We’re sure you have come across the best-selling business novel ‘The Goal’ by Eli Goldratt and how its principles can be applied to production environments (if you haven’t you can request a free copy here). But don’t be fooled – Goldratt’s Five Focusing Steps can be applied anywhere in any organisation to improve flow and capacity. From the front end with Sales and Marketing, through to Product Development and Engineering, into Procurement, Production and picking and packing for Delivery.
‘The Goal’ follows the main character Alex as he tries to save his manufacturing plant. Using the Theory of Constraints, Alex manages to increase the plant’s output, shorten lead-times and meet due dates. In real life, we have managed to achieve similar results with clients. After partnering with Goldratt UK, Forgeway (a sealants and adhesives manufacturer) managed to achieve some fantastic results. Forgeway had an opportunity to grow their business when their sales doubled in just three months. However, the increased demand put huge pressure on production to deliver. They found themselves constantly replanning and expediting orders through their system, their overtime expenditure increased, their Due Date Performance was poor with a significant backlog – and ultimately, customers weren’t happy! Using the principles of ‘The Goal’ we designed a custom-made solution to overcome these challenges. Implementing their solution, Forgeway achieved double the output on their bottleneck, removing their entire backlog whilst improving delivery performance. Rod Buckley, Managing Director, expressed that “before working with Goldratt UK our senior management team was too busy fire-fighting and chasing late orders to focus on winning new business. Our improved delivery performance means that now we are able to focus on growing the business further.”
However, you may be intrigued to know how well ‘The Goal’ can be applied to other environments. Let’s look at Trailparts where we implemented in warehousing and distribution. They had some challenges in completing their picking and packing operation each day to meet customer deliveries. Some of the solution elements implemented included: quick, focused, smaller picking and packing sprints, offloading tasks from ‘picking and packing’ to optimise their capacity at peak times, full-kitting to ensure completion was achieved as quickly as possible, along with new key measures and behaviours to ensure high output. As a result of these actions, the lead-time across picking and packing was significantly reduced (from 3 hours down to just 45 minutes!). Today, they are not missing a single delivery and have even revealed enough capacity to ensure that arriving inventory is put away quickly at the front end – they are now putting away deliveries the same day they arrive 99% of the time! While talking about the space these changes have allowed for, General Manager Murray Barnes said that “the transformation in our warehouse has been unbelievable – you could hardly walk through for all the inventory in your way before. Now we’ve cleared enough space to introduce a 5-aside football pitch! It is a much more enjoyable place to work.”
The same principles can be applied to a range of different project environments. We worked with GF Piping Systems UK to improve the flow of work through their Engineering department. With demand increasing, they needed to find additional capacity in Engineering as the backlog was delaying Production and jeopardising their ability to deliver orders on-time. Sales were also waiting on Engineering input to complete technical quotations for customers. A number of changes were implemented including task offloading, full-kitting, focus time (no interruptions), shattering the load and a visible common priority system. As a result, the average quote turnaround time to customers reduced from 5.31 days to 2.21 days – almost double the speed! They were able to feed orders through to production more consistently and effectively, and capacity and output was managed more efficiently due to the new visibility system. Finance Director, David Outhwaite explained that the new visible priority system protects people from being overloaded, “it also meant that it was far easier to manage workloads and keep track of our team’s output – even remotely.”
Similarly, Sales departments can implement the same principles to ensure high levels of selling activity. Salespeople possess a unique skillset; convincing people – this should be treated as a business Constraint, meaning Salespeople should spend their time selling! For a more developed understanding of what a Salesperson’s role should be click here. Small changes such as implementing focus time, offloading tasks and making sure Sales have plenty of ‘hot’ leads will drastically improve your sales levels. Eli Goldratt’s business books ‘Critical Chain’ and ‘It’s Not Luck’ apply the Theory of Constraints to Project Management and Sales respectively.
For almost forty years, ‘The Goal’ has been essential reading (and watching) for executives and entrepreneurs. Goldratt’s bestseller will help you to optimise the way work flows through your business. Using the principles illustrated in this book, you can identify the goal of your business and make sure all activities are aligned to achieve it.
By Lauren Wiles, Phil Snelgrove.