I Focus Right

Not everything that can be

improved should be, says Rami
Coldratt By Priyanka Sangani
is father, thelateEliyahu Coldratt shot into theglobal

H spotlight with Goal, a hix)k that launched the theory of

constraints (TOC) into the world.Rami Coldratt contin¬
ues his father’s work by helping companies improve their re¬
sponse time to the market using TOC asa systems management
tool. India is thesecond biggest centre for Goldratt Consulting
andhemakes sure he keeps his finger on thepulse of the coun¬
try. comingdown once every few months. Goldratt was in Pune I
recently toconducta session on breakthrough innovation using I
TOCat the Tata Management and TrainingCentre. In a conver- I
sation with CD, he spoke of the new challenges companies are
.
facingand using TOCin a VUCA (volatile uncertain, complex

ft
andambiguous) world. Edited excerpts:

How would you explain TOC to someone who

is new to the concept?
Ifl need to summarise TOC inone word it would
be focus. There are always many areas that can
be improved, however not everything that can be 1
improved shouldbe improved. Focus starts with '
what not todo. Usually when wethinkabout focus
it*s about what to do but TOC is about what to stop do¬
ing. Many of our improvement efforts aren’t aimed f
at theconstraints of thebusiness what limits
-

thebusinessfromdoingmore. Ifyouarenot
improving something that's limiting the A
businessfiramdoingmore,thebusiness
will not do more. TOC is about how¬
to identity’ the right constraint
and then giving you the
right set of tools to open it. A

Fast Responses
7
Continued on pg3>
 manee inengineeringeompanies is

Fast Responses very p<x>randclientstolerate it be¬

cause everybody isthe same. Socan
we manage projects ina different
way that can give valueandon-time
> Focus Right Continued wit h new products constantly being delivery? One of the fundamental
from pg 1 introducedandretailers needing mistakes we makeinproject man¬
to offer discounts to sel11heolder agement that causes major obstacles
How is TOC relevant in a VUC A version. This puts a lot of pressure to flow isbadmulti-tasking. Thisis
world? on brands. Unless the new launch is when you are forced to switch from
lÿet ’s take the consumer goods in¬ a star product 1ike t heiPhone, there one task toanother without complet¬
dustry and uncertainty. Weneed to will bea clash between your old and ingany of it. You have to realisethat
forecast the sales ofa certain product new offerings. All thismakes our by doing this you are losing capacity
in a certain place ina certain time. ability to forecast andhavethe right and quality willbe impacted. You
Based on this we would knowhow inventory impossible. have to prioritise and queue them up.
much to produce. One wouId expect So t he only way for compan ies to moving to the next one only after the
that over time ourability to make survive is to reduce the react ion first isdone.
an accurate forecast would improve time to market since it's impos¬
with more informalion on recorded sible to have an accurate forecast. How can TOC aid innovation?
consumption and more sophisti¬ Youneed to capture signals from Many companies have good ideas
catedIT tools but reality shows us reality of what issellingand react for business innovation but they
it’sexactlytheopposite it’sget- to it as fast as possible. Companies will work only if you havethe right
t ing worse. Wehave more and more that can’t dramatically impreve structured process to decipher what
surpluses and shortages. This is response times will not exist in value tobring to whatclients.In
because there are three dynamics thefuture.Earlicrhavingafast re¬ TOC. value is defined asremoving
in consumer behaviour that makes sponsetime wasa luxury: now it’s a significant limitation toan extent
it almost impossible to predict ac¬ a necessity. In TOC we remove op¬ that no otheraltemativecan. So if
curately. The first is t hat consumers erational constraints that block the you understand the limitation you
are becoming more sensitive to get flow and improve response times. are removing and thenbuilding
the products they want and this puts whether in marketing, operations thebusinessmodelaroundthat it
pressure on retailers to work with or product ion. would translate into more business.
wider assort ments else they will lose You thenunderstand development
sales. The wider the assortment, the What are the typical constraints and execut ion in the right way. May
harder it is to have a good forecast you come across? times we fail in executionbecause
of what you will sell because you’ll The main constraint isoften policy we invest toomuch in the wrong
stock more unitsand managing the driven. What typically increases directionand thencontinue to invest
depth of this inventory becomes response timesis working with big¬ because are already invested in it.
difficult. Thesecond is consumer ger batches. In procurement if you You need to clearly understand the
tolerance. Consumersare willing wait longer before placing an order. coreassumptionsundcrlyingthe
to wait lessand less for t he product response time would naturally in¬ businessand you need to validate
to becomeavailable which means crease. However, companies want to these as soon as possible. Thisis
that retailersneed to have it in the accumulateal1orders to get a good TOC for businessinnovation.
storesnot in the warehouse. Finally. deal. What t hey don’t not iceis t hat
product 1ife isbecoming shorter every suchincident increases their Have the external constraints that
response t ime. This is one major con- business has to deal with changed?
straint that ishurtingtheflow. Timeisbecomingofesscnccand
i CJfv'PA’ .¡f S THAT business innovationis becoming
CAN'T How do youmanage the constraints more crucial. Companies typically
DRAMATICALLY once you identify them? tend to compromise on thevalue
Mí R O'. í W S : OVA One mtqor obstacle to flow causing they provide their clients during a
LIMES WILL NOT project delays happens not in the downturn. The key is even during
IN THE FUTI execution, but the planning stage. a downturn,or rather, precisely
Ak RAMI COLOR When setting t iinelines.people will duringdownturns tocrystallisethe
CEO. giro an extended buffer - typically value you are providing themarket
COLSRATT —
50% to bereliable.The problem is and remove any constraintsthat
CONSULTING t hat people end up using this buffer prevents you from deliveringmore of
period whether they need it or not. this value.
andaré likely toovershoot it as is¬
sues cropup towards the end. A pro¬ What advice do you give leaders on
ject isa chain of tasks and to ensure how todo it?
t hat it finishes on t ime. t he project Start with analysing thevalueand
manager needs to make sure each competitive edge you are aiming to
task finishes on time. As the man¬ give and what you want to deliver to
ager. you have to take theindividual which segments. Then analyse the
’safety' out of the equation and use it major constraints that prevent you
as partofthe overall project buffer. from deliveringmore value and then
Inengineeringconipanies. the im¬ work to remove them.
portant thing is how you provide bet¬
ter valuc t o your clients by delivering priyanka.sartgani a
the project ontime.Due date perfor- timesgroup.com