This document summarizes key ideas from seminal works on Theory of Constraints (TOC), Lean manufacturing, and their application to IT services. It discusses how TOC was applied to supply chain management in "The Goal" and IT operations in "The Phoenix Project". The key ideas are identifying bottlenecks, reducing work in progress, shortening feedback loops, and creating a learning culture. Other topics covered include value stream mapping, sources of waste like wait times, and the new management era of optimizing operations for competitive advantage using techniques from TOC and Lean.

1. TOC on services
Key ideas from The Goal, The Phoenix Project and
Lean manufacturing
September 2019 Ref. 20190903jcr01
JC Ramos

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Content
Background
Key Ideas
Conclusions
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Background. Seminal works
E Goldratt introduced TOC in a brilliant book, “The Goal”. It changed radically
the way supply chain and production worked.
G Kim, K Behr & G Spafford created “The Phoenix Project” a great novel for
techies demonstrating that TOC could be applied to IT services. So did
Humble & Farley on “Continuous Delivery”, John Allspan and Harmond with
their idea of “10 deploys per day”.
Lean manufacturing and new methods for supply chain management and IT
Devops have provided the ultimate competitive advantage to current most
impacting companies. Which are the implications for management and
Steering Committees?
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4. Key Ideas
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Bottlenecks
Improvements made anywhere but bottlenecks are an illusion. It doesn’t
matter how good technology you put on production (manufacturing, IT).
This idea can be applied from business strategy to personal organization.
Bottlenecks are most constrained resources (like “Herbie”, slowest kid on
scouts excursion). They must do only the work serving to the entire system.
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Bottlenecks
On IT code has no value until it is in production. As in services research, ideas
and reports are worthless until they are applied.
- IT infraestructures can be treated as code
- For avoiding inefficiencies, development, QA and production
environments have to be synchronized
If you have inventory or WIP to the roof, stop releasing jobs. Freeze
production anywhere but bottlenecks.
- WIP will decrease
- Due date rates will increase
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3 ways
1. Create a fast flow of work. Reduce cycle times. Reduce batch sizes (ideally
to a single piece). Reduce Work in Progress (WIP= inventory). Flow only in one
direction: forward. Customer relationship dimensions:
- Business (market, sales)
- Operations (product)
- IT (services interface)
2. Shorten and amplify feedback loops from customers, to fix quality at the
source. Avoid rework.
3. Create a culture to foster experimentation, learning from failure. Avoid
mediocrity promoting open, trusted and collaborative environment
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4 categories of work on IT
1. Business Projects
Development projects. Typically run by PMO
2. Internal IT Projects
Infrastructure whether external or internal. Not centrally tracked. Reside in the DBA Manager, Storage
Manager etc. Creates a problem because there is no way to identify committed capacity
3. Changes
Generated from the previous two types of work. Tracked in a ticketing system
4 Unplanned work or recovery work (Firefighting or anti-work)
Operational incidents or problems caused by the previous types of work. The IT capacity death spiral –
Not paying down technical debt
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5 focusing steps to the goal
1. Identify the constraint
2. Exploit/ optimize the constraint
3. Subordinate to the rate of the constraint the rest of work
4. Elevate the constraint
5. Return to point 1
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Value stream mapping
Work centers include: men, machines, methods and measures. They have
inputs (materials) and provide outputs. Detail the bill of materials/ resources.
From work orders estimate demand. From bill of resources obtain capacity.
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Lean manufacturing elements:
- Tack time. Cycle time needed in order to keep up
with the customer demand. Tack Time=
Production time/ Daily demand.
Cycle time ≤ Tack Time
- SMED Toyota (single -digit- minute exchange of
die)

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Wait time
A work at a high used resource spends days sitting on its queue.
Wait Time, WT= t busy/ t idle
50% used resource has a WT= 1 unit. A 90% used has a WT= 9 units!
A line with 7 handoffs with 90% used resources: WT= 9 x 7= 56 units!!
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Control dept. Schedules and oversees all
production to ensure they can meet
customer demand.
“Water spiders” (Mizusumashi) facilitate
tools to men and keep workstations clear

12. Conclusions
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New management era
Well tuned operations are a source of competitive advantages. TOC has
proven its key role both in manufacturing and services production. Derived
small improvements have radical positive impact.
The Goal suggests the critical role of COO. The Phoenix Project suggests CIOs
relevant role for organizations, ending with the dichotomy of development
and operations (now Devops).
Steering Committees have to include talent on strategic operations. They
ideally have to include managers who combined skills on supply chain,
operations and IT.
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Some references
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15. 2019 JC Ramos, www.josecarlosramos.com
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