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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.
Interview with Robert Leavitt, Colonel, United States Marine Corps retired.
Manager, Sierra Management Technologies
DW: You were responsible for implementing a TOC-based program in the Marine Corps?
RL: Yes, when I was commanding officer at the Naval Air Depot in Cherry Point, North Carolina. I started the implementation there, which they have continued. As a colonel I had in essence a $625 million company and 4,000 people working for me. Everybody says the government is always the last to get the message. I don't know if that's true. My personal belief is that the government gives guys like me the opportunity to try things a little differently.
DW: Tell us about your implementation.
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RL: We had problems delivering H-46s on time. The H-46 is a 25-to 30-year-old Boeing helicopter used extensively in the Marine Corps as part of their assault support role. Because the airplane is so old and in frequent need of maintenance, anything over a single-digit number of airplanes on our hangar deck meant that you took a shadow off the flightline. If you took a shadow off the flightline, that meant they didn't have an airplane to do their mission. Our negotiated norm for turnaround time was 130 days, and on average we were somewhere between 190 and 205 days.
DW: Sounds like you had a problem.
RL: A problem, yes. So we implemented critical chain, and ultimately cut the number of airplanes in flow from 28 to 14. We were able to sell that to our customers. And the turnaround time went from 200 days to about 135. Now that in and of itself is probably a significant improvement. But at the same time we were starting the process, they added 30 days more worth of corrosion work to be done to the cabin. We accommodated the 30 days within that 135-day delivery. So we went from what would have been about 230 or 240 days to 135.
DW: Why did this approach work where others had failed?
RL: We had looked at a lot of the project management solutions, including material resource planning (MRP). TOC was the one that worked from all dimensions; building teamwork, understanding vari- ability, and with a grounding in scientific thought. It was a holistic approach to solving the problems. It looked at the entire system and said, hey, once you find the key leverage point you'll get some sig- nificant returns. And then you can go back and find the next leverage point, or constraint.
DW: Did it take you a long time to find the constraint?
RL: No, it didn't. And within about 120 days we were already begin- ning to see the results.
DW: What was the constraint that you found?
RL: It was the schedule-the way the schedule was developed. The
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biggest thing was the way we applied available resources; it didn't make any sense. The estimators and evaluators really had about two days worth of work and they were taking about 14. We figured out what was going on-why that was a problem, why the scheduler set that up-and then reorganized.
DW: Bottom line?
RL: Well, the way it worked with the government, we were funded for a certain number of airplanes each year. We started burning through the backlog and we actually produced a few extra airplanes. I know from talking to the new commanding officer down there that they've increased the amount of product every year as they've gone forward.
DW: And you had another example?
RL: I also implemented TOC in the tail rotor blade cell at Sikorsky Aircraft, the overhaul and repair division. We were averaging some- where between 15 and 19 tail rotor blades a month. It took us about 73 days to finish a tail rotor blade and we had as many as 75 or 80 tail rotor blades in flow. Well, we changed the flow to more than 30 tail rotor blades in process, which means our turnaround time actually was about 28 days.
DW: How quickly did this improvement occur?
RL: Three months. Now you can understand why I'm trying to build a consulting practice around TOC.
Interview with Eli Goldratt continued...
DW: I'd say almost everybody I've talked to who has read The Goal agrees with its messages. It also seems clear that many readers believe TOC to be founded on solid common sense. So why doesn't everybody implement TOC right away? Is it because TOC demands that cost accounting be discarded? Do the financial managers block the implementations?
EG: Not at all. The notion that financial managers try to protect cost
accounting is completely false. As a matter of fact, financial managers are the only type of managers that knew, much before TOC, the fal- lacies of cost accounting. Moreover, in almost any company, the VP of finance is one of the few managers who sees the overall picture and is extremely frustrated to witness so many devastating local optima decisions which do not view the organization as a whole. What we see in reality is the exact opposite; the financial managers rarely oppose TOC. On the contrary, in many (if not most) implementations, they are the driving force.
DW: That's hard to believe. Can I interview such an enlightened financial manager ?
EG: As many as you want. As I said, such financial managers are the norm rather than the exception.
Interview with Craig Mead, Book Manufacturing
Vice President Finance, Thomson-Shore, Dexter, Michigan. DW: Tell me about Thomson-Shore.
CM: We're in Dexter, Michigan, just outside Ann Arbor. Approxi- mately 40% of our customers are university presses. We would be considered a short-run printer, meaning we print runs of between 200 and 10,000 copies. We're also an ESOP company-98% of the stock is owned by the employees. We've had as many as 300 employees. Right now we're at 280.
DW: I understand that everybody in your company has read The Goal.
CM: We made it mandatory reading for all our employees. DW: Top to bottom? CM: Yes.
DW: So what was the problem you were trying to correct with the help of The Goal
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CM: Our main problem was with on-time delivery. We also had problems with a department-type mentality at the company. People had a hard time looking beyond their departmental responsibilities. Everybody was functional in thought.