Mark Woeppel on Management and Execution

Rarely does a business management theorist get a chance to prove himself by taking a key role in the fast-breaking news story of the year. And even rarer does it lead to concrete success.

That was the opportunity presented to Pinnacle Strategies CEO Mark Woeppel when BP surprised him with a call for help fighting the oil spill in the Gulf of Mexico. The call would lead Pinnacle on an international mission to boost output of spill fighting equipment and then to help organize a historic mop up — the cleaning of more than 10,000 boats, ships and rigs.

As the magnitude of the spill became clear last April, BP put out the order to buy all material that could possibly be of use. But it found the entire U.S. production of critical cleanup resources was not enough. Oil was spreading — often where no workers, booms, skimmers or other equipment existed to contain it.

As with many success stories, Pinnacle’s involvement started with an incidental connection. Clint Wood, the BP executive in charge of supply, recalled a time years earlier when he briefly collaborated with Woeppel to boost production.

Now, Wood needed decontamination suits, boats, detergents, real estate for clean up sites, containment boom, dock space, boats, and other scarce material. More than equipment, Wood realized he needed to mobilize minds.

“I sifted through old e-mails and found one of Mark’s marketing letters,” Wood said. “I’ve always been an early adopter. I wanted to see if we could use Theory of Constraints to increase throughput.”

Within 48 hours of Wood’s Friday evening phone call, Pinnacle launched a marathon of visits through North America and Europe to work with BP’s key suppliers to increase production.

One early visit was to a Walker, Michigan factory. Prestige Products was asked by BP to supply as much oil containment boom as it could…

read the entire article here

Building a System That Delivers Orders On Time, In Less Time

Despite the advances in information technology and systems, most plants manage the process of prioritizing and managing the production of customer orders as if it were an art, approaching the task as a craftsman would, rather than treating order fulfillment systemically, using a robust process to manage and control production.

Rarely is the order fulfillment process treated as a process unto itself, with sequential steps and appropriate controls.  Instead, order fulfillment is treated as an independent group of production steps, delegated to the resource owners (the plant) who do the work.  Typically, they have little incentive to deliver on time, but rather, their incentive is to be “efficient”.  As a result, the important task of improving on time delivery is an afterthought in process improvement efforts.  In the end, orders are thrown over the “wall” from the sales function to the production function, like hand grenades that might explode into a product that satisfies the customer.  The result is chaotic efforts, late deliveries and unhappy customers.

More about the Maximum Flow System

Download the full white paper here…

We did a very successful Theory of Constraints Implementation a while back, that incorporated a wide variety of approaches. 

• Critical Chain Project Management
• Process Reengineering
• Supply Chain Management

The results were great.  So we made a presentation telling our story.  Here it is on slide share.

The Article is can be found on the website by clicking on the link below

Pit Crews cut final assembly time in half, giving FMC Technologies “The Racer’s Edge.”

The main reason organizations don’t realize maximum output from their capacity is that planning and execution behavior is not aligned with the global purpose of the organization. There are two behaviors that account for this misalignment.  They are:

• Over-production; Making more than the customer (or the next step) requires. Usually manifested as batching behaviors and
• Releasing work too early into the system (allowing overproduction); resulting in high work in process inventory.

These two deeply embedded behaviors are the result of management’s beliefs about the proper way to deploy resources to the work. There are countless policies, procedures and measurements that reinforce the erroneous idea that in order to manage well means to keep workers and/or machines producing as much as possible, as fast as possible. We have been taught that idle resources are major waste. Those that have implemented ToC (and Lean) realize this thinking is fundamentally flawed.

Managers must change their processes, policies and measurements to reinforce behaviors that lead to more flow, not greater resource efficiency. The very nature of efficiency must be redefined, from the resource level to the system level, from individual production to system production.

How do you get managers to realize that this deeply held definition of efficiency (the sum of local improvements is equal to improving the system as a whole) is leading to shortages of capacity?  It’s  not a small task.  The thinking is institutional; managers are not even aware of this hidden assumption. Beyond the realization that the assumption is wrong, how do you get changes in behavior? Despite conventional wisdom, behavioral research demonstrates that people don’t necessarily act from the beliefs they have, but from the reinforcements they receive. Therefore, in order to get people to change behavior, you must not only find the erroneous assumption(s) and kill it, you must also identify the reinforcement mechanisms that drive the undesirable behaviors and change those, too.

Many companies think they at capacity because their delivery performance is suffering. This is a logical conclusion, but most organizations waste at least 20% (I think it’s really closer to 50%, but I’m being conservative) of their available capacity through synchronization mistakes and poor policy choices . Managers must remember that the output a system generates is a function of how resources are managed, not just the total number resources it owns.  To find this lost production capacity, managers often use lean manufacturing techniques to increase their output. However, when applying these techniques the results are uncertain. A recent study (see related article on this blog) demonstrated that only 2% of companies implementing lean techniques fully achieve their objectives and less than a quarter (24%) achieve significant results.

While Value Stream Mapping looks at behavior, it doesn’t look at the causes of the behavior.  It does not identify the root causes for organizations losing output from their capacity.  Without eliminating the causes for behaviors, you cannot eliminate them.  For example, you cannot stop people from eating unless you can eliminate the cause of it – hunger.  You can remove the food to prevent people from eating, but once food appears, they’ll eat again.  In the same way, we must address the behavioral causes for lost capacity and create new reinforcements for the correct behaviors.

With a few changes focused on identifying the causes of behavior, you can improve the results of your VSM efforts.

• Create a process map of the value creation process
• Identify excess and shortages of inventory
• Identify the behaviors that create the inventory, delay and shortages
• Identify the formal behavior reinforcement mechanisms
• Identify the informal reinforcement mechanisms
• Identify process activity errors that waste capacity
• Assess information quality for decision making
• Assess decision processes for downstream impact

To make the most of the system’s capacity one must ensure management is reinforcing behaviors that maximize flow. Flow behaviors are most often blocked by local efforts to achieve high efficiency, but there are deeper manifestations of the efficiency concept that must be identified and rooted out before a process can be transformed.

By modifying the existing tools of process mapping and value stream mapping, one can get an understanding of the main behaviors that hide system capacity. This can result in an early stage transition from efficiency behaviors to flow behaviors, providing a systems level guide to process capability and development of the “to-be” state of the value creation process. By increasing the understanding of current capacity utilization and finding the behaviors that block systems level improvement, one can reduce the capital risk associated with adding additional fulfillment infrastructure.

It’s that time of the year; review your past successes and update your plans for the coming year or so…

I was doing some research on selling professional services, and ran accross the “best business brochure ever written”. It was a brochure written by Arthur D. Little for his fledgling consulting firm. In it, he describes how his team literally converted sows ears into a silk purse!

The purpose of the article? To demonstrate that the commonly accepted wisdom is not “true”, merely difficult. Secondly, along the same lines, the firm sought to make lead balloons fly. Quite successfully, too!

Here’s some insight into the process.

Here is the actual brochure

So often, when faced with a difficult situation, we accept the conventional wisdom as being “true”, when really, we haven’t looked deeply enough into the situation, challenging ourselves to find the essence of the problem.

I find the more problems I solve, the less willing I am to accept the conventional solutions. In fact, the more publicity a solution recieves as being “correct”, the more skeptical I become!

“Things that everybody thinks he knows only because he has learned the words that say it, are poisons to progress. The only way to get ahead is to dig in, to study, to find out, to reason our theories, to test them – and then hold fast to what is good”

This is probably old news, but I just came across an article citing the 2007 Industry Week/MPS Survey of Manufacturers, saying that less than 2% of Lean Manufacturing initiatives achieve their objectives, and less than a quarter achieve significant results. Over 70% of US manufacturers have adopted Lean.

“Just because something is popular, doesn’t mean it’s working according to plan…” cites the author.

Managers seem to employing these techniques for the wrong reasons. The survey shows that market strategies are build around quality and service. Most of the lean tools are geared towards driving time from the system.

The Theory of Constraints continues to demonstrate superior performance in dimensions the customers care about; lead time and reliability. As a method of continuous improvement, it has no peer. A study by Mabin and Balderstone report that using ToC, organizations achieved a mean lead time reduction of 70% and an improvement to on time delivery performance by over 40%. Coupled with short implementation times, often less than 90 days, dramatic results are reported over and over and over.

Moreover, Theory of Constraints implementations actually improve the bottom line performance, doubling profitability in many implementations.

The article also cites that 14% of manufacturers are implementing ToC, up from 3% in 2007. Managers are starting to wake up to the power of the theory of constraints. Are those managers working for your competitor?

You may already know this, but a CCPM implementation is not much to fear.  Think of it this way: “CCPM is a disciplined approach to managing the work we already do.”  The reality is, that the work of your firm does not change.

CCPM is simply addition and subtraction.

You’re adding some new behaviors:

• Planning with different task estimates

• A slightly different approach to planning your projects (moving the buffer)

• Focusing execution effort on buffer penetration, instead of the telephone

You’re stopping others:

• Multi-tasking

• Expediting

• Planning without considering resource capacity

It seems more daunting than it really is.  The risk of failure is very low.  Even if you do a little or partial implementation, you get results.

The most significant thing in these implementations is not the technology, but managing the change; dealing with changing behavior in the face of an uncertain (in the minds of your team, anyway) outcome.

The technology is well understood, you can use a simple tool like CCPM+ to get moving and make the move to a more robust software solution later.

The culture change for your business is moving to one where managers quickly respond to problems that may occur.  It’s primarily a leadership challenge, rather than a technical one.  So if you feel you have a handle on this, you can implement quite easily.  If not, that’s the biggest battle you’ll fight.