Theory of Constraints in a Company
The XYZ Group is one of the largest landscaping companies in the United States. Sixty per cent of the business is landscape maintenance; the other 40 is landscape installation. Management knew the company could do better. In February 1996 the XYZ Group began its 'refinement process' using TOC.
The TOC journey started with about 90 middle- and upper-management personnel reading The Goal. Most agreed that the TOC concepts made sense, but they didn't know how to translate them from the production environment to their landscaping business. They began to understand that the constraint was not necessarily something negative that should be avoided, but that it may be the most profitable part of the business - and if they could control the constraint they could then control profitability. It was realized that work was being done in batches and that local optimum was the focus.
They claim that the ongoing search for constraints taught them some valuable lessons:
- Don't change too many processes too quickly - people need to adjust
- Everyone doesn't learn and accept change at the same speed
- Document the existing processes and share the planned changes with the staff - involving them in the creation of the current reality trees and future reality trees provides everyone with a sense of involvement, understanding and ownership
- For them, TOC was a 'refinement process' - this made it easier for personnel to accept the change as something more than a fad, especially as a company which was doing well prior to TOC
- Measure and share results with other departments and divisions - all can learn from each other's experience
- Appeal to all the senses - different people respond to learning and changing in different ways, provide the information in different formats - video, books, simulators, etc.
- The results claimed by XYZ since implementing TOC:
- Dramatic increase in customer satisfaction due to factors which include being able to make and meet scheduling commitments.
- 20 per cent increase in client base with only a 12-13 per cent increase in staff.
- Minimum 50 per cent increase in the bottom line.