6-Oded Cohen-Jelena Fedurko - ENG - 29 TOCPA - 11 Nov 2016 - Vilnius

29th International Conference of the
TOC Practitioners Alliance - TOCPA

www.tocpractice.com
11-12 November 2016, Vilnius, Lithuania
How the
TOC Thinking Processes

can be integrated in strategic
changing and designing systems
Oded Cohen & Jelena Fedurko
Estonia & Israel
TOC Strategic Solutions
tocExpert
11 November 2016
Oded Cohen
Oded Cohen has over 35 years of experience in
developing, teaching and implementing TOC
methodology,
solutions
and
implementation
processes working directly with Dr. Goldratt all over
the world. Among the countries to which Oded brings
his expertise are the USA, Canada, Japan, India,
China, the UK, Poland, Russia, Ukraine, Colombia,
Chile, Peru, Turkey and many others.
Oded has authored multiple TOC
contributed to numerous TOC books.
articles
and
Oded in the is the author of Ever Improve A Guide to

Managing Production the TOC Way, published in June
2010. Oded co-authored the book Deming & Goldratt:
The Theory of Constraints and the System of
Profound Knowledge The Decalogue.
Together with Jelena Fedurko Oded has co-authored
the book Theory of Constraints Fundamentals.
Oded is International Director of TOC Strategic
Solutions Ltd and Founder and Co-President of
TOCPA.
www.tocpractice.com
oded.cohen.gs@gmail.com
www.tocexpert.com
www.toc-strategicsolutions.com
www.tocpractice.com
29th International Conference of the TOC Practitioners Alliance - TOCPA
Jelena Fedurko
Jelena Fedurko is a Co-Founder and Co-President of
TOC Practitioners Alliance TOCPA and International
Director of TOC Strategic Solutions.
Jelena has been involved in TOC since 1999. She is a
TOC expert, trainer and consultant, and provides TOC
implementation support in production, supply chain
and project management. Jelena has worked in various
countries all over the world, including Japan, Poland,
Germany, Switzerland, Turkey, Italy, Russia, Ukraine,
India, China, Chile, Colombia, Mexico.
Jelena is the author of four advances books on TOC
Thinking Processes: Behind the Cloud (2011), Through
Clouds to Solutions (2013), Typical mistakes in
working with TOC Logical Tools (2014), A Good
Strategy & Tactic Tree (2016). Together with Oded
Cohen Jelena has co-authored the book Theory of
jelenafedurko.gs@gmail.com
Constraints Fundamentals (2012). She has contributed
www.tocexpert.com
to a number of books on TOC, and has many www.toc-strategicsolutions.com
publications. Jelena translated and edited several
www.tocpractice.com
major TOC books.
www.tocpractice.com
Moving towards Industry 4.0

looking with TOC tools
Industry 4.0: The term Industry 4.0 refers to the combination of several
major innovations in digital technology, all coming to maturity right now, all
poised to transform the energy and manufacturing sectors.
These technologies include
Source: A Strategists Guide to
Industry 4.0, by Reinhard
advanced robotics and artificial intelligence;
Geissbauer, Jesper Veds, and
sophisticated sensors;
Stefan Schrauf In
cloud computing;
strategy+business
http://www.strategy the Internet of Things;
business.com/article/A-Strategists data capture and analytics;
Guide-to-Industry-4.0?gko=7c4cf
digital fabrication (including 3D printing);
software-as-a-service and other new marketing models;
smartphones and other mobile devices;
platforms that use algorithms to direct motor vehicles (including navigation
tools, ride-sharing apps, delivery and ride services, and autonomous
vehicles);
and the embedding of all these elements in an interoperable global value
chain, shared by many companies from many countries.
www.tocpractice.com
Industry 4.0
Developers/Providers,
Users, Integrators
It is logical to expect that only some companies

will be Developing and Providing Industry 4.0
systems, tools and mechanisms.
While absolute majority of companies will be
their Users.
There is also a third player Integrators.
www.tocpractice.com
Source:
A Strategists Guide to
Industry 4.0
by Reinhard Geissbauer,
Jesper Veds, and Stefan
Schrauf
In strategy+business
http://www.strategybusiness.com/article/AStrategists-Guide-to-Industry4.0?gko=7c4cf
www.tocpractice.com
Adopting Industry 4.0

is the Solution
then what is the Problem?
What to change?
What to change to?
DE
UDE
DE
UDE
UDE
DE
DE
UDE
NBRs
DE
UDE
UDE
D
B
D
C
A
www.tocpractice.com
High
Performance
Measurements
DE
Injections
PIVOT
Direction
of solution
Future Reality
Current Reality
Low
Performance
Measurements

is the Solution
then what is the Problem?
What to change?
What to change to?
DE
UDE
DE
UDE
UDE
DE
DE
UDE
NBRs
DE
UDE
UDE
D
B
D
C
A
www.tocpractice.com
High
Performance
Measurements
DE
Injections
PIVOT
INDUSTRY
4.0
Future Reality
Current Reality
Low
Performance
Measurements

major shifts
Source: A Strategists Guide to Industry 4.0 by Reinhard Geissbauer, Jesper Veds, and Stefan Schrauf
In strategy+business http://www.strategy-business.com/article/A-Strategists-Guide-to-Industry-4.0?gko=7c4cf
Making Industry 4.0 work requires major shifts in organizational

practices and structures.
These shifts include
new forms of IT architecture and data management,
new approaches to regulatory and tax compliance,
new organizational structures,
and most importantly a new digitally oriented culture, which
must embrace data analytics as a core enterprise capability.
In TOC Terms new as a part of a system means

Injections.
www.tocpractice.com
Adopting Industry 4.0 is the

Solution then what is the Problem?
What to change to?
Low
Performance
Measurements
High
Performance
Measurements
DE
UDE
DE
UDE
UDE
DE
DE
UDE
UDE
D
B
D
C
A
www.tocpractice.com
NBRs
DE
UDE
Future Reality
Current Reality
What to change?
Industry 4.0 Injections:
DE
Injections
PIVOT
INDUSTRY
4.0
The full digitization of operations

Integration vertically (every function and
the entire hierarchy) and horizontally
(linking the suppliers, partners, and
distributors and transferring data among
them)
The redesign of products and services to
track their own activity and its results,
along with other products around them.
Industrial manufacturers reaching end
customers more directly and tailoring
their business models accordingly.
Taking advantage of the economics of
mass customization the ability to make
products in batches of one as
inexpensively as a mass-produced
product in the 20th century, while fully
tailoring the product to the
specifications of the purchaser.
Adapted from : A Strategists Guide to Industry
4.0 by Reinhard Geissbauer, Jesper Veds, and
Stefan Schrauf
In strategy+business http://www.strategybusiness.com/article/A-Strategists-Guide-toIndustry-4.0?gko=7c4cf
What UDEs do
Industry 4.0 Injections address?
What to change to?
Low Performance
Measurements
High Performance
Measurements
DE
UDE
DE
UDE
UDE
DE
DE
UDE
NBRs
DE
UDE
UDE
D
B
D
C
Future Reality
Current Reality
What to change?
DE
Injections
PIVOT
INDUSTRY
4.0
Industry 4.0 Injection: FULL DIGITIZATION

The full digitization of operations to
establish your company, your employees, and
your entire ecosystem of suppliers, partners,
distributors, and customers as a fully
interconnected, integrated digital network,
linked to other networks around the world.
If FULL DIGITIZATION OF OPERATIONS is a SOLUTION, then WHAT ARE THE PERSISTENT

PROBLEMS that do not allow companies to achieve their strategic targets ?
UDE: Response time to customer enquiry/order is (significantly) longer than

customers tolerance time.
UDE: Time to market is too long.
UDE: Too many launched products do not bring expected level of sales.
UDE: Too often supply chain is clogged with non-moving SKUs.
UDE: Only small portion of Requests For Quotations realize in orders.
www.tocpractice.com
What UDEs do
DE
UDE
DE
UDE
UDE
DE
NBRs
DE
UDE
DE
UDE
Future Reality
Current Reality
Does
FULL
remove
all these UDEs? In the part of quick exchange of
What to
change?DIGITIZATION
What to change
to?
Industry 4.0 Injection: FULL DIGITALIZATION
information
(provided
the data is correct and updated instantly) and instant
Low Performance
High Performance
Measurements
Measurements
The full digitization of operations to
transactions it should.
establish your company, your employees, and
But what about the content? What would be the practical mechanisms to
your entire ecosystem of suppliers, partners,
Stop overproduction and pushing into the supply chain?
distributors, and customers as a fully
Injections
Speed
up new product/new features development?
interconnected, integrated digital network,
D
D operating on forecasts (in case of physically long transportation times)?
Stop
INDUSTRY
B
C
linked to other networks around the world.
PIVOT
4.0 to RFQ, especially in highly customized environment?
Speed
up responses
A
DE
UDE
If FULL DIGITIZATION OF OPERATIONS is a SOLUTION, then WHAT ARE THE PERSISTENT

UDE: Response time to customer enquiry/order is (significantly) longer than

customers tolerance time.
UDE: Time to market is too long.
UDE: Too many launched products do not bring expected level of sales.
UDE: Too often supply chain is clogged with non-moving SKUs.
UDE: Only small portion of Requests For Quotations realize in orders.
www.tocpractice.com
What UDEs do
What to change to?
Low Performance
Measurements
High Performance
Measurements
DE
UDE
DE
UDE
UDE
DE
DE
UDE
NBRs
DE
UDE
UDE
D
B
D
C
Future Reality
Current Reality
What to change?
DE
Injections
PIVOT
INDUSTRY
Industry 4.0 Injection: VERTICAL AND

HORIZONTAL INTEGRATION
- Integration vertically (every function and the
entire hierarchy) and horizontally (linking the
suppliers, partners, and distributors and
transferring data among them)
4.0
If VERTICAL AND HORIZONTAL INTEGRATION is a SOLUTION, then WHAT ARE THE PERSISTENT
UDE: DDP/OTIF is significantly lower than high 90s.

UDE: A lot of SKUs have overstock.
UDE: Materials, parts, FG, tools, drawings, machines, human resources,
permissions, approvals are not always available when needed.
UDE: Priorities constantly change.
UDE: Too much rework.
UDE: Corrective actions significantly increase Operating Expense.
www.tocpractice.com
What UDEs do
DE
UDE
DE
UDE
UDE
DE
NBRs
DE
UDE
DE
UDE
Future Reality
Current Reality
What to change?
Does
VERTICAL AND
HORIZONTAL
INTEGRATION remove all these UDEs? In the
What to change
to?
Industry
4.0 Injection: VERTICAL AND
Low
Performance
High Performance of information and instant transactions it should.
part
of
quick
exchange
Measurements
Measurements
INTEGRATION
But what about the HORIZONTAL
content? How will
INTEGRATION help
- Integration
vertically (every
function and the
Identify what needs
to be SUBORDINATED
to what?
entire
hierarchy)
and horizontally
(linking
Synchronize production planning
among
the participants
of the value
chain the
Injections
often in
different partners,
countries?and distributors and
suppliers,
D
D
Manage
individual capacity?
transferring
data among them)
INDUSTRY
B
C
PIVOT
4.0
A
Provide availability?
DE
UDE
If VERTICAL AND HORIZONTAL INTEGRATION is a SOLUTION, then WHAT ARE THE PERSISTENT
UDE: DDP/OTIF is significantly lower than high 90s.

UDE: A lot of SKUs have overstock.
UDE: Materials, parts, FG, tools, drawings, machines, human resources,
permissions, approvals are not always available when needed.
UDE: Priorities constantly change.
UDE: Too much rework.
UDE: Corrective actions significantly increase Operating Expense.
www.tocpractice.com
What UDEs do
What to change to?
Low Performance
Measurements
High Performance
Measurements
DE
UDE
DE
UDE
UDE
DE
DE
UDE
NBRs
DE
UDE
UDE
D
B
D
C
Future Reality
Current Reality
What to change?
DE
Injections
PIVOT
Industry 4.0 Injection: REACHING END

CUSTOMER MORE DIRECTLY
- Industrial manufacturers reaching end
customers more directly and tailoring
their business models accordingly.
INDUSTRY
4.0
If REACHING END CUSTOMER MORE DIRECTLY a SOLUTION, then WHAT ARE THE PERSISTENT
What are the UDEs
www.tocpractice.com
What are the mechanisms that

will remove these UDEs?
What UDEs do
What to change to?
Low Performance
Measurements
Future Reality
Current Reality
What to change?
High Performance
Measurements
DE
UDE
DE
UDE
UDE
DE
DE
UDE
NBRs
DE
UDE
UDE
D
B
D
C
DE
Injections
PIVOT
INDUSTRY
4.0
Industry 4.0 Injection: PRODUCTS/

SERVICES TRACK THEIR OWN ACTIVITY
- The redesign of products and services
to track their own activity and its
results, along with other products
around them.
If PRODUCTS/ SERVICES TRACKING THEIR OWN ACTIVITY is a SOLUTION, then WHAT ARE THE
PERSISTENT PROBLEMS that do not allow companies to achieve their strategic targets ?
What are the UDEs
www.tocpractice.com

What UDEs do
What to change to?
Low Performance
Measurements
High Performance
Measurements
DE
UDE
DE
DE
UDE
UDE
DE
UDE
NBRs
DE
UDE
UDE
D
B
D
C
Future Reality
Current Reality
What to change?
DE
Injections
PIVOT
INDUSTRY
4.0
Industry 4.0 Injection: MASS CUSTOMIZATION:

- Taking advantage of the economics of mass
customization the ability to make products
in batches of one as inexpensively as a massproduced product in the 20th century, while
fully tailoring the product to the specifications
of the purchaser.
If MASS CUSTOMIZATION is a SOLUTION, then WHAT ARE THE PERSISTENT PROBLEMS that do
not allow companies to achieve their strategic targets ?
What are the UDEs
www.tocpractice.com

Recommendations from Industry 4.0

experts to companies on what to do:
6 steps
1.
2.
3.
4.
5.
6.
Map out an Industry 4.0 strategy up front. Evaluate

your own digital maturity now, versus where you
need to be.
Start with pilot projects. Use them to establish proof
of concept and demonstrate business value.
Define the capabilities you need. Foster a digital
culture: All your employees will need to think and act
like technologically adept natives, willing to
experiment, learn new ways of operating, and adapt
everyday processes accordingly.
Become a virtuoso in data analytics.
Transform into a digital enterprise.
Adopt an ecosystem perspective. Develop complete
product and services solutions for your customers.
Use partnerships or align with platforms if you cannot
develop a comprehensive offering on your own.
The listed 6 steps is

WHAT.
In transition of
companies to
Industry 4.0,
TOC Thinking
Process and
logistical solutions
can be of great
value to help with
HOW.
Source: A Strategists Guide to Industry 4.0 by Reinhard Geissbauer, Jesper Veds, and Stefan Schrauf
In strategy+business http://www.strategy-business.com/article/A-Strategists-Guide-to-Industry4.0?gko=7c4cf
www.tocpractice.com
Recommendations from Industry 4.0

experts to companies on what to do:
6 steps
1.
Map out an Industry 4.0 strategy up front. Evaluate your own digital maturity now, versus where
you need to be.
TO DO THIS STEP THE COMPANY MUST ALREADY HAVE THE SOLUTION IT MUST KNOW WHAT TO
ACHIEVE AND HOW MUCH OF IT. WHERE WILL THE COMPANY TAKE THIS SOLUTION FROM? HOW CAN
TOC HELP?
2.
Start with pilot projects. Use them to establish proof of concept and demonstrate business value.
TO DO THIS STEP THE COMPANY MUST FIRST DEVELOP THE CONCEPT OF THE NEW OFFERING TO
THE MARKET. WHAT IS THE MECHANISM TO DEVELOP IT? HOW CAN TOC HELP?
3.
Define the capabilities you need.
4.
Become a virtuoso in data analytics.
5.
Transform into a digital enterprise. Foster a digital culture: All your employees will need to think
and act like technologically adept natives, willing to experiment, learn new ways of operating, and
adapt everyday processes accordingly.
WHAT ABOUT RESISTANCE TO CHANGE? HOW CAN TOC HELP?
6.
Adopt an ecosystem perspective. Develop complete product and services solutions for your
customers. Use partnerships or align with platforms if you cannot develop a comprehensive
offering on your own.
HOW TO MAKE THE CHOICE? HOW TO JUSTIFY THE DECISION? HOW TO DEAL WITH DILEMMAS?
HOW CAN TOC HELP?
The source of the 6 steps: A Strategists Guide to Industry 4.0 by Reinhard Geissbauer, Jesper Veds, and Stefan Schrauf
In strategy+business http://www.strategy-business.com/article/A-Strategists-Guide-to-Industry-4.0?gko=7c4cf
www.tocpractice.com
Integrating
the TOC algorithms
Detecting gaps in performance UDEs, UDE Clouds,
Consolidation, Core Cloud
Solving dilemmas Dilemma Clouds
Addressing contradicting tactics UDE Clouds
Assessing risks - NBR
Identifying conditions - CRT, FRT, S&T, logical clusters
Developing justifications in the systems Logical
Clusters, Assumptions in Clouds, three types of
Assumptions in S&T Tree steps.
www.tocpractice.com
OPT:
HISTORY
AND LOOKING AHEAD
www.tocpractice.com
OPT
Optimized Production Technology
OPT was developed in 1975 in Israel, Introduced to the
US in 1978 and brought to Europe in 1982
OPT was an advanced planning system for
manufacturing companies. It was Finite Forward Capacity
Planning System.
The Need for such system was raised by large
manufacturing companies that installed MRPII systems
trying to achieve fully integrated systems (MIS)
MRPII planning was based on Infinite Capacity Planning.
Many companies had bottlenecks in their production and
hence experienced lousy delivery performance (DDP)
and high inventories in WIP and FG
www.tocpractice.com
OPT
Optimized Production Technology
The uniqueness of OPT:
It established the purpose of production system to
contribute to the financial performance of the company by
providing systematic approach to managing production.
It put the reliability of delivery at the highest priority
It set up the concepts and mechanics for managing
production by establishing:
FLOW PLANNING - EXECUTION
It created a breakthrough approach to sifting the relevant
managerial information from the oceans of data provides
by the computerized systems (the IT of today)
www.tocpractice.com
OPT
The Throughput Chain
For Production:
Collecting and presenting the relevant data to ensure the fast and
complete production flow from raw material (or components) to the
completion of the customer orders ready to be shipped On Time In Full
(OTIF).
Stocks
Routings
BOM
Orders
Purchasing
Distribution
Calendars
www.tocpractice.com
Resources
and
Capacity
Financials
OPT
The Throughput Chain
For Extended Supply Chain (internal and external):
Using the same concept for Pre-Production (such as design) and Post
Production (Transportation, Distribution, Installation, Service etc.)
www.tocpractice.com
OPT
Planning
Planning
Finite Froward Planning Algorithms to determine the planning of each
step in the Throughput Chain.
Producing analytical reports and instructions for actions
Rough Cut
Capacity
Purchasing
Material
Release
www.tocpractice.com
What IF
Analysis
Detailed
Planning
Expected
Completion
Financial
Outcome
OPT
Execution Control
OPT did not have a built in mechanism for controlling the
execution of the planning.
The Control was done manually by the OPT Analyst .
The concepts of managing the execution through Buffers
were developed by TOC from 1986, but by then OPT was
decoupled from TOC.
In early 1990 OPT was killed and disappeared from the
market.
In 1991 Goldratt Institute developed a simplified software to
replace OPT it was called DISASTER (and later The Goal
System). This system contains Buffers and early
developments of Buffer Management .
www.tocpractice.com
OPT
The Future
OPT can provide conceptually and technically a viable base
for managing production in line with Industry 4.0
The use of advanced digitation and computerized decision
making can support execution control, initiate recovery
actions, suggest improvements and continuously update
and upgrade the quality of data needed for Flow, Planning
and Execution Control.
Updating
DB
Buffers
Status
Recovery
Actions
Continupus
Improvement
T
www.tocpractice.com

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29th International Conference of the

TOC Practitioners Alliance - TOCPA

11-12 November 2016, Vilnius, Lithuania

TOC Thinking Processes

Oded in the is the author of Ever Improve A Guide to

29th International Conference of the TOC Practitioners Alliance - TOCPA

29th International Conference of the TOC Practitioners Alliance - TOCPA

Moving towards Industry 4.0

29th International Conference of the TOC Practitioners Alliance - TOCPA

It is logical to expect that only some companies

29th International Conference of the TOC Practitioners Alliance - TOCPA

29th International Conference of the TOC Practitioners Alliance - TOCPA

Adopting Industry 4.0

What to change to?

29th International Conference of the TOC Practitioners Alliance - TOCPA

Adopting Industry 4.0

What to change to?

29th International Conference of the TOC Practitioners Alliance - TOCPA

Adopting Industry 4.0

Making Industry 4.0 work requires major shifts in organizational

In TOC Terms new as a part of a system means

29th International Conference of the TOC Practitioners Alliance - TOCPA

Adopting Industry 4.0 is the

Industry 4.0 Injections:

The full digitization of operations

29th International Conference of the TOC Practitioners Alliance - TOCPA

Industry 4.0 Injection: FULL DIGITIZATION

If FULL DIGITIZATION OF OPERATIONS is a SOLUTION, then WHAT ARE THE PERSISTENT

UDE: Response time to customer enquiry/order is (significantly) longer than

29th International Conference of the TOC Practitioners Alliance - TOCPA

If FULL DIGITIZATION OF OPERATIONS is a SOLUTION, then WHAT ARE THE PERSISTENT

UDE: Response time to customer enquiry/order is (significantly) longer than

29th International Conference of the TOC Practitioners Alliance - TOCPA

Industry 4.0 Injection: VERTICAL AND

UDE: DDP/OTIF is significantly lower than high 90s.

29th International Conference of the TOC Practitioners Alliance - TOCPA

UDE: DDP/OTIF is significantly lower than high 90s.

29th International Conference of the TOC Practitioners Alliance - TOCPA

Industry 4.0 Injection: REACHING END

What are the UDEs

What are the mechanisms that

29th International Conference of the TOC Practitioners Alliance - TOCPA

Industry 4.0 Injection: PRODUCTS/

What are the UDEs

What are the mechanisms that

29th International Conference of the TOC Practitioners Alliance - TOCPA

Industry 4.0 Injection: MASS CUSTOMIZATION:

What are the UDEs

What are the mechanisms that

29th International Conference of the TOC Practitioners Alliance - TOCPA

Recommendations from Industry 4.0

Map out an Industry 4.0 strategy up front. Evaluate

The listed 6 steps is

29th International Conference of the TOC Practitioners Alliance - TOCPA

Recommendations from Industry 4.0

29th International Conference of the TOC Practitioners Alliance - TOCPA

29th International Conference of the TOC Practitioners Alliance - TOCPA

29th International Conference of the TOC Practitioners Alliance - TOCPA

29th International Conference of the TOC Practitioners Alliance - TOCPA

29th International Conference of the TOC Practitioners Alliance - TOCPA

29th International Conference of the TOC Practitioners Alliance - TOCPA

29th International Conference of the TOC Practitioners Alliance - TOCPA

29th International Conference of the TOC Practitioners Alliance - TOCPA