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# The Theory of Chains

The Theory of Chains presents some basic concepts in efficiency, effectiveness and process improvement, with a dash of humor.

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### The Theory of Chains

1. 1. Starring: The Chain as “itself” The Theory of Chains
2. 2. The Theory of Chains Some (possibly overly simplistic but hopefully not too condescending) stories to help us think about what we are here for…
3. 3. Part 1 The fable of the two mules
4. 4. The fable of the two mules Let’s start with the famous fable of two mules who were tied together.
5. 5. The fable of the two mules They each wanted grass, but neither could get any because they were pulling in opposite directions.
6. 6. The fable of the two mules They pulled...
7. 7. The fable of the two mules They pulled...
8. 8. The fable of the two mules They pulled... And pulled...
9. 9. The fable of the two mules They pulled... And pulled...
10. 10. The fable of the two mules What were they doing wrong? What is the solution?
11. 11. The fable of the two mules The answer is obvious!
12. 12. The fable of the two mules They need to try harder!
13. 13. The fable of the two mules They need to try harder!
14. 14. The fable of the two mules They need to try harder!
15. 15. The fable of the two mules They need to try harder!
16. 16. The fable of the two mules They need to be more efficient!
17. 17. The fable of the two mules They need to be more efficient!
18. 18. The fable of the two mules They need to be more efficient!
19. 19. The fable of the two mules For anyone who doesn’t know this story... The moral is that co-operation is better than struggle.
20. 20. The fable of the two mules For anyone who doesn’t know this story... The moral is that co-operation is better than struggle. But that’s not my moral...
21. 21. Part II Efficiency vs. Effectiveness
22. 22. Efficiency This is an efficient light bulb!
23. 23. Efficiency This is an efficient light bulb!
24. 24. Efficiency This is an efficient light bulb!
25. 25. Effectiveness Effectiveness is about the direction, not the speed!
26. 26. Effectiveness Effectiveness is about the direction, not the speed!
27. 27. Effectiveness Effectiveness is about the direction, not the speed!
28. 28. Efficiency vs. Effectiveness Efficient Ineffective Effective Inefficient A helpful and un-ironic four-quadrant diagram
29. 29. Efficiency vs. Effectiveness Efficient Ineffective Effective Inefficient A helpful and un-ironic four-quadrant diagram
30. 30. Efficiency vs. Effectiveness Efficient Ineffective Effective Inefficient A helpful and un-ironic four-quadrant diagram
31. 31. Efficiency vs. Effectiveness Efficient Die Slowly Ineffective Effective Die Quickly Inefficient A helpful and un-ironic four-quadrant diagram
32. 32. Efficiency vs. Effectiveness Efficient Die Slowly Ineffective Effective Die Quickly Inefficient A helpful and un-ironic four-quadrant diagram
33. 33. Efficiency vs. Effectiveness Efficient Die Slowly Thrive Ineffective Effective Die Quickly Survive Inefficient A helpful and un-ironic four-quadrant diagram
34. 34. Efficiency vs. Effectiveness “Efficiency is doing things right; effectiveness is doing the right things.” “There is surely nothing quite so useless as doing with great efficiency what should not be done at all.” “The most serious mistakes are not being made as a result of wrong answers. The true dangerous thing is asking the wrong question.” -- Peter Drucker.
35. 35. Part III The Chain
36. 36. The chain Can you see a problem with this chain?
37. 37. The chain Can you see a problem with this chain?
38. 38. The chain Keep looking!
39. 39. The chain Keep looking!
40. 40. The chain Keep looking!
41. 41. The chain Give up? The answer is...
42. 42. The chain The links are wasting metal and heavier than they need to be.
43. 43. The chain I reduced my diameter by 2mm I replaced my steel with aluminium A more efficient chain!
44. 44. The chain I reduced my diameter by 2mm I replaced my steel with aluminium
45. 45. The chain I reduced my diameter by 2mm I replaced my steel with aluminium
46. 46. Time for the first overly-simplistic business analogy....
47. 47. The chain Finance Sales ??? Fulfilment IT
48. 48. The chain We were 15% more efficient We saved £100K Finance Sales ??? Fulfilment A more efficient business! We cut costs by 10% IT
49. 49. The chain We were 15% more efficient We saved £100K Finance Sales ??? Fulfilment A more efficient business! We cut costs by 10% IT
50. 50. The chain I’ll lend you some of my metal Me too! Help the weakest link get stronger.
51. 51. The chain I’ll lend you some of my metal Me too! Help the weakest link get stronger. There is no point making other links efficient until the weakest link is strengthened..
52. 52. The chain • What is the goal of a chain?
53. 53. The chain • What is the goal of a chain? To be strong
54. 54. The chain • What is the goal of a chain? • Is there always a weakest link?
55. 55. The chain • What is the goal of a chain? • Is there always a weakest link? Yes!
56. 56. The chain • What is the goal of a chain? • Is there always a weakest link? • What is the most effective action to take?
57. 57. The chain • What is the goal of a chain? • Is there always a weakest link? • What is the most effective action to take? Make the weakest link stronger
58. 58. The chain
59. 59. The chain
60. 60. The chain
61. 61. Part IV The bucket brigade
62. 62. The bucket brigade
63. 63. The bucket brigade Meet Mr. Blue.
64. 64. The bucket brigade Meet Mr. Blue. And Mr Pink.
65. 65. The bucket brigade Meet Mr. Blue. And Mr Pink. And Mr Green.
66. 66. The bucket brigade They are forming a human chain – a bucket brigade.
67. 67. The bucket brigade Water input Water comes in one end....
68. 68. The bucket brigade Water input Water output ... And goes out the other.
69. 69. The bucket brigade Water input But what happens... Water output
70. 70. The bucket brigade Water input ... if Mr Blue is faster than Mr Pink? Water output
71. 71. The bucket brigade Water input Water output A big puddle coming soon. ... if Mr Blue is faster than Mr Pink?
72. 72. The bucket brigade Water input And what happens... Water output
73. 73. The bucket brigade Water input ... if Mr Green is faster than Mr Pink? Water output
74. 74. The bucket brigade Water input Water output Mr Green does a lot of waiting. He is quite bored now. Even Twitter has lost its charm. ... if Mr Green is faster than Mr Pink?
75. 75. The bucket brigade Water input • What is the goal of a bucket brigade? Water output
76. 76. The bucket brigade Water input Water output • What is the goal of a bucket brigade? To move as much water as possible in as little time as possible. Throughput, not efficiency.
77. 77. The bucket brigade Water input Water output • What is the goal of a bucket brigade? • What (or rather who) determines the throughput?
78. 78. The bucket brigade Water input Water output • What is the goal of a bucket brigade? • What (or rather who) determines the throughput? The slowest person
79. 79. The bucket brigade Water input Water output • What is the goal of a bucket brigade? • What (or rather who) determines the throughput? • Is there always a weakest link?
80. 80. The bucket brigade Water input Water output • What is the goal of a bucket brigade? • What (or rather who) determines the throughput? • Is there always a weakest link? Yes! There is always a slowest person
81. 81. The bucket brigade Water input • • • • Water output What is the goal of a bucket brigade? What (or rather who) determines the throughput? Is there always a weakest link? What is the most effective action to take?
82. 82. The bucket brigade Water input • • • • Water output What is the goal of a bucket brigade? What (or rather who) determines the throughput? Is there always a weakest link? What is the most effective action to take? Make the weakest link stronger
83. 83. The bucket brigade Water input • • • • Water output What is the goal of a bucket brigade? What (or rather who) determines the throughput? Make the slowest person faster Is there always a weakest link? What is the most effective action to take? Make the weakest link stronger
84. 84. The bucket brigade Water input Question: Which person never gets a rest? What happens if he does rest? Water output
85. 85. The bucket brigade Water input Water output Question: Which person never gets a rest? What happens if he does rest? Hint
86. 86. The bucket brigade Water input Water output Question: Which people always get a chance to be idle? What happens if you insist that they always keep working?
87. 87. The bucket brigade Water input Water output Hint Question: Which people always get a chance to be idle? What happens if you insist that they always keep working?
88. 88. The bucket brigade Water input Water output
89. 89. The bucket brigade Water input Water output
90. 90. Part V What is the goal of a business?
91. 91. How a business works Stuff we buy Our business Inventory/Investment Stuff we sell Operating expenses
92. 92. The goal of a business Throughput Goal: Try to increase this bit Our business Inventory/Investment Operating expenses
93. 93. The goal of a business Throughput Our business Inventory/Investment Operating expenses These numbers are related, often in unobvious ways. Changing one affects all the others. It’s a balancing act!
94. 94. The goal of a business Throughput Our business Inventory/Investment Operating expenses Some common metrics to help you relate the numbers and do the balancing act...
95. 95. The goal of a business Throughput Our business Inventory/Investment Operating expenses Some common metrics to help you relate the numbers and do the balancing act... Net profit (NP) = Throughput (T) - Operating expense (OE)
96. 96. The goal of a business Throughput Our business Inventory/Investment Operating expenses Some common metrics to help you relate the numbers and do the balancing act... Return on investment (ROI) = Net profit (NP) ÷ Investment (I)
97. 97. The goal of a business Throughput Our business Inventory/Investment Operating expenses Some common metrics to help you relate the numbers and do the balancing act... Productivity = Throughput (T) ÷ Operating Expense (OE)
98. 98. The goal of a business Throughput Our business Inventory/Investment Operating expenses Some common metrics to help you relate the numbers and do the balancing act... Investment Turns = Throughput (T) ÷ Investment (I)
99. 99. What if a bucket brigade was like a business? Another overly-simplistic business analogy....
100. 100. If the bucket brigade were a business... Water input If the bucket brigade were a business, what questions would we ask? Water output
101. 101. If the bucket brigade were a business... Water input What is the throughput? Water output
102. 102. If the bucket brigade were a business... Water input Water output What is the throughput? How long does it take a bucket to move through the system (“flow time”)? a.k.a "latency"
103. 103. If the bucket brigade were a business... Water input Water output What is the throughput? How long does it take a bucket to move through the system (“flow time”)? What is the current inventory?
104. 104. If the bucket brigade were a business... Water input Water output What is the throughput? How long does it take a bucket to move through the system (“flow time”)? What is the current inventory? What are the operating expenses?
105. 105. Real Numbers Mr Blue can do 2 Buckets/hour Each worker costs \$12/hour Mr Pink can do 1 Bucket/hour Mr Green can do 3 Buckets/hour Each bucket sells for a markup of \$24 Let’s look at some real numbers!
106. 106. Real Numbers 2 Buckets/hour \$24 \$12/hour 1 Bucket/hour \$24 What is the throughput? \$12/hour 3 Buckets/hour \$24 \$12/hour \$24
107. 107. Real Numbers 2 Buckets/hour \$24 \$12/hour 1 Bucket/hour \$24 \$12/hour 3 Buckets/hour \$24 \$12/hour \$24 What is the throughput? 1 bucket/hour (Mr Pink is to blame)
108. 108. Real Numbers 2 Buckets/hour \$24 \$12/hour 1 Bucket/hour \$24 \$12/hour 3 Buckets/hour \$24 \$12/hour \$24 What is the throughput? How long does it take a bucket to move through the system (“flow time”)?
109. 109. Real Numbers 2 Buckets/hour \$24 \$12/hour 1 Bucket/hour \$24 \$12/hour 3 Buckets/hour \$24 \$12/hour \$24 What is the throughput? How long does it take a bucket to move through the system (“flow time”)? Mr Blue takes 30 min per bucket, and Mr Green takes 20 min, so it takes a bucket 1h 50m to go through the system.
110. 110. Real Numbers 2 Buckets/hour \$24 \$12/hour 1 Bucket/hour \$24 \$12/hour 3 Buckets/hour \$24 \$12/hour \$24 What is the throughput? How long does it take a bucket to move through the system (“flow time”)? What is the current inventory?
111. 111. Real Numbers 2 Buckets/hour \$24 \$12/hour 1 Bucket/hour \$24 \$12/hour 3 Buckets/hour \$24 \$12/hour \$24 What is the throughput? How long does it take a bucket to move through the system (“flow time”)? What is the current inventory? Little’s law: inventory = throughput * flow time. So inventory = 1 bucket/hour x 1.83 hours => 1.83 buckets
112. 112. Real Numbers 2 Buckets/hour \$24 \$12/hour 1 Bucket/hour \$24 \$12/hour 3 Buckets/hour \$24 \$12/hour \$24 What is the throughput? How long does it take a bucket to move through the system (“flow time”)? What is the current inventory? What are the operating expenses?
113. 113. Real Numbers 2 Buckets/hour \$24 \$12/hour 1 Bucket/hour \$24 \$12/hour 3 Buckets/hour \$24 \$12/hour \$24 What is the throughput? How long does it take a bucket to move through the system (“flow time”)? What is the current inventory? What are the operating expenses? \$12/hour x three people = \$36/hour
114. 114. Real Numbers 2 Buckets/hour \$24 \$12/hour 1 Bucket/hour \$24 \$12/hour 3 Buckets/hour \$24 \$12/hour \$24 Throughput (buckets/hr) (money/hr) Flow time Inventory (buckets) Opex (money/hr) Net Profit (money/hr) = T - OE Inventory turns = T/I 1/hr or \$24/hr 1h 50m 1.83 \$36/hr -\$12/hr 0.54 Here are all the numbers.... Oh noes.... We’re losing money!
115. 115. Real Numbers We’re losing money – what should we do?
116. 116. Real Numbers We’re losing money – what should we do? Let’s step back and look at the problem...
117. 117. Real Numbers We’re losing money – what should we do? Let’s step back and look at the problem... Mr Pink is working flat out but look at all the idle people! Mr Blue is only working ½ time. And Mr Green is working only a third of the time. Lazy sod!
118. 118. Real Numbers We’re losing money – what should we do? Let’s step back and look at the problem... Mr Pink is working flat out but look at all the idle people! Mr Blue is only working ½ time. And Mr Green is working only a third of the time. There’s your problem right there!
119. 119. Real Numbers What to do? Option 1: Panic!
120. 120. Real Numbers What to do? Option 1: Panic! Option 1: Reduce wages or staff (helps with operating expenses) Especially the lazy ones like Mr Pink...
121. 121. Real Numbers What to do? Option 1: Reduce wages or staff (helps with operating expenses) Option 2: Hire extra people (helps with throughput, maybe?)
122. 122. Real Numbers What to do? Option 1: Reduce wages or staff (helps with operating expenses) Option 2: Hire extra people (helps with throughput, maybe?) Option 3: Change the process (but how?)
123. 123. Fixing the problem by reducing staff 2 Buckets/hour \$24 \$12/hour 1 Bucket/hour \$24 \$12/hour 3 Buckets/hour \$24 \$12/hour \$24 Let’s start with option 1: “Reduce staff on the non-bottlenecks” A.k.a. Don’t pay people to be idle.
124. 124. Fixing the problem by reducing staff As it happens, around this time, Mr Blue had a very unfortunate industrial accident – he was cut in half.
125. 125. Fixing the problem by reducing staff As it happens, around this time, Mr Blue had a very unfortunate industrial accident – he was cut in half. Luckily he can still work at 2 buckets/hour, But since there is only half of him, his average throughput is now 1 bucket/hr.
126. 126. Fixing the problem by reducing staff As it happens, around this time, Mr Blue had a very unfortunate industrial accident – he was cut in half. Luckily he can still work at 2 buckets/hour, But since there is only half of him, his average throughput is now 1 bucket/hr. As a result, the cruel capitalists who employ him have decided to slash his salary in half as well -- to only \$6/hr.
127. 127. Fixing the problem by reducing staff By coincidence Mr Green also had a very unfortunate industrial accident – he was cut into one third.
128. 128. Fixing the problem by reducing staff By coincidence Mr Green also had a very unfortunate industrial accident – he was cut into one third.
129. 129. Fixing the problem by reducing staff By coincidence Mr Green also had a very unfortunate industrial accident – he was cut into one third. His productivity is only a third now. Just like Mr Blue, his average is now 1 bucket/hr. The cruel capitalists have decided to slash his salary even more -- to only \$4/hr.
130. 130. Fixing the problem by reducing staff 1 Bucket/hour \$24 \$6/hour 1 Bucket/hour \$24 \$12/hour 1 Bucket/hour \$24 \$4/hour \$24 Here is the new setup. Mr Blue and Mr Green have been rehired at lower wages, corresponding to their lower throughput.
131. 131. Fixing the problem by reducing staff 1 Bucket/hour \$24 \$6/hour 1 Bucket/hour \$24 \$12/hour 1 Bucket/hour \$24 \$4/hour What is the throughput? Still 1 bucket/hour \$24
132. 132. Fixing the problem by reducing staff 1 Bucket/hour \$24 \$6/hour 1 Bucket/hour \$24 \$12/hour 1 Bucket/hour \$24 \$4/hour \$24 What is the throughput? How long does it take a bucket to move through the system (“flow time”)? Mr Blue and Mr Green have lower throughputs, but their latency is still the same. so the flow time is unchanged at 1h 50min.
133. 133. Fixing the problem by reducing staff 1 Bucket/hour \$24 \$6/hour 1 Bucket/hour \$24 \$12/hour 1 Bucket/hour \$24 \$4/hour \$24 What is the throughput? How long does it take a bucket to move through the system (“flow time”)? What is the current inventory? Same as before.
134. 134. Fixing the problem by reducing staff 1 Bucket/hour \$24 \$6/hour 1 Bucket/hour \$24 \$12/hour 1 Bucket/hour \$24 \$4/hour \$24 What is the throughput? How long does it take a bucket to move through the system (“flow time”)? What is the current inventory? What are the operating expenses? \$6 + \$12 + \$4 = \$22/hour
135. 135. Fixing the problem by reducing staff 1 Bucket/hour \$24 Throughput (buckets/hr) (money/hr) 1/hr or \$24/hr \$6/hour Flow time 1h 50m 1 Bucket/hour \$24 \$12/hour 1 Bucket/hour \$24 \$4/hour Inventory Opex Net Profit (buckets) (money/hr) (money/hr) = T - OE 1.83 Here are the new numbers... \$22/hr +\$2/hr \$24 Inventory turns = T/I 0.54
136. 136. Fixing the problem by adding staff 2 Buckets/hour \$24 \$12/hour 1 Bucket/hour \$24 \$12/hour 3 Buckets/hour \$24 \$12/hour \$24 Now try option 2: “Adding extra staff on the bottleneck” That is -- bring the weakest links up to speed
137. 137. Fixing the problem by adding staff 2 Buckets/hour \$24 \$12/hour 3 Buckets/hour \$24 \$36/hour 3 Buckets/hour \$24 \$12/hour We’ll hire 2 people to help Mr Pink. This team’s throughput is now 3 buckets/hour! \$24
138. 138. Fixing the problem by adding staff 2 Buckets/hour \$24 \$12/hour 3 Buckets/hour \$24 \$36/hour But now Mr Blue is the bottleneck. 3 Buckets/hour \$24 \$12/hour \$24
139. 139. Fixing the problem by adding staff 2 Buckets/hour \$24 \$12/hour 3 Buckets/hour \$24 \$36/hour 3 Buckets/hour \$24 \$12/hour But now Mr Blue is the bottleneck. Luckily he has a half-brother who can help. \$24
140. 140. Fixing the problem by adding staff 2 Buckets/hour \$24 \$12/hour 3 Buckets/hour \$24 \$36/hour 3 Buckets/hour \$24 \$12/hour But now Mr Blue is the bottleneck. Luckily he has a half-brother who can help. Literally! \$24
141. 141. Fixing the problem by adding staff 3 Buckets/hour \$24 \$18/hour 3 Buckets/hour \$24 \$36/hour 3 Buckets/hour \$24 \$12/hour \$24 Mr Blue’s throughput is now 3 buckets/hour as well.
142. 142. Fixing the problem by adding staff 3 Buckets/hour \$24 Throughput (buckets/hr) (money/hr) 3/hr or \$72/hr \$18/hour Flow time 1h 50m 3 Buckets/hour \$24 \$36/hour 3 Buckets/hour \$24 \$12/hour Inventory Opex Net Profit (buckets) (money/hr) (money/hr) = T - OE 5.5 \$66/hr Here are the numbers for this approach. +\$6/hr \$24 Inventory turns = T/I 0.54
143. 143. Fixing the problem by adding staff Moral: Adding staff can be more profitable than reducing staff – if you know where to add them. Adding also gives economies of scale, because there are other fixed costs like buildings, etc., which don’t need to be scaled at the same rate.
144. 144. Fixing the problem by adding staff Moral: Adding staff can be more profitable than reducing staff – if you know where to add them. Adding also gives economies of scale, because there are other fixed costs like buildings, etc., which don’t need to be scaled at the same rate. Question: Under what circumstances can you NOT add staff?
145. 145. Fixing the problem by adding staff Moral: Adding staff can be more profitable than reducing staff – if you know where to add them. Adding also gives economies of scale, because there are other fixed costs like buildings, etc., which don’t need to be scaled at the same rate. But can we do even better?
146. 146. Fixing the problem by changing the process 2 Buckets/hour \$24 \$12/hour 1 Bucket/hour \$24 \$12/hour 3 Buckets/hour \$24 \$12/hour \$24 Option 3 is “changing the process”. What does that look like?
147. 147. Fixing the problem by changing the process 2 Buckets/hour \$24 \$12/hour 1 Bucket/hour \$24 \$12/hour 3 Buckets/hour \$24 \$12/hour \$24 What happens if we get rid of the second step in the process and merge it into the first?
148. 148. Fixing the problem by changing the process What happens if we get rid of the second step in the process and merge it into the first?
149. 149. Fixing the problem by changing the process Mr Blue and Mr Pink now work together on step 1. Their combined throughput is now 3 buckets/hour.
150. 150. Fixing the problem by changing the process 3 Buckets/hour \$24 \$12/hour \$12/hour 3 Buckets/hour \$24 \$12/hour Mr Blue and Mr Pink now work together on step 1. Their combined throughput is now 3 buckets/hour. \$24
151. 151. Fixing the problem by changing the process 3 Buckets/hour \$24 \$12/hour \$12/hour 3 Buckets/hour \$24 \$12/hour Mr Blue and Mr Pink now work together on step 1. Their combined throughput is now 3 buckets/hour. \$24
152. 152. Fixing the problem by changing the process 3 Buckets/hour \$24 \$12/hour \$12/hour 3 Buckets/hour \$24 \$12/hour What is the throughput? 3 buckets/hour \$24
153. 153. Fixing the problem by changing the process 3 Buckets/hour \$24 \$12/hour \$12/hour 3 Buckets/hour \$24 \$12/hour \$24 What is the throughput? How long does it take a bucket to move through the system (“flow time”)? Mr Blue and Mr Pink have a combined latency of 40 mins so the total flow time is now 1 hour.
154. 154. Fixing the problem by changing the process 3 Buckets/hour \$24 \$12/hour \$12/hour 3 Buckets/hour \$24 \$12/hour \$24 What is the throughput? How long does it take a bucket to move through the system (“flow time”)? What is the current inventory? Little’s law: inventory = throughput * flow time. So inventory = 3 bucket/hour x 1 hours => 3 buckets
155. 155. Fixing the problem by changing the process 3 Buckets/hour \$24 \$12/hour \$12/hour 3 Buckets/hour \$24 \$12/hour \$24 What is the throughput? How long does it take a bucket to move through the system (“flow time”)? What is the current inventory? What are the operating expenses? \$12 x three = \$36/hour
156. 156. Fixing the problem by changing the process 3 Buckets/hour \$24 Throughput (buckets/hr) (money/hr) 3/hr or \$72/hr \$12/hour Flow time 1h \$12/hour 3 Buckets/hour \$24 \$12/hour Inventory Opex Net Profit (buckets) (money/hr) (money/hr) = T - OE 3 \$36/hr +\$36/hr \$24 Inventory turns = T/I 1
157. 157. Summary of different approaches Option Throughput (buckets/hr) (money/hr) Flow time Inventory Opex Net Profit (buckets) (money/hr) (money/hr) = T - OE Inventory turns = T/I Original 1/hr or £24/hr 1h 50m 1.83 £36/hr -£12/hr 0.54 Reduce Staff 1/hr or £24/hr 1h 50m 1.83 £22/hr +£2/hr 0.54 Increase Staff 3/hr or £72/hr 1h 50m 5.5 £66/hr +£6/hr 0.54 Change Process 3/hr or £72/hr 1h 3 £36/hr +£36/hr 1.0
158. 158. Summary of different approaches Option Throughput (buckets/hr) (money/hr) Flow time Inventory Opex Net Profit (buckets) (money/hr) (money/hr) = T - OE Inventory turns = T/I Original 1/hr or £24/hr 1h 50m 1.83 £36/hr -£12/hr 0.54 Reduce Staff 1/hr or £24/hr 1h 50m 1.83 £22/hr +£2/hr 0.54 Increase Staff 3/hr or £72/hr 1h 50m 5.5 £66/hr +£6/hr 0.54 Change Process 3/hr or £72/hr 1h 3 £36/hr +£36/hr 1.0
159. 159. Summary of different approaches Moral: Changing the process can have much greater impact than just tweaking efficiencies.
160. 160. Summary of different approaches Moral: Changing the process can have much greater impact than just tweaking efficiencies.
161. 161. Summary of different approaches Moral: Changing the process can have much greater impact than just tweaking efficiencies.
162. 162. What is the goal of IT?
163. 163. What is the goal of IT? Sales IT Supply Chain What is the most effective action for IT to take?
164. 164. What is the goal of IT? Sales IT Supply Chain
165. 165. What is the goal of IT? Sales IT Supply Chain
166. 166. What is the goal of IT? Sales IT Supply Chain IT should not be a cost centre
167. 167. What is the goal of IT? Throughput The business Inventory/Investment Operating expenses IT should add value to the business
168. 168. What is the goal of IT? Throughput The business Inventory/Investment Operating expenses IT should add value to the business
169. 169. What is the goal of IT? Throughput The business Inventory/Investment Operating expenses IT should add value to the business
170. 170. What is the goal of your team?
171. 171. What is the goal of your team? Sales Your team Supply Chain What is the most effective action for your team to take?
172. 172. What is the goal of your team? Throughput The business Inventory/Investment Operating expenses Where can your team add value to the business?
173. 173. What is the goal of your team? Throughput The business Inventory/Investment Operating expenses Where can your team add value to the business?
174. 174. What is the goal of your team? For example, how might an HR team add value?
175. 175. What is the goal of your team? For example, how might an HR team add value? How can HR help throughput? • Reduce purchase costs by hiring or training expert purchasers. • Better throughput by encouraging employee feedback and learning. • Promoting and managing continuous improvement. How can HR help capex? - Reduce need for facilities by helping people work remotely. How can HR help opex? • Reduce turnover with better working conditions, training, employee morale.
176. 176. What is the goal of your team? For example, how might an HR team add value? How can HR help throughput? • Reduce purchase costs by hiring or training expert purchasers. • Better throughput by encouraging employee feedback and learning. • Promoting and managing continuous improvement. How can HR help capex? - Reduce need for facilities by helping people work remotely. How can HR help opex? • Reduce turnover with better working conditions, training, employee morale.
177. 177. What next?
178. 178. What next? “The Goal” by Eliyahu M. Goldratt & Jeff Cox And find out about • Value Streams • The “Theory Of Chains” • Lean Enterprise/Lean Accounting • The Toyota Way
179. 179. What next? “The Goal” by Eliyahu M. Goldratt & Jeff Cox And find out about • Value Streams • The “Theory Of Chains” • Lean Enterprise/Lean Accounting • The Toyota Way
180. 180. Thank you! Contact me @ScottWlaschin