The Goal: A Process of Ongoing Improvement (39 page)

AN INTERVIEW WITH ELI
GOLDRATT AND OTHERS
by David Whitford,
Editor at Large, Fortune Small Business.

Healthcare Industries Materials Site

635 N. Gleaner Road

Hemlock, MI 48626

May 20, 2004

Dear Dr. Goldratt:

I wanted to share with you what we have accomplished within our organization by using the tools presented in your books, “The Goal” and “It’s Not Luck.”

When a colleague gave me a copy of “The Goal,” the plant at which I work was in a similar situation as Alex’s plant in the book. At that time, in 1998, our plant’s on-time delivery was approximately 50%. We were carrying over 100 days of inventory and we had customers on allocation because we could not meet the demand for orders. In addition, our management had given us six months to turn things around, or else. I was the new production team leader for approximately thirty percent of the plant sales and forty percent of the plant production employees. My units performance was similar to the plant’s overall performance.

As I read “The Goal” I quickly realized one person alone could not solve the problems within my unit, or within our plant. I ordered several copies of “The Goal,” and my colleague and I distributed them to our production manager, plant manager and manufacturing and quality engineers. Everyone was eager for a solution to our problems.

Within my unit we identified the bottleneck and began to focus our resources there. Our plant is a non-union facility and many of the workers were also interested in what we were doing. I ordered copies of “The Goal” for everyone who worked for me. By the time the six-month ultimatum came, my unit and another had started to make significant changes, and the plant was spared any ill recourse. However, the expectation was that we would continue to improve. For the five years that followed, we continued to work on breaking our bottlenecks. When one moved, we attacked it again. We got pretty good, and could determine where the bottleneck would occur next. Eventually, the bottleneck moved outside our plant as depicted in “The Goal.” However, we knew this would happen ahead of time and had already begun the indoctrination of our sales and marketing group.

I recently moved out of production, but before I left, the results within my unit were: cycle time reduction of ~85%. Operator headcount reductions of 35% through attrition; no layoffs were needed. Work in process and finished goods inventory down ~70%. On-time delivery went from ~50% to ~90% and the number of material handling steps were cut by over half. Our plant, and business unit have done very well too. And me, I received a promotion while in that position, and a compensation award. Dow Corning, like many other corporations, has downsized multiple times in the past five years. During each one, our plant, and business unit were affected very little or completely passed over. I am convinced that if we hadn’t read and followed the methods in “The Goal” and “It’s Not Luck” the situation would be much different today. There is still much to do, as our business unit is the only one to really have embraced “The Goal.” I am hoping in my new role in Six Sigma that I can further share your tools and methods. Thank you for signing the book Dr. Sirias has forwarded to you on my behalf. I am honored.

Sincerely,

Robert (Rob) Kain P.E.

Six Sigma Black Belt

Dow Corning Corporation

Life Sciences/Specialty Chemical Business

DW: Impressive, but why is only one business unit of Dow Corning using TOC? What bothers me is that this person is talking about a span of over five years. If it worked so well, why didn’t it spread to the other business units? Is it the Not-Invented-Here (NIH) syndrome?
EG: Before we dive into speculation about psychology of organizations, let’s examine the facts. We are talking about a middle manager who works in one corner of a large company. Why should we be surprised that, in five years, this person was not yet able to take his whole company through a major paradigm shift? And, by the way, as you read in his letter, he is making nice progress; he has already moved into a much more influential position.
DW: Still, even with enough time, is it possible for a middle manager to influence his whole company?
EG: Yes. But of course, such a person will need a lot of stamina and patience.
DW: What makes you so sure that it is possible at all?
EG: What evidence will convince you that it is possible?
DW: Give me an example of a middle level manager working for a large company who has succeeded in institutionalizing the usage of the know-how written in
The Goal
. I mean institutionalizing it across the board.
EG: Given that General Motors is the largest manufacturing company in the world, you should get an outstanding proof by interviewing
Kevin Kohls.
(Eli Goldratt interview to be continued.)
Interview with Kevin Kohls
General Motors
Director of Throughput Analysis and Simulation for North American Assembly Plants.
DW: What drove you to seek help from
The Goal
?
KK: It goes back almost 15 years, when I was starting off as a controls engineer at the Cadillac Detroit-Hamtramck assembly plant, just returning from Purdue University after completing a masters degree in electrical engineering. When I left a year and half earlier, the plant was just starting production. When I returned, they had yet to hit their production targets; in fact they were far short. As you might imagine, everyone was frustrated about not hitting these targets, and there was a lot of effort being expended to improve the system, with minimal results.
I was frustrated as well. The solutions I was putting in place rarely had a significant impact on the production of the plant, and it wasn’t clear why. About that same time, Dave VanderVeen from GM Research made a presentation to Larry Tibbetts, who was then plant manager. Dave was promoting a research tool that he said would help improve throughput in the plant. Larry was very impressed, and asked me to go see Dave to find out if we could use this tool at Hamtramck. When I went down to the Research Building at the GM Tech Center in Warren, Dave explained what a bottleneck was and how his tool identified it. He handed me a copy of
The Goal
and said if you want to understand bottlenecks and how to improve throughput, this is the book to read.
I took the book home and started to read it right away. The first thing that surprised me was that it was written in novel format. The second was how much I could identify with what was happening in Alex’s plant. I finally had to put it down at 2 A.M. so I could get some sleep, but I finished it the next day. I wanted to apply the concepts immediately, so I began collecting data from the systems we had, and putting it into the bottleneck program. After about a week of effort, I was fairly certain I had found the bottleneck. The scary part is that it was not 20 feet away, on the production line right outside my office!
DW: What was the problem?
KK: It was an operation where they were installing the fuzzy, felt-like material that goes in the ceiling of the car—very big and very clunky. Our data said that the mean cycles between failures was about five minutes, and the mean time to repair was about a minute. I was amazed that the line was stopping that often, and thought maybe the data was wrong, so we went and looked for ourselves. Sure enough, we watched the operator run for five cycles, stop the line, walk away, pick up five more of these big, bulky items—they weren’t heavy but they were big—drag them back, restart the line, and continue to install them. Every five cycles she would stop the line. Was it considered a major problem before we looked at it? No. It’s not like we were losing an hour straight of production because something had broken down. We were only losing one minute. But it was happening every five cycles.
We could see immediately why the material wasn’t closer to the line. There was a supervisor’s office in the way. We found out there had been a request made some time ago to move the office, but it was considered very low priority and it wasn’t getting done. So I got the office moved, and lo and behold, throughput of the entire plant went up, which was a surprise, because my experience told me that I couldn’t expect that. Then we used the software to find the next bottleneck and continued on with that process until we were making our throughput goals very steadily, every day. That was a real change in the way that plant operated.
DW: Did you take your insights to other GM plants?
KK: Yes. We demonstrated the process when central office management visited the plant, and it became apparent a lot of plants in GM weren’t hitting their throughput targets. Eventually, I left DetroitHamtramck and went to a central office position to help start a divisional group to implement this solution. Seventeen years later, I’m an executive at GM who owns the process for all of the North American plants, and it has been expanded to include the simulation of future manufacturing designs.
DW: And this is all TOC related?
KK: Yes, but there are other disciplines involved. You have to understand simulation, and how it predicts throughput, and why it’s important to understand where the bottleneck will be for a future design. But TOC is the basis for what we do. I still teach a two-day course. We might go to a plant and train the whole staff in how to use TOC concepts. I always give out copies of
The Goal
ahead of time and ask them to read it before the training. It’s gotten to the point in manufacturing, however, where there are not that many people left to go through the training. My internal customers are usually very savvy now about TOC, bottlenecks, data collection and analysis. So I rarely have to sell the concept anymore. Demand for data collection implementation to drive the bottleneck software, for example, exceeds our ability to install. And while I’m responsible for GM North America, this week alone I have people in China and in Europe working on these kinds of issues.
DW: How has your use of TOC concepts changed over the years?
KK: What we found when we first started out is that we were dealing with the low-hanging fruit. You look at that first example I told you about, and it was very obvious that the office was in the way, and the solution was just to move it. Over time, the solutions to the problems have become a lot more difficult to find. This doesn’t mean you can’t solve them, it just means you might have to use more scientific techniques. Now I might have to apply statistical methods as opposed to simple observation to understand what’s driving the problem at a work station.
Another thing we’re doing lately is applying what we’ve learned from
The Goal
to the design of new plants and production lines. In effect, we’re solving problems before they arise. Eli Goldratt hasn’t spent a lot of time talking about using TOC in that way, but we’ve taken his concepts and adopted them to our needs. That’s been the beauty of it for me. If you understand the logic and the reason behind the methodology, then you can apply that stuff continuously.
DW: It’s interesting that a way of thinking about production problems that you found useful 15 years ago you still find useful today. Does that surprise you?
KK: Yes and no. The Theory of Constraints is a very scientific, logical process. And because of that, when the game changes you can always go back to the logic. Originally we just had to find the bottleneck, walk out there, ask three or four questions, and we knew what to go and do. Now we can change the way we design whole manufacturing processes to make sure they’re better from the start. But the logic behind TOC—the conflict clouds, the current reality trees, the way we ask questions to uncover the constraint—all that still applies.
I think the problem with too many other approaches is that once the first layer of problems goes away, and the crisis no longer exists, then it’s, “Phew! We’re done!” In the TOC world, you find yourself asking, “Where has the constraint gone, and what can I do to help break it?” So you’re never done.
I’d like to be able to tell you that as soon as I started telling people about these concepts, the whole organization immediately changed to the new paradigm. The fact is that it has taken years to get the process going, and the leverage to make improvements is still significant, especially in a company as large as General Motors. It’s much like the flywheel concept discussed in
Good to Great
, by Jim Collins. It’s taken a while to get the flywheel turning, but it’s starting to go at a pretty good clip right now!
Interview with Eli Goldratt continued . . .
DW: At Dow Corning it took about 5 years for TOC to spread from one section to a whole business unit. In General Motors it took over ten years to be institutionalized throughout North America. Does it always take years to spread from the origin to the whole company?
EG: Not necessarily. It depends on who took the initiative. If the initiative was taken by a middle level manager, it naturally takes much longer compared to the many cases where the initiative was taken by a top manager. What is amazing is that the complexity of the organization is playing almost no role. In very large and complex organizations it takes TOC about the same time to become the dominant culture as it takes in small, relatively simple organizations.
DW: Can you give an example?
EG: In order to prove my point let’s take an extreme example. An example of an operation that is not only large and complex but also dominated by large uncertainties - a repair depot of the United States Marine Corps. This depot is overhauling helicopters. It’s very large – several thousand people. It is very complex – the helicopters are disassembled to the smallest pieces. Even the paint is sandblasted off. Whatever has to be repaired is repaired. Whatever has to be replaced is replaced. And then you reassemble the whole airplane. One has to make sure that certain parts which were taken from the original airplane go back on the same airplane. What makes it even more complex is the fact that two intrinsically different modes of operation have to be synchronized. The disassembly/assembly lines are a multi-project environment. The repair shops that feed the lines are a production environment, and the two must work in tandem. The real challenge is the fact that the whole operation is dominated by high uncertainty – one doesn’t know the content of the work until the helicopter is disassembled and inspected. Surprises all over the place. A real nightmare. Still, it took the commander less than a year to implement TOC. An implementation that was so solid that the process of on-going improvement continues with his successors.