Resolving the Grapple through TOC

With growing number of industries and business firms, the diversity in the constraints is also growing. Some organization find their way out of the pitfalls where as some grapple with them. Theory of Constraints (TOC) as a reliable solution has benefited largely to these organization. Walking us through the factors associated with the application of TOC and its prevalence, Mr. Satyashri Mohanty, Founder Director of Vector Consulting Group gives us real glimpses of industry.

How open is the manufacturing industry to adopting TOC?
We have never come across manufacturing organization which has chronic issues of delivery problems, typical month end rush, working capital problems sales stagnation saying no to adopting TOC, particularly when they understand how TOC addresses these problems, specific to their environment.
Ironically speaking, most of the companies in the manufacturing sector in India are still gripping with these issues. The problem is so chronic that many companies have given up on solving these problems and hence are not actively looking out for help. However, when they listen to us they eagerly open up to the idea of adopting TOC.
Are Indian SMEs aware of TOC and its benefits? Considering the growth of Indian SMEs, is there a need to bring TOC into the picture to ensure their flourishing?
Almost every person in Manufacturing has read the book ‘The Goal’ the iconic book introducing TOC. But what they do not understand fully is applicability to their environment. They need help in that translation. Without that translation, adoption will remain low. The problem we face in the current scenario is that we do not have enough expertise available in the country to provide this translation. It’s true to believe that we have lot of awareness about the concept but not enough in-depth understanding.
Yes, we need TOC to bring about a change of narrative in Indian manufacturing sector as a whole – from just being a low cost destination to being place famous for agile manufacturing management practices.
What sorts of organization have you been providing your service to?
We are partners to many of the very large Indian Corporates cross sectors. As market leaders in this space, we have taken a conscious call to deal mostly with big companies. We believe that, only when big brands announce results using TOC, the adoption will be rapid across different type of organizations in a sector.
How often the mindset of the people at top levels has emerged as the constraint in the functioning of an organization?
Erroneous management paradigms are always an obstacle to next level of performance. For example, the way operation are conventionally managed, hide capacities and hence prevents proper exportation of existing assets. Similarly, the way sales are conventionally managed and also prevent effective utilization of sales team, which in turn limits the sales. Most organization can sweat their current investments in assets and manpower, significantly more than what they think is possible.
In the coming years, what kind of impact TOC is likely to make on the manufacturing industry?
It can have a massive impact out one has to make it happen. The adoption in some sectors like auto is a very rapid. Other sectors are slowly picking up.
Indian Start Ups have been mushrooming in large numbers lately and are struggling to keep the establishment alive. Has Vector catered to any of the Start Ups? Would you say Indian Start Ups are well aware of the possible constraints and TOC as a solution method?
The problem with most Start Ups is a misplaced starting business objective, which revolves around valuation. Frankly, it looks like a ponzi scheme where each investor believes that he can exit by selling it to a greater fool and make money. But like in every such scheme – it cannot go on forever. Sadly, the days of heady valuation growth through irrational exuberance has gone. We are now back to basic and asking the fundamental question that should have been asked from day one – how does the proposed business earn profits with decent ROCE of around 20%, if not more. So, now people are finding out that companies do not even have a compelling idea, which provides a competitive edge. Unfortunately, discounting cannot be a competitive edge because it can be copied overnight.
We have been involved with some start-ups and as a first step; we force them to answer two existential questions, which are:
1) What problems are they solving for their customers?
2) And why do they think it is not easy to copy?
Answering these two questions forces the company to relook at business and bring about a focus on building unique capabilities to deliver a unique value to customer. Once a business is built around an idea which provides a competitive edge – then one can get rid of the faulty assumption that profits can only come with large scale. This allows one to sequence out investments in a rational way and makes business profitable while pursuing growth.

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