Constraints are a big part of the manufacturing industry. They are almost inevitable at times. The key to dealing with this is planning. In order to lessen the effects of constraints on your operation, it is crucial to know how to identify both your internal and external constraints and have the proper strategies to handle them effectively. In a recent chat for USA Manufacturing Hour on Twitter, host, Dr Lisa Lang from www.ScienceofBusiness.com led a discussion on the Theory of Constraints.
The Goal
The chat began with Host Lang asking if participants have read The Goal by Eliyahu M Goldratt. If they did, did they like it, love it, or not groove with the novel format?
Kerry O’Connell said, “No but now I'll have to look it up!”
Cherise Kennerly from SalesLeads said, “Not familiar. But I'll check it out!”
Ruby Rusine and the Social Success Marketing team replied, “No, not yet. I seriously have thousands of books on my Kindle not to mention the ones in my library.”
Chase Bodor from Plastic Plus Technology said, “No but I think it is mentioned in High Output Management (also a great read).”
Pavel Stepanov from VirtuDesk said, “Not yet. I'll be adding it to my list of books to read.”
Missy Moorefield Southern Fasteners and Supply said, “I have not read this... So excuse me while I go add this to my "To Be Read" list.”
Brett from FreightPOP said, “I have not read this book, but I now have a feeling I should...”
Nigel Packer from Pelatis Online said, “On to the read list.”
Brash said, “Haven’t read it yet! But our team is always looking for some new reads”
Kirsten Austin from DCSC Inc said, “Piggyback #USAMfgHour We need to read this book. It's on the list!”
Gina Tabasso from MAGNET Ohio Manufacturing said, “Nope”
Whitney Koch from Welker said, “I have not read this! I have a growing TBR list on Goodreads--going to add this now!”
Rebecca Prox the Digital Marketing Pro said, “Have not read it. Never heard of it until now."
Host Lang said, “I read The Goal back in 1989 while working on my PhD. It had a profound impact on me, and I eventually worked with the author and father of Theory of Constraints, Dr Eliyahu Goldratt. I now apply the concepts to custom manufacturers – job shops and machine shops.”
She added, “The Goal is estimated to be the most read business book in the world. It’s worth a read if you haven’t read it or a re-read if you have!”
Link to Book: https://www.amazon.com/dp/0884271781?tag=thescienceofb-20&camp=14573&creative=327641&linkCode=as1&creativeASIN=0884271781&adid=1JPSDSET8WPJHZQ6YCFV& Or you can read a SUMMARY here: https://www.velocityschedulingsystem.com/blog/the-goal-book-eliyahu-goldratt/
Business Goals
Host Lang then asked participants to share what the goal of their respective businesses is.
Brash said, “To build revolutionary products that stand above the rest.”
Packer added, “Admirable goals”
Tabasso Said, “Help manufacturers growth and in turn grow the economy and create jobs”
Austin replied, “Great answer!”
Kennerly said, “To help the company grow their business with the use of our software and services.”
Moorefield said, “Short answer is to sell fasteners. Longer answer is to be successful and continue growing as we sell fasteners.”
Stepanov said, “We manage the small tasks so busy people can focus on what's most important. We aim to help business owners and entrepreneurs scale their businesses through professional virtual assistant services."
Stepanov added, “And we also aim to help them achieve work-life balance through our virtual assistant services.”
LaBelle said, “To simplify asset management for businesses of all sizes.”
O’Connell said, “To help manufacturers improve safety thus reducing costs and reduce the dreaded safety paperwork so they can spend more time doing more productive things.”
Packer said, “To engage, educate and entertain clients into learning the things they already know but don't realize whilst making a modest profit.”
Amy M. Anderson added, “I like this! Best of luck always!”
Adam Baker from Schooley Mitchell said, “The goal of my business is to reduce operational costs for businesses so that they can use that money to invest in their people, processes, or products.”
Rusine said, “Hmmm... Let me see... to help B2B businesses build strong brand recognition, create meaningful relationships with their customers, and maximize their online presence.”
Emily Kite from Obsidian Manufacturing said, “Besides our mission statement, I think our goal is to provide quality products, excellent customer service, and to provide financially viable options for our customers.”
Brett said, “To help manufacturers and shippers simplify and streamline their supply chain. We provide our clients with features to give them superior visibility throughout the entire shipping process and total control over their shipping costs.”
Koch said, “Welker's goals are to (1) keep the public safe with our odorization equipment and (2) help energy companies ensure they are taking the best sample possible to get the best valuation possible.”
Bodor said, “Our goal is to help our customers be more successful. To achieve this, we help define their production goals and help them throughout the product development cycle to ensure they can hit the market running.”
Prox said, “There are multiple goals for the business I work in/for: Increase sales YoY, increase revenues and profits YoY, increase qualified leads, provide excellent customer service, etc.”
Host Lang said, “In for profit businesses, it’s to make money. For some that may mean achieving and maintaining a certain profit level. Others may want to increase profits by 10% every year. It’s important to understand YOUR goal.”
She added, “It’s common for business owners to state their goals as something other than making money but typically they are stating necessary conditions to making money.”
Constraints
Participants then shared what’s keeping THEM from achieving more of their goal? What are some constraints?
Tabasso said, “Small manufacturers without the budget to do projects, don't understand or value marketing, or don't know to come to us for help.”
Host Lang asked Tabasso, “So you have a sales constraint?”
Tabasso answered, “I don't sell, per se. Nonprofit.”
O’Connell then added, “Wow. Guess I'm not the only one. They think they know what they want but other priorities interfere.”
Rusine said, “So much to do with so little time. There's always a lot on our to-do list. Don't we all face the same 'constraint'?”
Host Lang replied to Rusine, “In general yes, but the specifics are different.”
Moorefield replied to Rusine with, “Ain't that the truth! I get to work and jump on a project. Suddenly it's lunch time. Then I blink and it's the end of the day... I'm sitting there asking where the time went.”
Jasmine LaBelle from Velavu Tech said, “We’re working on our sales outreach right now. Building connections and introducing the Velavu system to businesses who may benefit has been our main focus as of now !”
O’Connell said, “Time is the biggest constraint and competing priorities.”
Kennerly said, “I think we're all guilty of working 'in' the business vs 'on' the business. I hang my head in shame...”
Austin said, “Everything is going well but time is a huge restraint. It's hard to get everything done that I want to get done being a Leader. I try to delegate but it's challenging for me at times.”
Baker replied to Austin with, “Delegating is a huge challenge, but also provides some of the greatest rewards. When you want to start really delegating, read the one-minute manager (short read). It's great for providing feedback to those you delegate to.”
Baker said, “It's difficult differentiating ourselves from those that just want you to switch services, so we don't do any cold outreach. We grow through referrals by clients or close associates that understand our business, so prospects grasp what it is we do”
O’Connell replied to Baker with, “I agree this is the best strategy. Don't you sometimes feel that there are so many more out there who can benefit from your services if you could only talk to them for 5 minutes?”
Baker then answered, “Great question. I think a lot of times what we do makes sense, it's a trust of how we do it. If saving money interrupts your operations, it cost too much. I don't know if in 5 minutes I could get them to understand that because everyone promises that.”
Brash said, “Supply chain delays & getting our hands on certain parts has been tough.”
Baker replied to Brash with, “I don't know if this makes you feel better or worse, but you aren't alone with this.”
Koch said, “We aren't always willing to invest in the people, technology, and other systems that would help us grow.”
Kennerly said, I think we're all guilty of working 'in' the business vs 'on' the business. I hang my head in shame...”
Packer replied, “The burden of the small business.
Brett said, “Many shippers are used to supply chain issues and shady practices, so they don't even think there is a real solution out there. Most of our clients did not expect our software to be so effective and easy to use!”
Stepanov said, “Mostly it's all about the budget, especially with an uncertain economy and high inflation.”
Bodor said, “One constraint of mine is lack of experience. I'm new-ish to the technical side of my industry so there is a lot of learning on my end and lots of relying on others for information.”
Moorefield said, “The higher ups in my company. I often get steam-rolled when I voice my thoughts/opinions. There's not even an effort from them to think things over.”
Austin replied, “One of the things I make a huge point to do, is listen to all of our employees. When given the right opportunity to contribute along with a lending ear, great things happen for all. My Mom always told me, two ears one mouth!”
Moorefield replied back to Austin with, “So many businesses would have happier environments if they took this same stance. It's absolutely wonderful that you do!”
Prox said, “Constraints include high costs of materials & shipping, high inventory of items we don't sell, and backlog of orders and items.”
Host Lang replied to Prox with, “All of those things are likely symptoms of your constraint?!”
Prox replied, "Not sure! Maybe I'm not seeing that.”
Host Lang said, “Your constraint is relative to your goal. The goal of a chain is to hold the maximum amount of weight possible, so the constraint is the weakest link. What’s keeping YOU from making money?”
She added, “Is your constraint internal (a process step) or external (e.g. sales, marketing, raw material)? To check your answer ask: if I magically had 20% more of what you think your constraint is, would my profits increase by 20%?”
She continued, “Most (about 80%) manufactures have an internal constraint. And interestingly, most job shops (custom manufacturers) find that their constraint moves based on their mix of work.”
She then explained, “If you have a hockey stick on your monthly shipments graph – meaning that most of your shipments happen the last few days of the month – you have an internal constraint!”
Removing Constraints
Host Lang proposed to participants: If they improved a non-constraint would they achieve more of their goal and why? Participants shared their thoughts
O’Connell said, “Usually yes, but we often are too busy looking at things that are not in our control. To complain about them...”
Kennerly said, “I think it's possible to make a gain, but the constraint exists. Knowing about it, addressing it as much as possible will help it move forward.”
Rusine said, “We're on the lookout for responses here, Dr. Lang.”
Baker said, "This is a deep question - absolutely. Almost like focusing on strengths to get better versus weaknesses.”
Stepanov said, “It depends. This is because resources that are non-constraint (by definition) do not prevent you from achieving your objective.”
Stepanov added, “While improving non-constraint resources may increase other facets of your business, identifying and improving the constraint resources will have the biggest influence on attaining your goal.”
Prox said, “I would say yes, but it may only be incremental.”
Bodor said, “I think you can achieve the goal more efficiently, to at least be more productive. At the same time, you can over-optimize something that won't have a significant impact... EX: Going from 60% efficiency to 80% efficiency is a huge impact compared to 90% to 92%”
Host Lang answered, “No. That’s why many “improvements” DON’T result in adding to the bottom-line.
She added, “An hour added on your constraint is an hour added to your bottom-line. But improve a non-constraint and you won’t see a bottom-line impact. Saving setups at non-constraints doesn’t pay off.”
She continued, “Do you have an example of an “improvement” you’ve undertaken that did not have the expected bottom-line results?”
Driving Behavior
Policies, procedures and measures drive behavior. Participants were asked if they think efficiency should be a key measure and why or why not.
O’Connell said, “Efficiency should be considered while drafting the policies and procedures. Often times the behaviors that policies drive is how not to follow the procedure and not get caught doing it.”
Austin said, “Yes, Absolutely, without a doubt.”
Anderson added, “Sad but true: "Often times the behaviors that policies drive is how not to follow the procedure and not get caught doing it."
Stepanov said, “Efficiency is a crucial metric for many businesses since it can increase output and cut costs. The key is to strike a balance between productivity and other factors like quality, customer satisfaction, and employee well-being.”
Austin replied, “100%”
Kennerly said, “Actually, yes. Many get caught up in the weeds. If they focus on efficiency, they are 'doing'.”
Rusine said, “I believe so. Although that remains to be qualified, as well.”
Prox said, “Yes.”
Packer said, “I often think that the drive for efficiency and speed often distracts from the creative process. This may result in a lower level of service or quality product.”
Stepanov said, “If an organization places an excessive emphasis on efficiency at the expense of other aspects, it would experience negative effects, such as worse-quality goods or services, more stressed and burned-out employees, and reduced customer satisfaction.”
Austin agreed, “Good point Pavel I think it all needs to be balanced and in perspective.”
Bodor said, “I would say that "efficiency" as a key metric is important. But moreover, I think not in terms of speed but instead in terms of avoiding waste and costs that don't return any value.”
Host Lang responded with, “Yes it's important, but the key is to know WHERE to be efficient!”
Koch said, “It depends on your business. I listened to an interesting podcast conversation yesterday about how efficiency can be static in some industries.”
Host Lang said, “If you have a constraint (and everyone does) and it limits your output, all other resources are non-constraints. Non-constraints have more capacity than demand. Striving to be efficient EVERYWHERE is unproductive.”
Key Takeaways
The chat concluded with participants sharing their key takeaway or ah-ha moment during this Introduction to Theory of Constraints.
O’Connell said, “Love your message to focus on what can make the most difference (constraints). With so many things coming at us simultaneously, it's easy to lose sight of this.”
Koch said, “I am intrigued. I would like to learn more about what can be considered a constraint.”
Rusine said, “Constraints can be used to propel you to success. And piggyback to what Welker said.”
Prox said, “I need to better understand our constraints!”
Kennerly said, “You had lots of thought-provoking questions. I realize I need to catch up on some reading...and take a look at the current goals, ensure they are in the forefront of our minds and ensure we keep working on working past the blocks! Great questions today!”
Stepanov agreed with Kennerly, “Love this! Us too.”
Dr Lisa Lang tweets a #TOCtip of the day @TOCExpert and on LinkedIn at https://www.linkedin.com/in/theoryofconstraints/
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