Theory of Constraints for service. What is your Goal? Krishna Sivaramakrishnan, Qualitriz. Qualitriz. All rights reserved

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1 Theory of Constraints for service What is your Goal? Krishna Sivaramakrishnan, Qualitriz

2 THEORY OF CONSTARINTS - AIMS What is TOC Developed by Eliyahu M. Goldratt Any system can produce only as much as its critically constrained resource. TOC Helps Throughput Inventory Operating Expense What does TOC mean to you? Boost performance by looking at entire processes. The sum of local optima is never better than and usually worse than the global optimum.

3 TOC Key terms Constraint: Anything that limits a system s performance relative to its goal Constraint Bottle Neck Inventory Goal Throughput Inventory: All the money used to purchase things the system intends to sell unfinished work in software development. MINIMIZE. Throughput : Rate at which organization generates goal units(revenues). The Dollar value added from the delivered production units (FP/SP/Size). INCREASE Operating expense Operating expense: The money a system spends to turn inventory into throughput, in Software total number number of production units that have moved through the SDLC system to date. DECREASE Non Constraint : Any resource whose capacity is more than the demand placed on it

4 TOC FRAME WORK If core problems have been identified, the next step is to find the solutions What to Change if it is not possible to cause that change, then the solution TOC Frame Work to effectively improve the is not of much use. How to cause the change To what to change to performance.

5 Pillars of TOC Inherent Simplicity Every conflict can be resolved People are good Never Say I know Always look for signals that challenge our current understanding. Taking actions only within the comfort-zone is a wide-spread compromise of the conflict. Qualitriz. All rights reserved

6 Five Focusing steps Identify the Constraint Exploit the Constraint Subordinate to the constraint Elevate the constraint Go to step 1

7 PILLAR 1 - Inherent Simplicity - Basic units Number, hours Effort / schedule variation Number(size), Hours (Effort) Producti vity, Veocity rework Defect leakage, density Turn Around Time Frugal Innovation at its best 5000 dubbawallahs, lunch boxes daily, charges $5/month No fuel, no capital investment, almost no modern technology, and yet a high quality of service: that s frugality at its best. Forbes Magazine awarded its Six Sigma certification in 2001 to the Dabbawalas percent delivery accuracy rate (1 error for every 16 million transactions).

8 PILLAR 2 - All Conflicts can be resolved. Skip process blinding darkness, Follow it darkening blindness Tool : Pole Constraint : Pole Process : Pole Goal : Pole Holding To Hold or Not Tipping point Dropping

9 PILLAR 3 - People are Good. Satisfy internal and external stakeholders Understand Business and User Goals - PDSM Use Lean and Agile Methodologies to gain financial advantage for releasing products sooner and frequently Realizing the benefits ensure user goals are met

10 PILLAR 4 - Never Say I Know. Both weighs One Kg W a t e r It would be not a good attitude to have even traces of complacence of knowing. The moment we get a feeling that we have reached the best solution, we become complacent and might miss even better possibilities. There is always room for improvement breakthrough improvement. Mercury

11 Solution to Project Management woes with TOC Don t balance capacity with demand rather flow of product with the demand from the market Project managers have always analyzed individual components of a process Goldratt views the entire process and finds the weakest link--capacity Constrained Resource (CCR) All projects contain one, but not many CCRs Take lessons from Synchronous Manufacturing (Drum Buffer Rope and Buffer Management) Cluster of projects silos Vs network; competition for budget allocation, Vs investment factored by the impact on Throughput; Local optima Vs global optima

12 Agile project Metrics TOC Way Inventory: Number of story points in Backlog Throughput: the dollar value earned for delivered story point Rate of Production : Team velocity average number of story points per iteration Investment: the cost of acquiring user stories Lead Time: the length of time to deliver a story to a customer usually one iteration length, possibly 2 or more iteration lengths if a team is staggering development and testing Qualitriz. All rights reserved

13 Challenges Change management Moving to new culture, pilot or big bang? Understanding Thinking Processes, CRT and FT PM practices Resource pools Vs Fixed teams Expert Estimates Vs Goal units based estimation Identifying the constraint (CCR) Designing the process around the constraint Flow from push to PULL Qualitriz. All rights reserved

14 Key TOC Take aways Productivity :The act of brining company closer to its goals Spending less time on non value adds, more on Productivity How can you deliver more value to customer Use Lean, Agile, TOC Time Value method stresses the value of on time delivery Main symptoms to tackle: Students syndrome, Parkinson s principle People don t give back the time they are assigned Minimize multitasking Buffering scope (ctrl scope screep) PDSM problem driven scope eliminates away unwanted scope TP used for defining scope Customer invests wisely Qualitriz. All rights reserved

15 Never say I know THE GOAL >>> >>>Putting it all together TOC 5 Focusing steps Inputs Program 40% into the program, only 10% completed Exploit the Constraint ToolCap Value Release n > Initial Program backlog > Team Facilitation If the previous steps broken the constraint go to step 1 Subordinate to the constraint / provide buffer Inherent simplicity Every conflict can be removed Elevate the constraint Look for next constraint What to Change TOC PILLARS TOC Frame Work Win- Win is always possible How to cause the change What to change to

16 Drum Buffer Rope Problem that needs to addressed: Total estimated Time: Program Release Drum set the pace of the CCR Definition Non constraints Non bottle necks CCR Bottle neck ToolCap Success Input Goal Rope Feedback to ensure Input release does not exceed CCR capacity focus on Engg and subordinate support Time Buffer + Resource Buffer Ensures JUST enough work for CCR Resource Buffer Non constraints Non bottle necks

17 Attuning to TOC The power of compounded continual simple habits (1.01)^365=37.78 Enjoy the seeds of discipline for the Yield (1^365)=1.00 Status Quo = Long term loss (0.99)^365=0.03 Suffer the pain of regret

18 TOC Questions? / Discussions. Qualitriz. All rights reserved

19 References Lets be in touch: Mail : Qualitriz@gmail.com Call : Blog : LinkedIn:

20 TOC Thank You