The TOC Strategy & Tactics Tree:

Aligning & Synchronizing for Ongoing Improvement

TOC KoreaSeoul, ColombiaOctober, 2008

Presented by Lisa Scheinkopf

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The issue troubling The issue troubling every CEO every CEO

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Up & Down Levels

Across Silos

Our Viable Vision Implementations Implementations Demanded A Solution

Good peopleHard working Hard working peopleThe TOC solutions The TOC solutions have proven to work over many work over many yearsWhat is missing?g

In the words of Dr. Deming

“It would be better if everyone would work “It would be better if everyone would work together as a system, with the aim for together as a system, with the aim for g y , fg y , feverybody to win” everybody to win” 

–– W. Edwards DemingW. Edwards Deming

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The Strategy & Tactics TreeThe Strategy & Tactics Tree

The TOC Thinking Process The TOC Thinking Process Application to Facilitate

Whole Company Ongoing Whole-Company Ongoing Improvement

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TRD for Flats

900

Operational Performance (TDD) Before & After S&T

850

700

800

Baseline

Simultaneously* Sales Increased* Inventory Decreased

543

678

583600

700 BaselineTRD for Flats

Inventory Decreased

432466

543514

396371

428460

367

460501

456

400

500

Inde

xed

TRD

367

183200

300

183

8829 323828294130

100

0

1.12.05

1.1.06

1.2.06

1.3.06

1.4.06

1.5.06

1.6.06

1.7.06

1.8.06

1.9.06

1.10.06

1.11.06

1.12.06

1.1.07

1.2.07

1.3.07

1.4.07

1.5.07

1.6.07

1.7.07

1.8.07

1.9.07

1.10.07

1.11.20

07

Starting & Sticking with the S&TStarting & Sticking with the S&TActual 4 Months ResultsActual 4 Months Results

OperationsOperations SalesSales R&DR&DOperationsOperations•• All plants on All plants on

DBR/BMDBR/BM

SalesSales•• Inventory Turns Inventory Turns

Offer accepted Offer accepted

R&DR&D•• DDP increased DDP increased

20%20%--63%63%DBR/BMDBR/BM

•• StockoutsStockouts from from 30% to <1%30% to <1%

Offer accepted Offer accepted by all major by all major distributorsdistributors

20%20%--63%63%•• 2X rate of 2X rate of

projects projects l ti l ti 30% to <1%30% to <1%

•• Capacity >2XCapacity >2Xcompletion completion

Clearly Articulates Up, Down, Across

1. What am I / are we responsible for accomplishing?p g

2. Why is what I’m responsible for really needed by the organization to improve vis-à-vis its goal?

3. What must I/we do to accomplish it?4. Why will this action/activity achieve it?5. Why is accomplishing this at risk without

providing another level of detail for my subordinates?

6. How does it link with what others are responsible for accomplishing?

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Strategy & Tactics Tree Elements1. What am I/are we responsible

for accomplishing?

2 Why is what I’m responsible

Necessary AssumptionWhy?2. Why is what I m responsible

for really needed by the organization to improve vis-à-vis its goal?

StrategyStrategyWhat for?What for?

Why?

3. What must I/we do to accomplish it?

4. Why will this action/activity

What for?What for?

Parallel Assumption4. Why will this action/activity

achieve it?

5. Why is accomplishing this at risk without providing another TacticTactic

AssumptionWhy?

p glevel of detail for my subordinates?

6. How does it link with what

TacticTacticHow?How?

Sufficiency

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others are responsible for accomplishing?

Sufficiency AssumptionWhy?

1

Consumer Goods S&TConsumer Goods S&T

Viable Vision

Base Growth Enhanced GrowthStrategyStrategyWhy?

2:1Inventory Turns

Comp. edge

2:2TPS

Comp. edge

What for?What for?

TacticTacticHow?How?

Why?

Build SustainCapitalize Build Capitalize

How?How?

3:1Aligning

the supply chain

3:4CapacityElevation

3:2Inventory

Turns Selling

3:3Expand Client base

3:7TPS

Enhancement

3:5Ensure

HighTPS

3:6TPS

Sellingchain Selling base TPS

When most cash is tied up in inventory and availability is still an issue, improving inventory turns is a client’s significant need

Inventory Turns Comp. Edge

Necessary assumptions

2:1

improving inventory turns is a client s significant need.

A decisive competitive edge is gained by providing a "partnership" that delivers superior inventory turns (better availability coupled with

assumptions

Strategydelivers superior inventory turns (better availability coupled with substantially reduced inventories), when all other parameters remain the same.

StrategyStrategyWhat for?What for?

Switching from a forecast driven mode of operation to a consumption driven mode of operation increases dramatically inventory turns (reduces shortages while reducing inventories).

Parallel assumptions

The Company develops the capabilities to successfully implement with enough clients a “partnership” that is based on supply according to consumption

TacticTacticTactic

Building a decisive competitive edge is not easy; building the capabilities to capitalize on it is not less difficult But sustaining

to consumption.

Sufficiency assumption

How?How?

capabilities to capitalize on it is not less difficult. But, sustaining these two elements is the real challenge.

assumption

Consumer Goods S&TConsumer Goods S&T

1Viable Vision

2:1Inventory Turns

Base GrowthViable Vision

3 1Build

3 2Capitalize

3 3Sustain

3 4

Comp. edge

3:1Aligning

the supply chain

3:2Inventory

Turns Selling

3:3Expand Client base

3:4CapacityElevation

4:11Aligning

production to

4:12Replenishing to

RDC’s

4:13Keeping correctinventory levels

4:14Building initial

inventories

5:13:1 5:13:2 5:13:3

production to actual demand

RDC s inventory levels inventories

5:13:1Buffer

management system

5:13:2Expediting

5:13:3Adjusting to peak demand

“WA”

Harmony, Peaceful, Sum and Japanese!Japanese!

WA Holistic TransformationWA Holistic Transformation (KAIKAKU) Management

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With thanks to Yuji Kishira

Making An Organization’s

With thanks to Yuji Kishira

Organization s Vision Viable SS

TTWhat for?

How?

SST

SST

What for

How?

What for?決定的な差別化

S&T TreeT T

S S S S S S S S S

How? How?

SuppliersSuppliersShare

holdersShare

holders

TT TT TT TT TT TT TT TT TT

SSS SSSSS S SS SS S S S S S S S SSS SS

Harmony

RetailsRetails

o de so de s

Procure-ment

Procure-ment

T T T T T T T T T TT T T T T T T T T T T TT T T

Stability Growth

HarmonyProductionProduction Sales

and Marketing

Sales and

Marketing

Supply ChainSupply ChainR & DR & D

The Newest Addition to TOC TP

Several Standard Templates are in the public domainpublic domain

Manufacturers; Projects; Retailers; Wholesalers; Distributors;

There are a growing number of S&T Experts in the TOC communityp y

Seek them outPut pressure for more

More books, articles, presentations are on the way

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Lisa Scheinkopf

A Director of Goldratt Consulting and recognized worldwide as a leading Theory of Constraints (TOC) authority. ( ) y

Worked with Dr. Eliyahu Goldratt in developing the TOC Thinking Processes and is the author of the definitive TOC reference, Thinking for a , gChange: Putting the TOC Thinking Processes to Use (St. Lucie Press, 1999).

Published in a variety of industry and Thank You!y yprofessional publications, and a long history of public speaking on TOC.

Over 25 years management and consulting y g gexperience, past Board Member and Chairperson of TOCICO, and an MBA in International Management from the Thunderbird School of Global Management

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Thunderbird School of Global Management.