitive advantage by
using tools of Theory of Constraints”. Therefore, questions in the research focused on TOC tools
applied in business environments and their influence on a competitive edge.
This document is not the EMBA dissertation. It isn’t even a chapter of the dissertation. It is
intended just to present the results of the survey and in this way initiate discussions. Therefore,
despite the results, in some cases it also presents speculation about possible reasons.
At this time, I’d like to thank all proofreaders of the survey for their feedback that helped me
improve it. Special thanks to Orion Avidan for her contribution, ideas and support. It was her idea to
reward participants with a TOC related video. I’d like also to thank Dr Lisa Lang, Marcia Hutchinson
and Jessica Banks from TOCICO for support, interesting selection of videos and technical realization.
I’d like to thank Marcia Hutchinson too, who helped me by proofreading a draft of this report.
Last, but not least, I’d like to thank all participants of the survey for sharing their experience (or
inexperience) with using TOC tools in companies. Quotations from their responses to open questions
are marked in the text with “slanted font and quotation marks”. They are kept in original form if
possible (even if they contain typos). Only a few have been slightly changed in order to keep the
context.
Contents of questions and options presented in the survey to the respondents are marked with
italics.
The survey consisted of three parts:
« general information about respondents,
« information about popularity of TOC tools,
« effectiveness of the tools.
2 About the survey and respondents
The survey was conducted between October 18, 2013 and November 21, 2013 through the business
social networking website LinkedIn. There were 254 participants. Table 1 represents the number
of participants from various LinkedIn groups. The size of each group (number of members) at the
moment of publication of invitations to the survey is shown in parentheses after group names.
1
Respondents LinkedIn group
LinkedIn TOC groups
78 Theory of Constraints (4032)
48 TLS - TOC Lean & Six Sigma (2038)
24 TOC Learning Network (1032)
13 TA4U - Throughput Accounting For You (755)
12 Eli Goldratt-group (TOC) (1175)
7 TOC Polska (50)
3 Critical Chain Professional (786)
2 TOC Thinking Processes (TP), Jonah Processes (627)
LinkedIn other groups
18 Semiconductor Manufacturing (19796)
17 Aerospace Manufacturing (7222)
8 Automotive Quality Professionals (4466)
3 Auto OEM Network - World’s Largest Automotive Group (172895)
3 Contract Manufacturing Network of Moulds and Plastic (1018)
3 MBA Highway (36531)
2 Automotive Industry Professionals Worldwide (151717)
1 Automotive Finance Professionals (5759)
other sources
11 Facebook
1 personal invitation
Table 1: How respondents learnt about the survey?
Despite invitations on LinkedIn, 11 people learnt about the survey from the Facebook page of
Goldratt Books. One person was invited personally.
Information about the survey was submitted also to other LinkedIn groups, but there were no
responses for various different reasons.
Participants have been divided into four categories, depending declared level of experience and
knowledge in Theory of Constraints:
laymen marked with letter L in table 2,
fans marked with letter F in table 2,
experts marked with letter E in table 2,
masters marked with letter M in table 2.
Following notation has been used in table 2:
« Knowledge, depending on an answer to a question Do you know Theory of Constraints (TOC)?
K0 No
K1 I’ve heard/read/been told something about it
K2 I’ve read a TOC book / several TOC books
2
K3 I’ve studied the topic
K4 I have a certificate in Theory of Constraints
« Experience, depending on an answer to a question Do you have experience in Theory of Con-
straints?
E0 No
E1 I’ve seen it applied (by someone else)
E2 I’ve tried to apply it
E3 I’ve applied it a few times
E4 I’ve applied it many times
K4 0F 1F 7E 14M 45M
K3 4F 3F 24E 27E 15M
K2 18F 5F 32F 12E 6E
K1 9L 11L 0L 2F 0F
K0 17L 1L 0L 1L 0L
E0 E1 E2 E3 E4
Table 2: Number of participants as a function of their knowl-
edge and experience in TOC.
Number of respondents from various groups:
laymen fans experts masters total
LinkedIn TOC groups 6 44 65 72 187
LinkedIn other groups 31 16 7 1 55
Facebook 1 5 4 1 11
other 1 0 0 0 1
total 39 65 76 74 254
Table 3: Distribution of expertise as a function of source of
information.
Table 4 presents countries of origin declared by the participants, as an answer to a question Select
your country, ordered by expertise.
Country laymen fans experts masters total
United States 15 17 21 24 77
India 1 2 5 7 15
France 2 4 5 6 17
Poland 1 5 5 4 15
South Africa 1 0 2 4 7
United Kingdom 0 4 4 3 11
Ecuador 0 0 2 3 5
3
Country laymen fans experts masters total
New Zealand 0 0 1 3 4
Australia 0 1 3 2 6
Colombia 0 0 2 2 4
Brazil 0 1 1 2 4
Israel 0 0 1 2 3
Spain 1 2 4 1 8
Mexico 2 1 3 1 7
Italy 1 4 1 1 7
Belgium 0 1 1 1 3
Germany 0 2 0 1 3
Lithuania 0 1 0 1 2
Bulgaria, Moldova, Norway, Peru,
Slovenia, Taiwan
0 0 0 1 1
Russia 1 3 4 0 8
Canada 4 5 2 0 11
Netherlands 0 2 2 0 4
Costa Rica 0 0 2 0 2
Argentina 1 1 1 0 3
Croatia, Latvia 0 1 1 0 2
Haiti, Sweden 0 0 1 0 1
Ireland 1 1 0 0 2
Austria, Czech Republic, Finland,
Kenya, Sudan, Switzerland
0 1 0 0 1
China 2 0 0 0 2
Albania, Egypt, Iran, South Korea,
Malaysia, Philippines
1 0 0 0 1
Table 4: Number of participants as a function of a country
These results don’t mean distribution of knowledge about Theory of Constraints worldwide, but
only distribution of respondents. It is possible that the USA is overrepresented because of popularity
of LinkedIn in the country. Weighting results presented in further sections with distribution of certified
professionals worldwide could lead to more accurate results, but data is not available public.
Nevertheless, the weighting should not change the overall meaning of the results presented in the
document.
3 Popularity of Theory of Constraints
The second part of they survey examined popularity of TOC tools in various aspects. It was
preceded with an introductory text explaining context for further questions:
On following screens you’ll be asked questions about YOUR EXPERIENCE with TOC in
companies you worked for in the last 5 years.
4
For every option you’ll see two checkboxes. Please, select first one if you worked for
companies that used TOC and the second one if TOC was not used there. If you worked
for more companies during that period, and some of them used TOC and some not, select
both checkboxes. If you have no experience with companies corresponding to an option,
leave both checkboxes cleared. Please, mark all options that apply.
By giving participants the possibility to express positive as well as negative experience one can
measure popularity of the tools as well as reliability of the reading.
Questions in section 3 were asked to all participants.
3.1 Popularity in various industries
Figure 1 presents popularity of TOC tools in various industries, as an answer to the question
Select industries of companies you worked for and whether they used TOC or not1. (if unsure, please
check http://en.wikipedia.org/wiki/Outline_of_industry#Major_industries)
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Figure 1: Popularity of TOC tools in various industries
Results for industries with 20 or more readings are marked with a continuous line. Results for
industries with 10 or more readings, but less than 20, are presented separately and connected with a
dashed line, as they are less reliable. Industries with less than 10 readings are omitted as unreliable.
1List of available options: Aerospace, Agriculture, Agriculture–Fishing, Agriculture–Timber, Agriculture–Tobacco,
Chemical, Chemical–Pharmaceutical, Computer, Computer–Software, Construction, Defense, Education, Energy, En-
ergy–Electrical power, Energy–Petroleum, Entertainment, Financial Services, Food, Health care, Hospitality, Infor-
mation, Insurance, Manufacturing, Manufacturing–Arms, Manufacturing–Automotive, Manufacturing–Pulp and paper,
Manufacturing–Steel, Manufacturing–Toy, Manufacturing–Shipbuilding, Mass media, Mass media–Broadcasting, Mass
media–Film, Mass media–Internet, Mass media–Music, Mass media–News media, Mass media–Publishing, Telecommu-
nications, Water, Other.
5
As it can be read from the figure, the highest reading (57%) is for the Defence industry. As only
12 respondents witnessed TOC tools used in the industry and 9 respondents know companies from
the industry that don’t use the tools, treat the number (57%) with caution. The same applies to
Pharmaceutical industry (55%).
On the other hand values for Manufacturing–Steel (54%), Aerospace (53%) and Manufacturing
(51%) are much more reliable. More than half of the companies (known to the respondents) in these
industries have used at least one TOC tool in the last 5 years.
At the other end of the scale one can find Financial Services, Telecommunications (both 26%),
Agriculture (24%) and Education. The last one is especially interesting as there is a dedicated tool
for Education TOCfE (TOC for Education2).
3.2 Size of companies
Figure 2 presents popularity of TOC tools as a function of the size of companies expressed with
number of employees. The values are answers to a question Number of employees in the companies
and whether they used TOC or not3.
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Figure 2: Popularity of Theory of Constraints as a function of size of companies
It says that 16 respondents (33% of 49) knew microenterprises4 using TOC. On the other hand,
33 respondents knew microenterprises that didn’t use any TOC tools.
Such low reading can be, perhaps, explained by the fact that in a microcompany it is much easier
to ensure holistic view and alignment to strategic goals. Also processes are usually much simpler and
shorter.
2One can read more about TOCfE in [1, p. 787–812].
3List of available answers: 1–10, 11–100, 101–1000, 1001–10000, 10001+.
4Enterprises having 10 employees or less.
6
In bigger enterprises (11 employees or more) about 41-42% of respondents knew companies using
TOC. In case of companies of 1001–10000 it was even 46%.
3.3 Organisational culture
Figure 3 presents popularity of TOC as a function of organisational culture. The question read
Organisational culture of the companies and whether they used TOC or not5 (if unsure, please check
http://en.wikipedia.org/wiki/Organizational_culture#Charles_Handy) .
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Figure 3: Popularity of TOC as a function of organisational culture
This chart indicates that TOC is most popular in companies with task cultures (similar number
of respondents know companies that use TOC and that don’t use TOC). On the other hand, TOC is
least popular in companies with person cultures.
3.4 Function in organization
Figure 4 presents the relation between function of the respondents in the companies and a fact of
using (or not using) TOC by the companies, as declared in a response to the question Your function
in the companies and whether they used TOC or not6.
5List of available options:
Power culture concentrates power among a small group or a central figure and its control is radiating from its center
like a web.
Role culture authorities are delegated as such within a highly defined structure. Control is made by procedures (which
are highly valued), strict roles descriptions and authority definitions.
Task culture teams are formed to solve particular problems. Power is derived from the team with the expertise to
execute against a task.
Person culture formed where all individuals believe themselves superior to the organization.
7
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Figure 4: Function of the respondents in the companies
More than half of the respondents from Manufacturing departments worked for/with companies
using TOC. In case of Managers the percentage is a bit lower (47%). At the end of the list there are
Accountants and Salesmen with only 34–35%.
It’s interesting to note that the most popular functions among the respondents are Management,
Project Management and Manufacturing. Each of them have more than 100 respondents. Most of the
attention of these functions is directed towards internals of a company. It could be perhaps concluded
that Theory of Constraints is usually used to improve internals (processes) of companies.
In the case of the salesmen and the marketers, focus is on the exterior of the organisation, small
representation (less than 40 respondents) is connected with low reading — only one third of them
know the tools.
4 Theory of Constraints tools
4.1 Popularity of TOC tools
Figure 5 presents the popularity of TOC tools in companies known to the respondents as a response
to the question Which of these were used in the companies7? This question has been asked to
respondents who declared that they used, tried to use, or saw someone using the tools.
6List of available answers: Manufacturing, Distribution, Sales, Marketing, Finance/Accounting, Project Management,
Services, Management, Other.
7List of available answers: CCPM (Project Management); DBR (Manufacturing); Mafia Offer (Marketing); Less is
More (Sales); Throuput Accounting; Replenishment (Distribution); Thinking Processes (CRT, EC, etc); other TOC tools
(which? [Open–ended answer]); none of the above - ToC wasn’t used.
8
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Figure 5: Popularity of TOC tools.
The most popular TOC tools are DBR and Thinking Processes. Two thirds of the respondents
know each of them. The third most popular tool is CCPM. Surprisingly few respondents (16%) used
marketing and sales TOC tools.
14% of respondents used “other tools”. Answers to this open question included S–DBR and 5FS.
It’s interesting to note that these results have similar characteristic as those described in point 3.4
(page 7).
4.2 Sources of knowledge about Theory of Constraints
All respondents, with the exception of 17 who answered “No” twice to questions about knowledge
and experience, were asked a question How have you learnt about Theory of Constraints8 (mark all
that apply, please)? Figure 6 presents answers to this question.
Undoubtedly, books by Dr Goldratt are the most popular source of knowledge about the Theory
of Constraints (82%). Then word of mouth (someone told me) comes next and then, it’s used in my
company.
4.3 Results of using the TOC tools
Figure 7 presents answers of the respondents to a statement Results of using these tools were9...
and ...because... This question has been asked to respondents who declared using at least one of the
TOC tools in point 4.1.
8List of available options: from Goldratt’s books; at university, which: [Open-ended answer]; it’s used in my company;
someone told me; other, write how: [Open-ended answer].
9List of available options: positive and negative
9
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Figure 6: Sources of knowledge about Theory of Constraints.
It’s worthwhile to emphasise that 95% of the respondents rated results of using the
tools positive.
Only every twentieth respondent thought differently. These 7 persons rated the tools negatively,
because they experienced
« lack of support from senior management (“not supported by senior management” (a layman from
Iran), “Lack of understanding by key executives” (an expert from United Kingdom)),
« insufficient change of organisational culture (“A paradigm shift in company culture would have
been required to apply TOC holistically” (an expert from Australia), “They were tried in several
areas but the culture was too ingrained for much change” (a fan from United States)),
Figure 7: Results of using the TOC tools were...
10
« lack of results caused by early phase of implementation (“To be determined — still in the early
phases of implementation” (a fan from United States)),
« lack of practical guidelines for implementing TOC in services (“Deeper usage was not easy, as we
work in services, where there are not so many practical guidelines. Some thinking tools were useful
however.” (a fan from Poland)),
« “Lack of people involvement” (a fan from Spain).
In point 4.7 we’ll see that these answers belong to a catalogue of the most prevalent mistakes made
in implementation of Theory of Constraints.
4.4 Theory of Constraints and a competitive advantage
The next question was a key one to the EMBA dissertation. It read “Did the companies gain
competitive advantages because of using the TOC tools10?” It was asked to the same respondents as
in point 4.3.
Figure 8 presents answers of the respondents to the question.
Figure 8: Did the companies gain competitive advantages because of using the TOC tools?
More than 42% of them answered that the companies gained significant competitive advantage.
Next 37% pointed out gaining a slight competitive advantage. It means that almost 80% of the
respondents, who had an experience of using TOC tools, found using the tools increased
competitive advantage.
One more interesting observation is that nobody considered that a company may lose or
worsen its competitive position/edge because of using the TOC tools, even those who
considered results of using the tools negative (see point 4.3).
10List of available options: yes, significantly; yes, slightly; there was no difference; now it’s worse; I don’t know / I have
no data; other, please specify: [Open-ended answer].
11
4.5 Areas of improvement
Respondents who expressed that TOC tools increased competitive advantage in point 4.4 were
asked an open question “What kind of competitive advantages (describe shortly with keywords, please)?”
Figure 9 presents answers of the respondents.
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Figure 9: Competitive advantages gained with TOC tools.
The most popular answers:
« reduced lead time,
« increase of throughput, production,
« on-time delivery, reliability,
« better decisions because of holistic view,
« increase of market share,
« reduction of inventories,
« differentiation on strategic or product levels,
« lower costs,
« better cashflow,
« improved responsiveness (for changes in a demand),
« better quality,
« reduced WIP (work in progress),
12
« better availability of goods resulting in decrease of lost profits,
« better atmosphere in the workplace,
« increase of net profit and
« others.
Based on these answers, one can conclude that companies can gain competitive advantages in
internal areas (operational and capital efficiency) as well as external areas (better fitting to the market,
increase of revenue and a profit).
4.6 Communication of using TOC tools
Did the companies communicate externally the fact of using ToC11? and Why?
This question was asked to the same group of respondents as in point 4.4.
Figure 10 presents replies of the respondents.
Figure 10: Did the companies communicate externally the fact of using ToC?
Only 26% of respondents witnessed such communication. In most of cases, however, companies
didn’t communicate using TOC tools.
The respondents were also asked (with an open question) about reasons for such behaviour of the
companies12. Summary of their answers is depicted on figure 11.
The most popular reason for not communicating usage of TOC tools is that it gives companies
the competitive advantage (it’s a secret weapon). The companies feared that dissemination of
this information will result in imitation by competitors, and the loss of their competitive
advantage.
The second most common reason given was company policy that prohibits informing the outside
of what is happening inside the organisation or organisational culture, understood as lack of habit,
interest, or seeing value of communicating such issues.
11List of available options: yes; no; I don’t know; other, please specify: [Open-ended answer].
12With a simple question Why?
13
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Figure 11: Reasons for the decision about potential communication of using the TOC tools
The third most common reason was lack of consciousness (in the market, among workers, or even
management). Sample answers: “We pretended to be using Lean, because we didn’t want our people
to think we were following «yet another fad»” (an expert from Italy), “TOC and CCPM haven’t been
officially accepted methodology used in the company” (a fan from Poland) or “In fact, even employees do
not know that this is TOC. They know it as Symphony from Inherent Simplicity. We do not push much
theory to people who not decide. Only tools, and make sure they use it as new habbit.” (a master from
Moldova).
It is unreasonable to expect in such situation that the company will communicate outside the fact
of using TOC.
Following answers took further positions
« “I don’t know why”
« “it’s too early”
« not finished/spoiled implementation
« other
« no results to communicate
« “lack of communication channel”
On the other hand, in cases where companies communicated usage of the TOC tools, the respon-
dents rated in first place a communication to key stakeholders: customers and investors. In the case
14
of the customers, this was a marketing communication intended to credit an unrefusable offer or em-
phasise the advantage over the competition. In the case of investors (e.g. shareholders), it’s used to
explain sources of the competitive advantage.
According to one of the respondents, the companies decide to communicate using TOC tools,
“because TOC is a culture that can not be replicated easily. So, companies [are] relatively comfortable in
sharing about the fact of practising TOC.” (a master from India).
The next reason to inform about using TOC is an altruistic need to share the knowledge. “We
were always glad to share what we learned with others” (a master from United States), “We believe in
sharing the benchmark best practices among all. Also TOC is a wonderful management tool to improve
significant results.” (an expert from India).
Five people pointed that the usage was communicated because TOC consultants insisted on it, or
published that information by themselves in journals or at conferences.
Among “other” reasons, there were various answers including “no special reason”, or “Company
do not hide a fact of using of TOC, but it is not so visual as Lean usage. Everybody visitor see a Lean
visual tools and some how «understand» how it works. Nobody can see how TOC works, because for that
knowledge of TOC basics as well as deep dive inside company is needed.” (an expert from Latvia).
The rest of the answers included:
« limited range / internal communication,
« communication to partners to convince them to use TOC tools, too13
« pride for results,
« it’s trendy: “At that time it was the state-of-the-art when talking about TOC” (a fan from Brazil)
4.7 The most common mistakes during implementation of Theory of Constraints
What are the most common mistakes made during implementation of TOC, to your experience?
This open question was asked to the same group of respondents as in point 4.4. Exactly one
hundred respondents provided reasonable answers.
Figure 12 presents the most common mistakes during implementation of Theory of Constraints.
In the respondents’ opinion, lack of managerial support is the most common mistake during im-
plementation of Theory of Constraints in a company. Almost every fourth experienced this situation.
The second most common mistake (21%) is lack or insufficient change of the organisational culture
(“For true implementation, TOC needs to become the culture of organization...” (an expert from India)).
The change, to be effective, has to eradicate old bad habits (“Subordination of non–bottlenecks that
require abandoning local optima; how to live with explicit excess capacity?” (a master from France), “Too
much focus on the tools, instead of the new behaviors” (a master from United States))
Many of the respondents name explicitly Cost Accounting in this context: “The most common
mistake I have seen is continuing to believe in using traditional Cost Accounting for daily decisions” (a
master from United States), “people are stuck to cost accounting learned at universities” (an expert from
Poland), “being driven by cost reduction drives” (a master from Spain).
Partial implementation took the third place (18%). “Partial” means not–finished, implemented
only in part of an organization or missing fifth steps of 5FS (i.e. continuous improvement).
13To increase profits, of course. See for example [2] for a discussion.
15
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Figure 12: The most common mistakes during implementation of Theory of Constraints
This was followed by14
« lack of buy-in (15%): “Lack of attention to ’buy-in’ step, an implementation of only easier parts
to be used” (an expert from Russia), “not involving all those impacted by the change” (a master
from India), “Not following the TOC Buy-in Process” (a master from United States),
« lack of commitment (11%): “To let people do themselves, they actually do not do anything” (a
master from Moldova), “often, I found people wanted to undermine the process” (an expert from
United States), “There isn’t leader of TOC implementation” (an expert from Russia),
« lack of knowledge (11%): “Inability to truly identify the company’s constraint” (a master from
United States), “Lack of understanding the big picture of TOC” (an expert from Costa Rica),
“treating TOC like a one size fits all tool” (a master from United States),
« not enough education (11%): “Inadequate education of affected employees; failed attempts to
educate executives: «You do it and bring us the results. We’re ’hands-off’...»” (an expert from
United States), “As the owner I was over eager and some of my key people didn’t understand all
the basic concepts” (an expert from United States) , “Leaving departments of the organization
not trained, educated in TOC, not involving departments in TOC” (a master from United States),
“Moving before everyone understands the reasons and the differences between TOC and conventional
thinking” (a master from United States),
« misunderstanding of the environment (9%): “Not clearly identifying the core conflict and dealing
with it” (a master from United States), “Bad preparation for the implementation” (a master from
14Only quotations from more interesting responses are provided, if available. Obvious or trivial answers have been
skipped as not interesting.
16
Belgium), “Inability to truly identify the company’s constraint” (a master from United States),
“Trying to get to the answer before fully understanding the problem” (a master from United States),
« too fast implementation (8%): “Lack of patience” (a master from Israel), “Hurry to get results”
(an expert from Mexico), “Moving before everyone understands the reasons and the differences
between TOC and conventional thinking” (a master from United States), “It takes time to get the
ropes and buffers set correctly. You have to get the systems setup to provide the info daily.” (an
expert from United States), “Not spending enough time understanding and selling the problem” (a
master from United States), “Transition from traditional management practice to TOC takes its
time as it needs culture change and most importantly the change in the way people think. Many a
times in the rush of implementing something, organizations tend to overlook certain sensitive issues
related to organization culture, HR etc.” (a master from India),
« miscommunication (6%): “We have been trapped by common sens solution which was not so
common for everybody. So the risk was to lost people during the thinking process.” (a master from
France), “Failure to measure and communicate the results internally” (an expert from Australia),
« wrong/old measures (5%): “Changing the KPIs. Without it, it doesn’t hold.” (an expert from
Brazil),
Additionally, 18% of the respondents mentioned other reasons, but they were not so common. The
most interesting among them were:
« “Not enough management succession planing. The TOC champion often gets promoted because of
the fast and impressive results and the implementation then very often disintegrates.” (a master
from France)
« “Doing pilots” (a master from Israel), “Trying a bottoms up approach or implementing it on a
sample project” (an expert from South Africa)
« “TOC seen as theoretical” (an expert from United Kingdom)
The conclusion is that an exemplary implementation should:
« be initiated, promoted and controlled by senior management,
« be preceded with proper diagnosis and fitting proper tools,
« be preceded with trainings for employees, who should know what is important and why, to
change their habits,
« be properly communicated,
« be carried out by qualified persons,
« involve crew,
« be carried out at the right pace, without haste or delays,
« use appropriate metrics (of throughput accounting),
« involve the entire organization and be brought to an end,
« implant the continuous improvement in the culture of the company.
17
5 Additional notes
At the end of the survey, participants could leave their notes on the topic (If you have any additional
comment / note, you can write it below). Below one can find these notes that relate to TOC.
« “The TOC community does not do enough marketing especially via internet.
There is no longer an up to date active and credible TOC implementation database.
Too much attention is given to the Thinking Processes rather than the «Engines» such as DBR/S-
DBR, CCPM, etc.
The Critical Chain Project Management approach should be used to gain a significant (>20%) market
share. This would leverage «the TOC way».
TOCICO should have active regional groups in at least 20 countries to provide local visibility.
TOC needs new young blood; efforts should be made to seduce 18 to 30 year olds.” (a master from
France)
« “For my mind now we are standing in front of the great leadership challenge which needs great goals
and big courage or audacity, or courage and audacity to go through” (an expert from Russia)
« “I think capacity analysis via bottlenecks are a valuable way of looking at things. I always emphasized
heeping bottleneck processes fully manned for this reason — helped smooth out volume fluctuations.”
(an expert from United States)
« “TLS are the keys for improvement” (an expert from France)
« “[I] try to use CCPM as a parallel PM methodology but with no real success. 50% task estimation
is quite difficult to explain if there is no real full implementation project.” (a fan from Belgium)
« “In small business I think it is possible to apply some shortcuts of the methodology but not the overall
methodology, that is, the methodology must be particularized for small organizations...” (an expert
from Spain)
« “People understand easily the concepts. They have a problem with change.” (a master from France)
« “From my experience, TOC’s «sweet spot» is small-to-medium size organization that is grasping for
any advantage in order to survive the Obama On-going Recession. Executive management in larger
organizations only believes in short-term hot-shot-management-plan of the month (or quarter ... or
year). They see TOC as just another tool and will junk it as soon as they see another «Best Practice»
in Harvard Business Review.” (an expert from United States)
« “For increased effectiveness, it is mandatory for practitioners as well as implementers to have in-depth
knowledge of the subject of TOC as well as how to implement it systematically” (a master from
India)
« “I am surprised how simple all about TOC looks like but at the same time it is not implemented/used
much” (a fan from Croatia)
« “It is a way of thinking” (a master from United States)
18
« “I have been involved in lean for over 25 years and I have yet to see a company successfully implement
TOC” (an expert from United States)
« “Pharmaceutical industry is a laggard in TOC applications (my own perception)” (an expert from
Canada)
« “[I] would love to see more TOC implementations. Policy constraints and ignorance are the biggest
hurdles.” (an expert from United States)
« “TOC is valuable but needs to be from top down and a open environment to change will benefit
success” (a fan from United States)
« “I wish TOC was applied and taught to pupils from a younger age: logical thinking processes are
being taught in a very few schools and it should be mandatory. Why? Because it only brings light
in the tunnel of learning.” (an expert from France)
« “People are educated from a complex and unintegrated perspective, so TOC becomes a most difficult
approach to simplicity, which is not «normal» to them” (a master from Ecuador)
« “I work in a public administration and in try to implement the principles of TOC, the thinking
processes and a vision of flow rather than the actual vision with individual management of each part
of our process. The study of the layers of resistance is very important to succeed.” (an expert from
France)
« “Hard to get info on TOC purchasing tools” (a master from Australia)
« “I would like to know several results when applying the theory in small companies” (a fan from
Brazil)
« “It was a great way to schedule. I have hopes to be able to fan it out to the rest of the company at
some point.” (an expert from United States)
« “«Lean» is top of mind in industries not manufacturing. The only upside to the Great Recession in
the USA is that it exposed pinch points, remora eel processes, and constraints. TOC is superior the
cross cultural, and across multiple disciplines to assess business opportunity, strengths, weaknesses,
opportunities, and threats.” (an expert from United States)
« “From all I have read and attempted to implement, I know TOC will contribute to a stronger and more
profitable company. Cost accounting and its negative consequences still reign supreme, however.”
(an expert from South Africa)
« “As a Consultant, I have used TOC a few times. In my experience, awareness levels for TOC is very
low in my country, particularly in the services sector.” (a master from India)
« “TOC can achieve outstanding results but unfortunately not enough organisations truly understand
this and pursue it’s implementation fully” (an expert from Australia)
« “still many companies think IT enabled solutions have higher impact than TOC” (a master from
India)
19
6 Highlights
Highlights of the results of the survey:
« Theory of Constraints tools is used on all continents, in various industries, in companies of all
sizes and organisational cultures,
« about 95% of respondents found results of using TOC tools positive,
« about 80% of respondents found companies increased competitive advantage as a result of using
TOC tools. 43% of the respondents considered the advantage to be significant,
« most of companies don’t communicate fact of using TOC tools. The most common reason is
that TOC tools give the competitive advantage,
« a list of the most common mistakes during implementation of TOC tools has been used to define
exemplary implementation checklist.
References
[1] J. F. Cox III and J. G. Schleier, editors. Theory of Constraints Handbook. McGraw-Hill, 2010.
[2] T. M. Simatupang, A. C. Wright, and R. Sridharan. Applying the theory of constraints to supply
chain collaboration. Supply Chain Management: An International Journal, 9 (1):57–70, 2004.
20

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TOC diagnosis

  • 1. Diagnosis of Theory of Constraints — autumn 2013 Marek Wrona March 30, 2014 1 Introduction This document describes results of a survey conducted as a part of the research for an EMBA dissertation of the author. The subject of the dissertation was “Gaining competitive advantage by using tools of Theory of Constraints”. Therefore, questions in the research focused on TOC tools applied in business environments and their influence on a competitive edge. This document is not the EMBA dissertation. It isn’t even a chapter of the dissertation. It is intended just to present the results of the survey and in this way initiate discussions. Therefore, despite the results, in some cases it also presents speculation about possible reasons. At this time, I’d like to thank all proofreaders of the survey for their feedback that helped me improve it. Special thanks to Orion Avidan for her contribution, ideas and support. It was her idea to reward participants with a TOC related video. I’d like also to thank Dr Lisa Lang, Marcia Hutchinson and Jessica Banks from TOCICO for support, interesting selection of videos and technical realization. I’d like to thank Marcia Hutchinson too, who helped me by proofreading a draft of this report. Last, but not least, I’d like to thank all participants of the survey for sharing their experience (or inexperience) with using TOC tools in companies. Quotations from their responses to open questions are marked in the text with “slanted font and quotation marks”. They are kept in original form if possible (even if they contain typos). Only a few have been slightly changed in order to keep the context. Contents of questions and options presented in the survey to the respondents are marked with italics. The survey consisted of three parts: « general information about respondents, « information about popularity of TOC tools, « effectiveness of the tools. 2 About the survey and respondents The survey was conducted between October 18, 2013 and November 21, 2013 through the business social networking website LinkedIn. There were 254 participants. Table 1 represents the number of participants from various LinkedIn groups. The size of each group (number of members) at the moment of publication of invitations to the survey is shown in parentheses after group names. 1
  • 2. Respondents LinkedIn group LinkedIn TOC groups 78 Theory of Constraints (4032) 48 TLS - TOC Lean & Six Sigma (2038) 24 TOC Learning Network (1032) 13 TA4U - Throughput Accounting For You (755) 12 Eli Goldratt-group (TOC) (1175) 7 TOC Polska (50) 3 Critical Chain Professional (786) 2 TOC Thinking Processes (TP), Jonah Processes (627) LinkedIn other groups 18 Semiconductor Manufacturing (19796) 17 Aerospace Manufacturing (7222) 8 Automotive Quality Professionals (4466) 3 Auto OEM Network - World’s Largest Automotive Group (172895) 3 Contract Manufacturing Network of Moulds and Plastic (1018) 3 MBA Highway (36531) 2 Automotive Industry Professionals Worldwide (151717) 1 Automotive Finance Professionals (5759) other sources 11 Facebook 1 personal invitation Table 1: How respondents learnt about the survey? Despite invitations on LinkedIn, 11 people learnt about the survey from the Facebook page of Goldratt Books. One person was invited personally. Information about the survey was submitted also to other LinkedIn groups, but there were no responses for various different reasons. Participants have been divided into four categories, depending declared level of experience and knowledge in Theory of Constraints: laymen marked with letter L in table 2, fans marked with letter F in table 2, experts marked with letter E in table 2, masters marked with letter M in table 2. Following notation has been used in table 2: « Knowledge, depending on an answer to a question Do you know Theory of Constraints (TOC)? K0 No K1 I’ve heard/read/been told something about it K2 I’ve read a TOC book / several TOC books 2
  • 3. K3 I’ve studied the topic K4 I have a certificate in Theory of Constraints « Experience, depending on an answer to a question Do you have experience in Theory of Con- straints? E0 No E1 I’ve seen it applied (by someone else) E2 I’ve tried to apply it E3 I’ve applied it a few times E4 I’ve applied it many times K4 0F 1F 7E 14M 45M K3 4F 3F 24E 27E 15M K2 18F 5F 32F 12E 6E K1 9L 11L 0L 2F 0F K0 17L 1L 0L 1L 0L E0 E1 E2 E3 E4 Table 2: Number of participants as a function of their knowl- edge and experience in TOC. Number of respondents from various groups: laymen fans experts masters total LinkedIn TOC groups 6 44 65 72 187 LinkedIn other groups 31 16 7 1 55 Facebook 1 5 4 1 11 other 1 0 0 0 1 total 39 65 76 74 254 Table 3: Distribution of expertise as a function of source of information. Table 4 presents countries of origin declared by the participants, as an answer to a question Select your country, ordered by expertise. Country laymen fans experts masters total United States 15 17 21 24 77 India 1 2 5 7 15 France 2 4 5 6 17 Poland 1 5 5 4 15 South Africa 1 0 2 4 7 United Kingdom 0 4 4 3 11 Ecuador 0 0 2 3 5 3
  • 4. Country laymen fans experts masters total New Zealand 0 0 1 3 4 Australia 0 1 3 2 6 Colombia 0 0 2 2 4 Brazil 0 1 1 2 4 Israel 0 0 1 2 3 Spain 1 2 4 1 8 Mexico 2 1 3 1 7 Italy 1 4 1 1 7 Belgium 0 1 1 1 3 Germany 0 2 0 1 3 Lithuania 0 1 0 1 2 Bulgaria, Moldova, Norway, Peru, Slovenia, Taiwan 0 0 0 1 1 Russia 1 3 4 0 8 Canada 4 5 2 0 11 Netherlands 0 2 2 0 4 Costa Rica 0 0 2 0 2 Argentina 1 1 1 0 3 Croatia, Latvia 0 1 1 0 2 Haiti, Sweden 0 0 1 0 1 Ireland 1 1 0 0 2 Austria, Czech Republic, Finland, Kenya, Sudan, Switzerland 0 1 0 0 1 China 2 0 0 0 2 Albania, Egypt, Iran, South Korea, Malaysia, Philippines 1 0 0 0 1 Table 4: Number of participants as a function of a country These results don’t mean distribution of knowledge about Theory of Constraints worldwide, but only distribution of respondents. It is possible that the USA is overrepresented because of popularity of LinkedIn in the country. Weighting results presented in further sections with distribution of certified professionals worldwide could lead to more accurate results, but data is not available public. Nevertheless, the weighting should not change the overall meaning of the results presented in the document. 3 Popularity of Theory of Constraints The second part of they survey examined popularity of TOC tools in various aspects. It was preceded with an introductory text explaining context for further questions: On following screens you’ll be asked questions about YOUR EXPERIENCE with TOC in companies you worked for in the last 5 years. 4
  • 5. For every option you’ll see two checkboxes. Please, select first one if you worked for companies that used TOC and the second one if TOC was not used there. If you worked for more companies during that period, and some of them used TOC and some not, select both checkboxes. If you have no experience with companies corresponding to an option, leave both checkboxes cleared. Please, mark all options that apply. By giving participants the possibility to express positive as well as negative experience one can measure popularity of the tools as well as reliability of the reading. Questions in section 3 were asked to all participants. 3.1 Popularity in various industries Figure 1 presents popularity of TOC tools in various industries, as an answer to the question Select industries of companies you worked for and whether they used TOC or not1. (if unsure, please check http://en.wikipedia.org/wiki/Outline_of_industry#Major_industries) ! ! ! " ! " # $# %# &# '# (## ($# (%# (&# $#) $*) +#) +*) %#) %*) *#) **) &#) *,) **)*%)*+) *()*#) %()%() +')+,) +&) ++)+$) $&)$&) $%) $+) - ./! Figure 1: Popularity of TOC tools in various industries Results for industries with 20 or more readings are marked with a continuous line. Results for industries with 10 or more readings, but less than 20, are presented separately and connected with a dashed line, as they are less reliable. Industries with less than 10 readings are omitted as unreliable. 1List of available options: Aerospace, Agriculture, Agriculture–Fishing, Agriculture–Timber, Agriculture–Tobacco, Chemical, Chemical–Pharmaceutical, Computer, Computer–Software, Construction, Defense, Education, Energy, En- ergy–Electrical power, Energy–Petroleum, Entertainment, Financial Services, Food, Health care, Hospitality, Infor- mation, Insurance, Manufacturing, Manufacturing–Arms, Manufacturing–Automotive, Manufacturing–Pulp and paper, Manufacturing–Steel, Manufacturing–Toy, Manufacturing–Shipbuilding, Mass media, Mass media–Broadcasting, Mass media–Film, Mass media–Internet, Mass media–Music, Mass media–News media, Mass media–Publishing, Telecommu- nications, Water, Other. 5
  • 6. As it can be read from the figure, the highest reading (57%) is for the Defence industry. As only 12 respondents witnessed TOC tools used in the industry and 9 respondents know companies from the industry that don’t use the tools, treat the number (57%) with caution. The same applies to Pharmaceutical industry (55%). On the other hand values for Manufacturing–Steel (54%), Aerospace (53%) and Manufacturing (51%) are much more reliable. More than half of the companies (known to the respondents) in these industries have used at least one TOC tool in the last 5 years. At the other end of the scale one can find Financial Services, Telecommunications (both 26%), Agriculture (24%) and Education. The last one is especially interesting as there is a dedicated tool for Education TOCfE (TOC for Education2). 3.2 Size of companies Figure 2 presents popularity of TOC tools as a function of the size of companies expressed with number of employees. The values are answers to a question Number of employees in the companies and whether they used TOC or not3. ! " # $ " ! %$!"&'!(!) *$"!!"+ Figure 2: Popularity of Theory of Constraints as a function of size of companies It says that 16 respondents (33% of 49) knew microenterprises4 using TOC. On the other hand, 33 respondents knew microenterprises that didn’t use any TOC tools. Such low reading can be, perhaps, explained by the fact that in a microcompany it is much easier to ensure holistic view and alignment to strategic goals. Also processes are usually much simpler and shorter. 2One can read more about TOCfE in [1, p. 787–812]. 3List of available answers: 1–10, 11–100, 101–1000, 1001–10000, 10001+. 4Enterprises having 10 employees or less. 6
  • 7. In bigger enterprises (11 employees or more) about 41-42% of respondents knew companies using TOC. In case of companies of 1001–10000 it was even 46%. 3.3 Organisational culture Figure 3 presents popularity of TOC as a function of organisational culture. The question read Organisational culture of the companies and whether they used TOC or not5 (if unsure, please check http://en.wikipedia.org/wiki/Organizational_culture#Charles_Handy) . ! ! " # $ %$&'!$(")* "$! Figure 3: Popularity of TOC as a function of organisational culture This chart indicates that TOC is most popular in companies with task cultures (similar number of respondents know companies that use TOC and that don’t use TOC). On the other hand, TOC is least popular in companies with person cultures. 3.4 Function in organization Figure 4 presents the relation between function of the respondents in the companies and a fact of using (or not using) TOC by the companies, as declared in a response to the question Your function in the companies and whether they used TOC or not6. 5List of available options: Power culture concentrates power among a small group or a central figure and its control is radiating from its center like a web. Role culture authorities are delegated as such within a highly defined structure. Control is made by procedures (which are highly valued), strict roles descriptions and authority definitions. Task culture teams are formed to solve particular problems. Power is derived from the team with the expertise to execute against a task. Person culture formed where all individuals believe themselves superior to the organization. 7
  • 8. ! " # # # #! $ %$ & $ &%$ $ %$ % $ %%$ ! $ % $ '$ $ &$ &$ #$ &($ &%$ & $ ) * ) * + ) * +,-+./ +)* Figure 4: Function of the respondents in the companies More than half of the respondents from Manufacturing departments worked for/with companies using TOC. In case of Managers the percentage is a bit lower (47%). At the end of the list there are Accountants and Salesmen with only 34–35%. It’s interesting to note that the most popular functions among the respondents are Management, Project Management and Manufacturing. Each of them have more than 100 respondents. Most of the attention of these functions is directed towards internals of a company. It could be perhaps concluded that Theory of Constraints is usually used to improve internals (processes) of companies. In the case of the salesmen and the marketers, focus is on the exterior of the organisation, small representation (less than 40 respondents) is connected with low reading — only one third of them know the tools. 4 Theory of Constraints tools 4.1 Popularity of TOC tools Figure 5 presents the popularity of TOC tools in companies known to the respondents as a response to the question Which of these were used in the companies7? This question has been asked to respondents who declared that they used, tried to use, or saw someone using the tools. 6List of available answers: Manufacturing, Distribution, Sales, Marketing, Finance/Accounting, Project Management, Services, Management, Other. 7List of available answers: CCPM (Project Management); DBR (Manufacturing); Mafia Offer (Marketing); Less is More (Sales); Throuput Accounting; Replenishment (Distribution); Thinking Processes (CRT, EC, etc); other TOC tools (which? [Open–ended answer]); none of the above - ToC wasn’t used. 8
  • 9. ! " # $ !"% !!% "% % $% !% !% % % &'()*'+ Figure 5: Popularity of TOC tools. The most popular TOC tools are DBR and Thinking Processes. Two thirds of the respondents know each of them. The third most popular tool is CCPM. Surprisingly few respondents (16%) used marketing and sales TOC tools. 14% of respondents used “other tools”. Answers to this open question included S–DBR and 5FS. It’s interesting to note that these results have similar characteristic as those described in point 3.4 (page 7). 4.2 Sources of knowledge about Theory of Constraints All respondents, with the exception of 17 who answered “No” twice to questions about knowledge and experience, were asked a question How have you learnt about Theory of Constraints8 (mark all that apply, please)? Figure 6 presents answers to this question. Undoubtedly, books by Dr Goldratt are the most popular source of knowledge about the Theory of Constraints (82%). Then word of mouth (someone told me) comes next and then, it’s used in my company. 4.3 Results of using the TOC tools Figure 7 presents answers of the respondents to a statement Results of using these tools were9... and ...because... This question has been asked to respondents who declared using at least one of the TOC tools in point 4.1. 8List of available options: from Goldratt’s books; at university, which: [Open-ended answer]; it’s used in my company; someone told me; other, write how: [Open-ended answer]. 9List of available options: positive and negative 9
  • 10. ! " # $ % %! %" %# %$ $!& !'& !(& %'& %!& $& )& )& (& "& *& *& %& +,-. Figure 6: Sources of knowledge about Theory of Constraints. It’s worthwhile to emphasise that 95% of the respondents rated results of using the tools positive. Only every twentieth respondent thought differently. These 7 persons rated the tools negatively, because they experienced « lack of support from senior management (“not supported by senior management” (a layman from Iran), “Lack of understanding by key executives” (an expert from United Kingdom)), « insufficient change of organisational culture (“A paradigm shift in company culture would have been required to apply TOC holistically” (an expert from Australia), “They were tried in several areas but the culture was too ingrained for much change” (a fan from United States)), Figure 7: Results of using the TOC tools were... 10
  • 11. « lack of results caused by early phase of implementation (“To be determined — still in the early phases of implementation” (a fan from United States)), « lack of practical guidelines for implementing TOC in services (“Deeper usage was not easy, as we work in services, where there are not so many practical guidelines. Some thinking tools were useful however.” (a fan from Poland)), « “Lack of people involvement” (a fan from Spain). In point 4.7 we’ll see that these answers belong to a catalogue of the most prevalent mistakes made in implementation of Theory of Constraints. 4.4 Theory of Constraints and a competitive advantage The next question was a key one to the EMBA dissertation. It read “Did the companies gain competitive advantages because of using the TOC tools10?” It was asked to the same respondents as in point 4.3. Figure 8 presents answers of the respondents to the question. Figure 8: Did the companies gain competitive advantages because of using the TOC tools? More than 42% of them answered that the companies gained significant competitive advantage. Next 37% pointed out gaining a slight competitive advantage. It means that almost 80% of the respondents, who had an experience of using TOC tools, found using the tools increased competitive advantage. One more interesting observation is that nobody considered that a company may lose or worsen its competitive position/edge because of using the TOC tools, even those who considered results of using the tools negative (see point 4.3). 10List of available options: yes, significantly; yes, slightly; there was no difference; now it’s worse; I don’t know / I have no data; other, please specify: [Open-ended answer]. 11
  • 12. 4.5 Areas of improvement Respondents who expressed that TOC tools increased competitive advantage in point 4.4 were asked an open question “What kind of competitive advantages (describe shortly with keywords, please)?” Figure 9 presents answers of the respondents. ! " "! # #! $ $! % $% # # "! "% "$ " " & & ' ' ' ' ( % $ # # # ## Figure 9: Competitive advantages gained with TOC tools. The most popular answers: « reduced lead time, « increase of throughput, production, « on-time delivery, reliability, « better decisions because of holistic view, « increase of market share, « reduction of inventories, « differentiation on strategic or product levels, « lower costs, « better cashflow, « improved responsiveness (for changes in a demand), « better quality, « reduced WIP (work in progress), 12
  • 13. « better availability of goods resulting in decrease of lost profits, « better atmosphere in the workplace, « increase of net profit and « others. Based on these answers, one can conclude that companies can gain competitive advantages in internal areas (operational and capital efficiency) as well as external areas (better fitting to the market, increase of revenue and a profit). 4.6 Communication of using TOC tools Did the companies communicate externally the fact of using ToC11? and Why? This question was asked to the same group of respondents as in point 4.4. Figure 10 presents replies of the respondents. Figure 10: Did the companies communicate externally the fact of using ToC? Only 26% of respondents witnessed such communication. In most of cases, however, companies didn’t communicate using TOC tools. The respondents were also asked (with an open question) about reasons for such behaviour of the companies12. Summary of their answers is depicted on figure 11. The most popular reason for not communicating usage of TOC tools is that it gives companies the competitive advantage (it’s a secret weapon). The companies feared that dissemination of this information will result in imitation by competitors, and the loss of their competitive advantage. The second most common reason given was company policy that prohibits informing the outside of what is happening inside the organisation or organisational culture, understood as lack of habit, interest, or seeing value of communicating such issues. 11List of available options: yes; no; I don’t know; other, please specify: [Open-ended answer]. 12With a simple question Why? 13
  • 14. !! "" "" ## ## $$ ## ## "" !! %% && '' (#(# )*+ , --- . , --- Figure 11: Reasons for the decision about potential communication of using the TOC tools The third most common reason was lack of consciousness (in the market, among workers, or even management). Sample answers: “We pretended to be using Lean, because we didn’t want our people to think we were following «yet another fad»” (an expert from Italy), “TOC and CCPM haven’t been officially accepted methodology used in the company” (a fan from Poland) or “In fact, even employees do not know that this is TOC. They know it as Symphony from Inherent Simplicity. We do not push much theory to people who not decide. Only tools, and make sure they use it as new habbit.” (a master from Moldova). It is unreasonable to expect in such situation that the company will communicate outside the fact of using TOC. Following answers took further positions « “I don’t know why” « “it’s too early” « not finished/spoiled implementation « other « no results to communicate « “lack of communication channel” On the other hand, in cases where companies communicated usage of the TOC tools, the respon- dents rated in first place a communication to key stakeholders: customers and investors. In the case 14
  • 15. of the customers, this was a marketing communication intended to credit an unrefusable offer or em- phasise the advantage over the competition. In the case of investors (e.g. shareholders), it’s used to explain sources of the competitive advantage. According to one of the respondents, the companies decide to communicate using TOC tools, “because TOC is a culture that can not be replicated easily. So, companies [are] relatively comfortable in sharing about the fact of practising TOC.” (a master from India). The next reason to inform about using TOC is an altruistic need to share the knowledge. “We were always glad to share what we learned with others” (a master from United States), “We believe in sharing the benchmark best practices among all. Also TOC is a wonderful management tool to improve significant results.” (an expert from India). Five people pointed that the usage was communicated because TOC consultants insisted on it, or published that information by themselves in journals or at conferences. Among “other” reasons, there were various answers including “no special reason”, or “Company do not hide a fact of using of TOC, but it is not so visual as Lean usage. Everybody visitor see a Lean visual tools and some how «understand» how it works. Nobody can see how TOC works, because for that knowledge of TOC basics as well as deep dive inside company is needed.” (an expert from Latvia). The rest of the answers included: « limited range / internal communication, « communication to partners to convince them to use TOC tools, too13 « pride for results, « it’s trendy: “At that time it was the state-of-the-art when talking about TOC” (a fan from Brazil) 4.7 The most common mistakes during implementation of Theory of Constraints What are the most common mistakes made during implementation of TOC, to your experience? This open question was asked to the same group of respondents as in point 4.4. Exactly one hundred respondents provided reasonable answers. Figure 12 presents the most common mistakes during implementation of Theory of Constraints. In the respondents’ opinion, lack of managerial support is the most common mistake during im- plementation of Theory of Constraints in a company. Almost every fourth experienced this situation. The second most common mistake (21%) is lack or insufficient change of the organisational culture (“For true implementation, TOC needs to become the culture of organization...” (an expert from India)). The change, to be effective, has to eradicate old bad habits (“Subordination of non–bottlenecks that require abandoning local optima; how to live with explicit excess capacity?” (a master from France), “Too much focus on the tools, instead of the new behaviors” (a master from United States)) Many of the respondents name explicitly Cost Accounting in this context: “The most common mistake I have seen is continuing to believe in using traditional Cost Accounting for daily decisions” (a master from United States), “people are stuck to cost accounting learned at universities” (an expert from Poland), “being driven by cost reduction drives” (a master from Spain). Partial implementation took the third place (18%). “Partial” means not–finished, implemented only in part of an organization or missing fifth steps of 5FS (i.e. continuous improvement). 13To increase profits, of course. See for example [2] for a discussion. 15
  • 16. ! ! "" ## "" $$ "" !! !%!% Figure 12: The most common mistakes during implementation of Theory of Constraints This was followed by14 « lack of buy-in (15%): “Lack of attention to ’buy-in’ step, an implementation of only easier parts to be used” (an expert from Russia), “not involving all those impacted by the change” (a master from India), “Not following the TOC Buy-in Process” (a master from United States), « lack of commitment (11%): “To let people do themselves, they actually do not do anything” (a master from Moldova), “often, I found people wanted to undermine the process” (an expert from United States), “There isn’t leader of TOC implementation” (an expert from Russia), « lack of knowledge (11%): “Inability to truly identify the company’s constraint” (a master from United States), “Lack of understanding the big picture of TOC” (an expert from Costa Rica), “treating TOC like a one size fits all tool” (a master from United States), « not enough education (11%): “Inadequate education of affected employees; failed attempts to educate executives: «You do it and bring us the results. We’re ’hands-off’...»” (an expert from United States), “As the owner I was over eager and some of my key people didn’t understand all the basic concepts” (an expert from United States) , “Leaving departments of the organization not trained, educated in TOC, not involving departments in TOC” (a master from United States), “Moving before everyone understands the reasons and the differences between TOC and conventional thinking” (a master from United States), « misunderstanding of the environment (9%): “Not clearly identifying the core conflict and dealing with it” (a master from United States), “Bad preparation for the implementation” (a master from 14Only quotations from more interesting responses are provided, if available. Obvious or trivial answers have been skipped as not interesting. 16
  • 17. Belgium), “Inability to truly identify the company’s constraint” (a master from United States), “Trying to get to the answer before fully understanding the problem” (a master from United States), « too fast implementation (8%): “Lack of patience” (a master from Israel), “Hurry to get results” (an expert from Mexico), “Moving before everyone understands the reasons and the differences between TOC and conventional thinking” (a master from United States), “It takes time to get the ropes and buffers set correctly. You have to get the systems setup to provide the info daily.” (an expert from United States), “Not spending enough time understanding and selling the problem” (a master from United States), “Transition from traditional management practice to TOC takes its time as it needs culture change and most importantly the change in the way people think. Many a times in the rush of implementing something, organizations tend to overlook certain sensitive issues related to organization culture, HR etc.” (a master from India), « miscommunication (6%): “We have been trapped by common sens solution which was not so common for everybody. So the risk was to lost people during the thinking process.” (a master from France), “Failure to measure and communicate the results internally” (an expert from Australia), « wrong/old measures (5%): “Changing the KPIs. Without it, it doesn’t hold.” (an expert from Brazil), Additionally, 18% of the respondents mentioned other reasons, but they were not so common. The most interesting among them were: « “Not enough management succession planing. The TOC champion often gets promoted because of the fast and impressive results and the implementation then very often disintegrates.” (a master from France) « “Doing pilots” (a master from Israel), “Trying a bottoms up approach or implementing it on a sample project” (an expert from South Africa) « “TOC seen as theoretical” (an expert from United Kingdom) The conclusion is that an exemplary implementation should: « be initiated, promoted and controlled by senior management, « be preceded with proper diagnosis and fitting proper tools, « be preceded with trainings for employees, who should know what is important and why, to change their habits, « be properly communicated, « be carried out by qualified persons, « involve crew, « be carried out at the right pace, without haste or delays, « use appropriate metrics (of throughput accounting), « involve the entire organization and be brought to an end, « implant the continuous improvement in the culture of the company. 17
  • 18. 5 Additional notes At the end of the survey, participants could leave their notes on the topic (If you have any additional comment / note, you can write it below). Below one can find these notes that relate to TOC. « “The TOC community does not do enough marketing especially via internet. There is no longer an up to date active and credible TOC implementation database. Too much attention is given to the Thinking Processes rather than the «Engines» such as DBR/S- DBR, CCPM, etc. The Critical Chain Project Management approach should be used to gain a significant (>20%) market share. This would leverage «the TOC way». TOCICO should have active regional groups in at least 20 countries to provide local visibility. TOC needs new young blood; efforts should be made to seduce 18 to 30 year olds.” (a master from France) « “For my mind now we are standing in front of the great leadership challenge which needs great goals and big courage or audacity, or courage and audacity to go through” (an expert from Russia) « “I think capacity analysis via bottlenecks are a valuable way of looking at things. I always emphasized heeping bottleneck processes fully manned for this reason — helped smooth out volume fluctuations.” (an expert from United States) « “TLS are the keys for improvement” (an expert from France) « “[I] try to use CCPM as a parallel PM methodology but with no real success. 50% task estimation is quite difficult to explain if there is no real full implementation project.” (a fan from Belgium) « “In small business I think it is possible to apply some shortcuts of the methodology but not the overall methodology, that is, the methodology must be particularized for small organizations...” (an expert from Spain) « “People understand easily the concepts. They have a problem with change.” (a master from France) « “From my experience, TOC’s «sweet spot» is small-to-medium size organization that is grasping for any advantage in order to survive the Obama On-going Recession. Executive management in larger organizations only believes in short-term hot-shot-management-plan of the month (or quarter ... or year). They see TOC as just another tool and will junk it as soon as they see another «Best Practice» in Harvard Business Review.” (an expert from United States) « “For increased effectiveness, it is mandatory for practitioners as well as implementers to have in-depth knowledge of the subject of TOC as well as how to implement it systematically” (a master from India) « “I am surprised how simple all about TOC looks like but at the same time it is not implemented/used much” (a fan from Croatia) « “It is a way of thinking” (a master from United States) 18
  • 19. « “I have been involved in lean for over 25 years and I have yet to see a company successfully implement TOC” (an expert from United States) « “Pharmaceutical industry is a laggard in TOC applications (my own perception)” (an expert from Canada) « “[I] would love to see more TOC implementations. Policy constraints and ignorance are the biggest hurdles.” (an expert from United States) « “TOC is valuable but needs to be from top down and a open environment to change will benefit success” (a fan from United States) « “I wish TOC was applied and taught to pupils from a younger age: logical thinking processes are being taught in a very few schools and it should be mandatory. Why? Because it only brings light in the tunnel of learning.” (an expert from France) « “People are educated from a complex and unintegrated perspective, so TOC becomes a most difficult approach to simplicity, which is not «normal» to them” (a master from Ecuador) « “I work in a public administration and in try to implement the principles of TOC, the thinking processes and a vision of flow rather than the actual vision with individual management of each part of our process. The study of the layers of resistance is very important to succeed.” (an expert from France) « “Hard to get info on TOC purchasing tools” (a master from Australia) « “I would like to know several results when applying the theory in small companies” (a fan from Brazil) « “It was a great way to schedule. I have hopes to be able to fan it out to the rest of the company at some point.” (an expert from United States) « “«Lean» is top of mind in industries not manufacturing. The only upside to the Great Recession in the USA is that it exposed pinch points, remora eel processes, and constraints. TOC is superior the cross cultural, and across multiple disciplines to assess business opportunity, strengths, weaknesses, opportunities, and threats.” (an expert from United States) « “From all I have read and attempted to implement, I know TOC will contribute to a stronger and more profitable company. Cost accounting and its negative consequences still reign supreme, however.” (an expert from South Africa) « “As a Consultant, I have used TOC a few times. In my experience, awareness levels for TOC is very low in my country, particularly in the services sector.” (a master from India) « “TOC can achieve outstanding results but unfortunately not enough organisations truly understand this and pursue it’s implementation fully” (an expert from Australia) « “still many companies think IT enabled solutions have higher impact than TOC” (a master from India) 19
  • 20. 6 Highlights Highlights of the results of the survey: « Theory of Constraints tools is used on all continents, in various industries, in companies of all sizes and organisational cultures, « about 95% of respondents found results of using TOC tools positive, « about 80% of respondents found companies increased competitive advantage as a result of using TOC tools. 43% of the respondents considered the advantage to be significant, « most of companies don’t communicate fact of using TOC tools. The most common reason is that TOC tools give the competitive advantage, « a list of the most common mistakes during implementation of TOC tools has been used to define exemplary implementation checklist. References [1] J. F. Cox III and J. G. Schleier, editors. Theory of Constraints Handbook. McGraw-Hill, 2010. [2] T. M. Simatupang, A. C. Wright, and R. Sridharan. Applying the theory of constraints to supply chain collaboration. Supply Chain Management: An International Journal, 9 (1):57–70, 2004. 20