The Goal

DW: How old were you?

SW: That was ten years ago; so, early 30s. Mechanic school wasn't a waste of time. I still use what I learned. I save 600 bucks doing my own tune-ups. But right before I left to go out there, someone said: "You know, in San Jose there's a software company that has been cre- ated to support the rules that are stated in The Goal, and by the way, the Goldratt Institute has just issued a self-learning kit that you might be interested in." So I went to my mechanic class, that was very fun. Then afterwards I stopped in San Jose, took a look at the software, and completed the workbook on the way home. I was so excited that on Monday morning I got my staff together and I said: "This is what we're going to do. We've got nothing to lose. It looks like it's possible. It almost looks too simple. Let's give it a try." They weren't very con- vinced. In fact they were pretty skeptical. I'd put them through a lot already. One more thing, huh?

DW: This was their first exposure to TOC?

SW: Yes. Short story is, it took us about a month to go through the training materials, which came with a tutor guide and a workbook for all the participants. I went through the tutor guide step by step, they went through the workbook, and eventually they said: "I think you're right, we can do this." So we started, and about two weeks later we began to see some things improve. Lead times were starting to come

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down, our on-time deliveries were starting to go up. At first I thought it was just a fluke.

DW: What changed your mind?

SW: Well, a month later here comes one of my welders and he says: "Boss, I think my numbers are wrong. The lead time I've been mea- suring is now about a day and a half." I said: "How can that be?" We were still ru

DW: What did you find when you examined the numbers?

SW: I told my welder: "You know what? You're right, the numbers are wrong. The lead time is less than a day." Same resources, 40% more orders, a fraction of the lead time. Took us two months to do that. Cost us $500. The company was a hundred years old and they had the best two quarters that they've ever had. One division that was losing a million dollars a month was now making a million dollars a month. If I hadn't seen it with my own eyes, I would never have believed it.

DW: What was the constraint you exploited to make such

a huge difference?

SW: We actually worked through about three of them. One of them had to do with the fact that we were sending everything out to put a protective coating on the pipes that held the measuring equipment. It was a step that had been added at some point by the marketing department, and it had developed into a constraint. So we had to go and find one or two more suppliers to handle the load.

DW: And there were others?

SW: One was the saws that cut the pipes. We offloaded some of the work to another machine that was just sitting there doing nothing. That saw ran at half the speed of the other saw, no one ever wanted to use it. But we identified just the right materials to run on it, which built just enough capacity to eliminate the saw as a constraint. And then the

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paint department was next, we did a couple of things there. At which point the constraint shifted to engineering. We were waiting for some new products to come out, and that's kind of where it ended up.

DW: Do you believe that TOC is an infinite process? In other words, is there always going to be another constraint you can find and exploit?

SW: Theoretically, it can go on forever. But from what I've seen, it goes through one or two cycles within a facility, and then you've kind of broken the constraint in the production operation. Then it may move to, say, engineering. Then you can apply Critical Chain to the engineering group and eliminate that as a constraint, and then the next constraint usually is the market, and typically it's the existing market. Unless you're Coke or GE or whoever, you probably don't have a dominant position in your market. So you can still find room to grow. Finally, there are plenty of cases where, using the same capabilities that you generated using TOC, you can attack new markets that you never thought you could compete in. At that point, you're probably doing all you can handle anyway.

Or maybe it goes back to manufacturing again. Could be, yeah, and you definitely know how to deal with that by then.

DW: Alright So then you moved on?

SW: I actually went to Grant Thornton for two years and worked on developing other TOC skills and applying what I knew to an ERP [enterprise resource pla

DW: This was a large-scale implementation?

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SW: Huge. The plant covered half of Te

DW: What was the upshot?

SW: No change whatsoever in on-time delivery. The company already had an excellent record in that regard and by the time we had fin- ished, it still had an excellent record. But the only reason they could deliver on time before was because they had more inventory than they really needed. They just stuffed the shelves full of electrodes, had them sitting all over the place. So you see, we didn't disrupt their delivery performance at all, they continued to deliver 100% on-time. But in the end they did it with about 40% less inventory. And they were very satisfied with that because that essentially freed up almost $20 million that they could now use elsewhere to run their business. Based on those results, the CEO stood up at a big meeting one day and said that this is what we're going to do worldwide. We brought representatives from Spain, Brazil, Italy and South Africa to Clarksville as part of a worldwide implementation team. It's become a classic case of phenomenal improvement and a very satisfied client.

DW: So this is what you do now? TOC-based consulting gigs?

SW: Yes.

DW: Do you offer TOC as one option among many, or is