On Clear Days you can see Corporate HQ - 8

Why the 5 Focusing Steps are so Important

Most middle and senior managers do not understand or simply are not interested in how their business system works. They are content to focus on their local department and optimise that – rather than understanding the business as a whole to cause it to maximise results. Even top management (CEOs) often do not understand their business. They condone and even encourage their management teams to optimise their local departments – production, marketing sales, finance etc. Wherever local optimisation is the rule the business concerned will always harm the bottom line significantly. Local optimisation is a massive mistake!

The 5 Focusing Steps are guidelines that, properly used, will cause a management team to always reflect on their (local) decisions. Doe the action or decision taken locally help or damage the business as a whole? As we will see the 5 Focusing Steps are a guide, but they do not replace a deep understanding of the business system.

What follows is a first example of the impact of the exploit and subordinate steps on the bottom line. In this the first example I have chosen a situation in which a there is a clear physical constraint in the factory concerned. However through just a few simple changes to the way the factory works in relation to the constraints (policy changes) they were able to move from an overloaded situation to being able to meet all demand with the expected lead time.
Examples of the 5 Focusing Steps in Action

Exploiting the constraint in automotive component production

The factory produces a major component for both cars and trucks. Production involves a series of steps followed by an automated assembly and lastly some manual final assembly. The company invited me to a meeting with the plant manager to discuss how TOC (and the 5 Steps) could solve his problem of insufficient capacity.

The plant manager's problem was demand far exceeded the factories capability to supply (by about 25%). Instead of a discussion with the him, he confronted me with 16 sceptical engineers who had been working on the problem already for a very long time.

I explained the 5 steps and their importance. This led to a discussion about the location of their constraint. With 16 engineers in the room consensus was difficult. After a while it became clear that they believed either a metal turning step or the final manual assembly step were the possible constraints. I explained that it is unusual to find the constraint at the end of a production line simply because month end pressures to meet sales targets ensure plenty of capacity there. They finally agreed that the best candidate was the turning machine in a line (they had 10 lines).

From there it was easy. I asked them how many hours per day the constraint machines would be producing. They claimed constantly except for set-ups. I asked to see these machines. We went to 5 lines and found that in 3 of them (60%) the turning machine was idle. They were idle for set-ups (but no set up person was present) and one was idle for a break. Clearly they were losing capacity at the constraint and therefore for the factory.

Back in the conference room the engineers came up with many ideas to make sure the constraint never stops (apart from actual work doing set-ups). They also came up with ways to accelerate set-ups significantly. Most of the changes could be made immediately (some did require the OK from their union). The result was they easily discovered the 25% of capacity needed to meet demand!

To exploit the constraint they had to find ways to shorten set-ups; they had to find ways to cover for breaks, meals and shift changes and they eventually found ways to move material between production lines since the constraint was not equally loaded across all 10 lines.