Restoring Harmony in Manufacturing Plants

Shailesh Ranjan


Does TOC bring harmony among people?

Let us first define harmony. It’s about getting consensus, agreement on a topic. There are no conflicts.

I am sure most of you must have observed and experienced the extent of disharmony that exists in any organization. There are almost daily fights/disagreements/arguments between people from various departments. It could be between Sales & Production over delivery of an order from an important customer or between Purchase & Production over supply of a critical component or within Production between different work centers over supply of missing parts or between Finance & Purchase/Production over make/buy decision.

Before we try to reason out why such disharmony exists among people in an organization, let us first understand where it is coming from. I mean the sources of disharmony. There are primarily three of them:

– Conflicts. People are operating under conflicts.
– Gaps between responsibility and authority. How frustrating it is to have something you are responsible for accomplishing, but you do not have the authority for some of the actions that must be taken.
– What is my contribution? Many people don’t really know (i.e. cannot clearly verbalize) how what they are doing is essential to the organization. Would you be motivated if you were in that position?

You can regularly see the conflict between Sales and Production people. Constantly there are arguments about orders which the Sales want production to deliver whereas production is busy doing orders (due to batch/efficiency considerations) which are not required now. Sales people always complain about manufacturing not delivering orders in time and therefore, they can’t meet their sales target. On the other hand production keeps saying why Sales people can’t sell what they have in hand. Similarly disharmony can be seen due to conflict between vendor and the Purchase person. What is being supplied by vendor is not required now whereas the ones that are required immediately are delivered late. For a distribution company the conflict whether to keep high inventory (to protect sales) or to keep low inventory (to control cost) is perennial. This leads to such companies juggling between high inventory (when sales start shouting that they are losing sales due to unavailability) and at times maintaining low inventory (when finance raises the alarm about high working capital).

Misalignment between responsibility and authority can be seen regularly in day to day operations. One such regular event is someone who is trying to resolve a fire. Since the person is responsible he seeks an action from his boss because he doesn’t have the authority to take the action which will resolve the fire. For example if one of the downstream work centers such as Assembly is desperately looking for missing parts of an urgent order from the feeding work centers often finds himself helpless though he is responsible for order completion but doesn’t have authority over other work centers so that they expedite the missing parts to the Assembly. This not only leaves the Assembly person frustrated but he also starts blaming the other work center in-charge for his incompetence/inability to help. Then the blame game starts and one thinks that others are not working in the interest of the company, they have hidden agendas, etc. Similarly the production line head responsible for order completion has to take approval for over time from manufacturing head (his supervisor) whenever there is such a need. Such gaps in authority and responsibility also lead to disharmony. Such examples are also seen in other areas such as dispatch. An urgent order that needs to be dispatched to the customer but the dispatch person doesn’t have the authority to send partial truck load.

People are also at a loss or feel de-motivated when they are not able to relate to the actions that they are taking at their local level, how is that helping the company as a whole. For example a work center head involved in reducing the set-up time in his area is not sure whether such an action will increase the output of the overall plant and therefore, benefit the company. Similarly a finance person is not sure whether an investment in a machine will really benefit the company as Production is claiming (because the past experience has been really bad – projected savings never materialized). Also lot of frustration/de-motivation sets in when people find themselves in helpless situation arising due to a conflict or gap between authority & responsibility and are unable to take the desired actions.

If you observe all the above sources of disharmony are actually linked with each other. For example – in the shop floor each work center is taking actions to improve its local efficiency. This leads to cherry picking, creates jams in the shop floor, increases the lead time and reliability goes for a toss. When reliability is poor then conflict between sales & production over delivery of orders keeps happening. Similarly downstream work centers (such as assembly) regularly fight with feeding departments for missing parts who are busy doing other things (to improve their local efficiency). The assembly person feels helpless since he does not have the authority over other work centers to expedite the missing parts nor able to take decision of over time when the missing parts are delivered. This leads to frustration/de-motivation and then people start blaming others about not doing their job properly, hidden agendas, etc.

As described above the disharmony is predominant across the organization. Any number of motivational programs or team building workshops will not help improve relationship or ensuring harmony among people from various departments. Unless the above sources of disharmony are resolved situation will not change.

That brings us to the question can TOC bring in harmony among people? Can it improve the quality of life of people?

Fortunately the answer is yes. Actually all these sources of disharmony are due to a single cause i.e. core conflict. The disharmony between different departments, gaps between authority & responsibility and frustration among people is all coming from the core conflict. For example in a manufacturing environment the core conflict is between actions taken to improve local efficiency (i.e. taking bigger batches, lesser set-ups, monitoring output/day) Vs actions taken to ensure flow (i.e. taking smaller batches, expediting, focus on order completion). TOC’s operations solution shows just by focusing on flow this conflict is resolved. The plant is allowed to work on fewer orders (visibility of orders in the shop floor is cut) at any point of time. Each work center subordinates to order completion rather than on its local efficiency. Due to this the reliability of the plant improves dramatically. The solution addresses all the sources of disharmony arising out of the core conflict. The below examples explain how it happens:

Conflicts: Actually there are no conflicts in nature. The conflicts arise because of our own assumptions and one of them (if not many) is erroneous. TOC solution in Operations, Distribution, Finance and Project Management shows the core conflict in each of these areas and the invalid assumption. This forms the basis for the solution. For example after deploying the TOC Operation solution the plant becomes highly reliable (Due Date performance is in the high 90s & output increases significantly). Then there are no disagreements over order priority or orders getting late. Production now produces to the real demand and on time. Therefore, orders that have been produced get billed in time. This resolves the conflict between Sales & production over order execution and FG stocks that cannot be billed. Similarly when the TOC Operations solution is deployed at vendor’s end, its capacity is released and supplies become highly reliable resolving the conflict between Purchase & Vendor over supplies.

Gaps between responsibility and authority: The misalignment between responsibility & authority is also corrected as part of the SOP (Standard Operating Procedure) that is deployed during TOC implementation. For example a work center supervisor is allowed to give over time if there is a Red order (in the earlier regime though he is responsible for order completion but does not have the authority to give over time whenever required for timely completion of order). Also now the feeding department expedites the missing part to the assembly because the work centers now subordinate to order completion rather than to local efficiency. Similarly in a company where TOC Distribution solution is implemented the dispatch person can now take the decision of even sending a partial truck load provided the SKU is in Red (i.e. stock at very low level) in the downstream supply chain link. Failure to take such an expediting action would affect availability or in other words sale loss which is far greater than compared to the expediting cost (partial truck load). Such decisions required for day today functioning are facilitated through the SOP which is part of the TOC solution deployment. This empowers people working at the ground level and help plug the gap between responsibility & authority.

This is not to say that all gaps are known upfront. However, during the implementation when such misalignments surface (typically known when a subordinate comes to his/her supervisor to handle a fire but doesn’t have the authority to take the action) TOC’s conflict resolution tool is used to resolve and plug the gaps.

My contribution: As part of the buy-in process during TOC implementation it is explained that how the action being taken at the local level connects to the global level i.e. how a local decision/action is linked to the overall objective of the company. For example the Strategic & Tactic tree logically explains how a local action such as Chocking the Release taken at the shop floor builds reliability in the plant. The tree also logically connects how this reliability will be capitalized in the market leading to sales increase and eventually overall profit of the company. So the person at the shop floor implementing chocking the release knows how this action is leading to the company’s goal of making more money. Also now the shop floor person knows whether reducing the set-up time at a machine will benefit the overall plant or not depending upon whether the machine is a bottleneck or not. If it’s a non-bottleneck machine then no such improvement initiative is taken because the local improvement does not translate into an improvement for the company as a whole. Whereas a set-up reduction time of few hrs at the bottleneck resource would translate into an output increase of the overall plant and thus, benefitting the company in terms of higher profit. Similarly a finance person taking a decision regarding investment in a machine knows whether such a decision will increase profit of the company or not using Throughput accounting principles (TOC’s finance solution). An investment in only a bottleneck resource will lead to real capacity addition and therefore, increase overall plant output (any investment in a non-bottleneck resource will not increase overall plant output. Any savings due to such an investment is mostly fictitious). The purpose of giving such examples is to show when people know the decisions they are taking how it will help achieve company’s overall objective, they feel proud/motivated about what they are doing rather than doing things (initiated by corporate/top management) for the heck of it.

As described above TOC implementation helps eliminate the sources of disharmony by resolving chronic conflicts, empowering people (by aligning mismatch between responsibility & authority) and brings in a sense of pride/motivation among people because now they know what actions they are taking, how it is helping the company at an overall level. This brings in harmony among people. There is consensus on actions, no heart burns, lesser firefighting, peace of mind and lastly a better work life balance. Do we need a motivational program or team building exercise to bring harmony among people?

I am beginning to see TOC as an HR initiative!!!

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