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10 profitable ways to use the
Chapter 4 Solution Secret No 2: Right first time!Key “Theory of Constraints” concepts:
Given that the amount of time available to you or me is fixed and cannot be stored, it is critical that we spend our time doing the right things correctly first time. In “The Goal”, one of the key ways that the bottleneck was elevated was by making sure it only worked on quality products. They discovered that Herbie (a new robot machine) spent a large proportion of its time processing already defective parts. Once through the bottleneck, these parts would have been identified at quality control and binned. We all know that quality is free, and Goldratt identifies that if a piece of work has gone through the bottleneck then that has a direct impact on the company’s profitability. You could have processed and sold a quality item in the time you processed and binned a defective one. The actual cost is the loss of your profit on that item. It is a variation on the garbage in garbage out concept:
With the ever-increasing use of computers, one clerical mistake or miscalculation could affect many, many customers. Imagine for example the costs incurred if the payroll department got everyone's pay wrong? Or all the costs involved restating the company accounts? When you work on defective information and convert that in a service environment to the service the customer has ordered, then you will have significant costs to fix. The Theory of Constraints moves the quality control process to before the bottleneck. In services, it is critical that the information you start with is as accurate and clear as possible. At Warrender Financial, extensive quality control was carried out after work had been done. Typically a junior member of staff would calculate values for them to be checked by a more senior member of staff (the process was known as 1st end and 2nd end). Further quality control checks were done on the person who had carried out the 2nd end. And still work would go out incomplete or wrong! In one particular team, significant progress was made by moving the quality checking from checking the work of the staff to checking the quality of the data held on the computer system. Efforts to validate and correct the information before it reached the bottleneck (the people) meant that management could have confidence that the calculation being done would result in the right values. Further, it was vitally important to train staff fully and properly as soon as they started in the role. The concept of staff gradually becoming competent and experienced and therefore given more responsibility is in itself a contributory factor to the problems experienced. Because you checked everyone’s work, staff didn’t have to get it right first time. Someone would come and pick up the pieces after them. By removing the psychological safety net, those carrying out the 1st end suddenly had a lot more questions, and made fewer careless mistakes! Management also introduced individual responsibility by including direct phone numbers to the person who carried out the calculation. 8 things you can do to get it RIGHT FIRST TIME: 1. Explain to your staff what Herbie is! (read / re-read “The Goal”)
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