Goldratt’s TOC Thinking Process

1. Goldratt’s TOCThinking Process Using the TOC Thinking Process to Identify Problems, Develop Alternatives, and Implement Solutions Ed D. Walker II Department of Management Langdale College of Business Administration Valdosta State University

2. You graduate and get a good job. Now what? • You are expected to solve problems. • If the job were perfectly routine they would not hire a college graduate.

3. What 3 questions must you answer to solve a problem? • What to change? • To What to Change? • How to Change?

4. How do we solve problems? • Too often we treat the symptom.. • Shouldn’t we treat the underlying problem? • Have you ever been taught a tool for this?

5. Tools created by Eli Goldratt • What to change? • Current Reality Tree • To what to change? • Evaporating Cloud • Future Reality Tree & Negative Branch • How to change? • Prerequisite Tree • Transition Tree

6. The Current Reality Tree • Today we will focus on the first question • What to Change?

7. There are two types of problems: Deviations and Dilemmas. • A deviation is easily fixed once the cause is recognized. For example - the house is too hot. Why? The air conditioner isn’t on. Solution: turn on the air conditioner. • A dilemma is hard to fix even when the problem is recognized because a conflict is involved. Mary wants to watch “60 Minutes”. John wants to finish watching the football game. There is one TV.

8. Most business problems are dilemmas. • If the problems were mere deviations they would have been solved once the deviation was recognized. There is nothing to prevent the solution. • In a business very often the symptoms of the problem appear in department X (say production) but the underlying cause is in department Y (say marketing) and marketing has no incentive to fix the problem.

9. Current Reality Tree (CRT)What to Change? • A CRT is a diagram that links underlying cause to symptoms via cause-and-effect arrows. • If the underlying cause involves a dilemma we will need the next tool (evaporating cloud) to solve it.

10. Basic Structure of a CRT

11. Definitions -- CRT • Current Reality Tree -- a logic-based tool for using cause-and-effect relationships to determine root problems that cause the undesirable effects of the system (APICS Dictionary, p. 19.)

12. CRT – Benefits • Focus • Team-Building • Root Cause Analysis • Systems Thinking • Cross Functional Problem Solving • Effective Communications • Common and Agreed upon Understanding of the System

13. Steps in Construction of the CRT 1. List between 5 and 10 problems (called undesirable effects -- UDE's) related to the situation. 2. Test each UDE for clarity -- is the UDE a clear and concise statement. This test is called the clarity reservation. 3. Search for a causal relationship between two of the UDEs. 4. Determine which UDE is the cause and which is the effect. Read as "IF cause THEN effect." This test is called the causality reservation. Occasionally you may have the cause and effect reversed, check using the following statement "Effect BECAUSE cause."

14. Steps in Construction of the CRT 5. Continue the process of connecting the UDEs using the If-Then logic until all UDEs are connected. 6. Many times the causality is strong to the person feeling the problem but doesn't seem to exist to others. In these instances, "clarity" is the problem. Use the clarity reservation. Generally, entities between the cause and the effect are missing. The current relationship is stated as "IF cause THEN effect." The correct structure in its simplest form may be "IF cause THEN (missing effect). (Missing effect becomes missing cause at the next higher level.) IF (missing cause) THEN effect."

15. Steps in Construction of the CRT 7. Sometimes the cause by itself may not seem enough to create the effect. These cases are tested with the cause insufficiency reservation and are improved by reading "IF cause AND __________ THEN effect." What is the missing dependent statement that completes the logical relationship? Add it to your diagram using the "AND CONNECTOR" (represented graphically by a horizontal line or an ellipse across both connecting arrows). The and in this relationship is called a "conceptual and" which means that both entities connected with the "and connector" have to be present for the effect to exist. If either entity is eliminated, the effect is eliminated as well.

16. Steps in Construction of the CRT 8. Sometimes the effect is caused by many independent causes. The causal relationships are strengthened by the additional cause reservation. The problem to be addressed is "how many of the causes are important enough to address?" One, two, sometimes three causes frequently result in creating about 80 percent of the effect. Generally, eliminating these few causes is enough of a reduction where the remaining effect becomes minor. Therefore it is not necessary to have an exhaustive list of causes for an effect. These cause-effect relationships are called a "magnitudinal and" for each cause increases the magnitude of the effect. Each of the causes must be addressed individually to eliminate most of the effect.

17. Steps in Construction of the CRT 9. Sometimes an if-then relationship seems logical but the causality is not appropriate in its wording. In these instances words like "some", "few", "many", "frequently", "sometimes" and other adjectives can make the causality stronger. 10. Numbering of UDEs on the CRT is for ease of locating entities only. An asterisk by a UDE indicates that UDE was provided in the original list of UDEs.

18. Constructing a CRT • List Undesirable Effects (UDEs) • Many bank tellers quit to take a better job. • Some single parent bank tellers quit to make more money on public assistance and to be with their children. • Many bank teller job vacancies occur each year.

19. Constructing a CRT • List Undesirable Effects (UDEs) • The bank’s budget for hiring, training, and raises is quite small. • Some bank tellers (students or their spouses) quit at college graduation. • Bank teller jobs are low paying entry level positions.

20. Constructing a CRT • Search for causal relationships

21. Constructing a CRT • Search for causal relationships

22. Constructing a CRT • Search for causal relationships

23. Constructing a CRT • Search for causal relationships

24. Constructing a CRT • Search for causal relationships

25. The Bank Teller CRT

26. The Steakhouse CRT

27. Categories of Legitimate Reservation • Clarity • Entity Existence • Causality • Tautology (House on Fire) • Cause Insufficiency • Additional Cause • Predicted Effect

28. Application of CLR

29. List of Undesirable Effects (problems) 1) Secretaries are frustrated. 2) Secretaries make mistakes. 3) The manager/department appears inept. 4) Work is completed slowly. 5) Secretaries constantly ask managers for clarification. 6) Managers do not trust the system. 7) Secretaries often change departments. 8) The secretary is not trained.

30. Test each UDE for clarityIs the UDE a clear and concise statement? 1) Secretaries become frustrated with their work assignment/load. 2) Secretaries make mistakes. 3) The manager/department appears inept. 4) Work gets postponed/completed more slowly than expected. 5) Work must iterate between the manager and secretary several times. 6) Management loses trust in the system. 7) Secretaries are rotated among the managers frequently. 8) Assignments are made for which the secretary is not trained.

31. 3* The manager/ department appears inept. The search for causal relationships. 2* Secretaries make mistakes.

32. 8* Assignments are made for which the secretary is not trained. The search for causal relationships. 2* Secretaries make mistakes.

33. 4* Work get postponed/completed more slowly than expected. The search for causal relationships. 3* The manager/ department appears inept.

34. 1* Secretaries become frustrated with their work assignment/load. 6* Management loses trust in the system. 4* Work get postponed/completed more slowly than expected. 5* Work must iterate between the manager and secretary several times. 2* Secretaries make mistakes. 3* The manager/ department appears inept. The search for more causal relationships.

35. 8* Assignments are made for which the secretary is not trained. 7* Secretaries are rotated among managers frequently. 21 Different departments/managers require different skill sets of their secretaries. An example of cause insufficiency.

36. a. b. 2* Secretaries make mistakes. 2* Secretaries make mistakes. 23 Secretaries are unable to learn what a particular department/manager likes. 7* Secretaries are rotated among managers frequently. 7* Secretaries are rotated among managers frequently. An example of the clarity reservation.

37. a. b. 7* Secretaries are rotated among managers frequently. 7* Secretaries are rotated among managers frequently. 52 Secretarial staff supervisor reassigns work/secretary to satisfy the secretary. 1* Secretaries become frustrated with their work assignment/load. 1* Secretaries become frustrated with their work assignment/load. An example of the clarity reservation.

38. 6* Management loses trust in the system. 7 (loop) 52 Secretarial staff supervisor reassigns work/secretary to satisfy the secretary. The initial Current Reality Tree. 3* The manager/ department appears inept. 1* Secretaries become frustrated with their work assignment/load. 4* Work get postponed/completed more slowly than expected. 5* Work must iterate between the manager and secretary several times. 2* Secretaries make mistakes. 8* Assignments are made for which the secretary is not trained. 23 Secretaries are unable to learn what a particular department/manager likes. 21 Different departments/managers require different skill sets of their secretaries. 7* Secretaries are rotated among managers frequently. 52 (loop)

39. 7* Secretaries are rotated among managers frequently. 52 Secretarial staff supervisor reassigns work/secretary to satisfy the secretary. 100 In a pool of 16 secretaries, at least one secretary is absent one day per week. 39 Secretaries are shifted to cover for absences. 101 Secretaries take time off work for family/vacation/personal leave. An example of the additional cause reservation.

40. 101 Secretaries take time off work for family/vacation/personal leave. 102 The highest skilled secretary is always assigned to the highest level of management. Another example of the additional cause reservation 39 Secretaries are shifted to cover for absences.

41. 7 (loop) 52 Secretarial staff supervisor reassigns work / secretary to satisfy the manager(s) / secretary. 48 The company is less efficient. 50 Secretaries are less efficient. 1* Secretaries become frustrated with their work assignment/load. 34 Managers don’t train their secretary to handle as many tasks as might be possible. 4 27 24 Managers can’t become too dependent upon a particular secretary. 49 Managers are less efficient. 46 The work of the receiving department is also made late. 81 109 The manager does not have time to do things that cannot/have not been delegated. 7 110 The manager complains to the secretarial staff supervisor. 31 The work scheduling system is informal and ineffective. 107 The manager is required to do some tasks his/her self. 1 80 The secretarial staff supervisor counsels the secretary about his/her work quality. 91 Some secretaries are less busy than the system would indicate. 3* The manager/ department appears inept. 81 Secretaries try hard to please the manager(s). 81 Some secretaries are busier than the system would indicate. 4* Work get postponed/completed more slowly than expected. 48 49 99 Managers interrupt the work currently being processed by the secretary to expedite a task. 2* Secretaries make mistakes. 71 The secretary assignment system is by-passed. 27 Managers must oversee more work than he/she should. 106 The work of the absent secretary is delayed. 104 The current work of the moved secretary is delayed. 5* Work must iterate between the manager and secretary several times. 105 The moved secretary is unfamiliar with the new department/ manager and is therefore less efficient. 61 Managers seek out the secretary whose skills are required even if the secretary is on another department. 37 The secretary’s current workload is not considered 23 Secretaries are unable to learn what a particular department/manager likes. 6* Management loses trust in the system. 21 24 41 Manager know which secretary possesses the skills required. 44 Managers aren’t notified of the shift. 7* Secretaries are rotated among managers frequently. 8* Assignments are made for which the secretary is not trained. 51 Secretarial skill don’t necessarily match the skill sets required by different managers. 19 There are no formal initial training requirements 52 (loop) 100 In a pool of 16 secretaries, at least one secretary is absent one day per week. 39 Secretaries are shifted to cover for absences. 103 Lower level managers are unable to chose which secretary is assigned to them. 11 Different secretaries have different skill sets. 101 Secretaries take time off work for family/vacation/personal leave. 102 The highest skilled secretary is always assigned to the highest level of management. 21 Different departments/managers require different skill sets of their secretaries. 8 Figure 11: The final Current Reality Tree.

42. Project 1 • You are to use the thinking process tools to analyze something in your personal life. • School • Relationships • Sports performance • Whatever • This project is an individual project designed to allow you to become comfortable with the tools. • In Project 2, each group will find a business to analyze with the TP tools.