TOCPA Expert Webinar 2 by Sanjeev Gupta

Mickey Granot: Thoughts about the Buy-In Process

The pdf of the material used in the webinar 

Webinars calendar

See more on Change and People Management on TOCPA


Comments and questions discussed at the end of the webinar:

Making a sell to an organization is often a process of several layers. How do you achieve emotional connection when there are several people who need to come together and make the decision?

Tal Aviv

 

Leaving aside Israeli jokes (I have known Mickey a long time), how do you determine that what you want people to do is what they actually should do? To clarify: For me, it’s not a question of right or wrong. It’s a question of whether it’s their solution, or yours, or both (the “society,” if you like). Because if it’s just your solution, then in my experience it’s much harder to get their passion behind it. But, as you say, if they’re part of the same “society” then in a sense they are part of the decision-making. I expect the places you (and I) have trouble is where we are not part of the same society.

Rob Newbold

 

So the path you propose is firstly to focus on the Psychological side of people or persons, to achieve the true commitment to follow through the different paradigms shifts that TOC generally suggests. So focusing means to pay more attention to people rather than the logic that we supposedly Know to the bone.This subject is not only necessary at the beginning,to get the commitment, but in my eyes much more relevant into the implementation itself, where all the feelings the ones we didn´t see, are to be the norm in the client current reality. you finally become some to some extent their herder as in ancient tribes. This is key to continue to achieve their emotions into play.

Jorge Ramirez

 

The best to get the buy in is to empower the manager to work with his people on the suggested solution. How to teach the client to teach his own people about the need to change?

Alejandro Fernandez

John Darlington: Demand Capacity and Flow (DCAF)

The pdf of the material used in the webinar 

Webinars calendar

See more on Supply Chain Management on TOCPA

 

Henry Camp: Using TOC to make real money

 

The pdf of the material used in the webinar   

Webinars calendar

See more on TOC for Strategy on TOCPA


Feedback and discussion

Kevin Fox:

Henry, Great presentation! You don’t say much about Throughput as a factor in choosing a company(s). I would think that looking for companies with larger T would be smart as well. Thoughts? Also I know you have lots of experience with distribution, among other areas. But do you see a preference for that type of company, for manufacturers, others? and why? I would think that finding companies who supply to the same customers would be easier to combine if they were both in distribution vs. manufacturers. Thank you Henry, Great stuff. 

Henry Camp’s response:

Hi Kevin, let me answer the first part about Throughput in two different ways, since I’m not certain whether you meant Throughput dollars or Throughput as a percentage of sales.  If the former, do think that bigger is better – to a point.  You want enough T$ to allow the company to need and be able to afford middle management.  Without that level of hierarchy, there may be too little management attention available to sustain a TOC transformation.  However, I personally shy away from really big T$ (>$250-500m) where the organization’s structure is so large that it almost must be maintained by inertia or else massive communication and supervision to get acquiescence to the envisioned changes.

I think you meant %T.  If so, I don’t think it is a problem with low %T companies.  Any trivial improvement is huge to such companies.  Let’s say a company sells a commodity at 6% T margin.  If a “mafia offer” really solves a problem for the customers, that might be worth a 3% increase in price, which raises T$ by 50%.  This is huge for a company built to deliver on less than 6% of sales.   

I agree that combining different types of companies would not result in such wonderful synergies.  I’d stick to the same type of company with different but similar types of products or services. 

 

Ismael Sandoval:

Could you elaborate on the features/characteristics of a company you are looking for before running the whole process? Type of market? Size? Etc.

Henry Camp’s response:

Yes, Ismael.  It would depend largely on the team’s familiarity with the various industries.  While I think someone with the TOC mindset can do much with fresh eyes, having a real expert with a proven track record will be a leg up, especially in raising the confidence of lenders and investors.  Fortunately, when you buy a company they usually have such an expert.  Let me identify an example of what I’d stay away from.  I wouldn’t buy a company that provides truck drivers to other companies, given the likely increase of autonomous vehicles and trucking being the most obvious industry to take advantage of it.  That being said, bargains can be had in industries in a slow decline.  Nevertheless, I prefer an incoming tide that raises all ships, because that takes the pressure off of competitors to improve and allows a TOC manager to build a bigger relative performance gap.  For example, installation and repair of solar panels seems like a likely winner.

 

Terrance Moore:

Thank you! Great presentation! Are there a TOC Viable Vision or Strategy elements you used to identify businesses to buy?

Henry Camp’s response:

The existing templates you can find bundled with Harmony are a great starting place.  www.harmonytoc.com  The solutions are set down and tested already.  This means a quick start to the change process due to less required planning.  Pay-per-click and RRR are the ones that seem to offer the biggest leaps. 

 

Salvatore Totino Longo:

What do you think about the application of TOC in Startup Companies?

Henry Camp’s response:

Well, I don’t think startups are an attractive place to start but I haven’t given much thought to it.  I guess I have a couple reasons. 

1) Lacking a track record means that banks (the least expense source of funds), which typically like to look backwards before deciding to lend, are virtually eliminated as a source of startup funding. 

2) A startup tends not to have existing staff with years of experience, although the management team may well have such expertise.  I worry about getting the rank and file employees trained; it might consume too much time. 

3) Startups are typically underfunded. 

Here’s an example:  I asked a coworker earlier today to imagine he wanted to startup a distributor.  So, he goes out and talks some customers into buying from him.  Let’s say the customers together buy $2,000,000 per year and he is lucky enough to be able to have $500,000 of that be Throughput.  Maybe his inventory at the end of the year might also be $500,000, because he lacks much aggregation and is forced to buy in relatively large lots, since he is still small.  Fortunately, his suppliers will give him a month to pay, which means that he will owe them $125,000 at the end of the year ($1,500,000 cost-of-goods-sold/yr / 12mo/yr).  Distribution is not a cash-and-carry business, like retail.  If he is lucky his customers will pay him in 36.5 days or 1/10th of a year.  If so, he will have an average of $200,000 of accounts receivable.  Say he pays himself and a few employees $250,000/yr and has another $150,000/yr in OE, then the startup earns $100,000 of profit!  Yay.  In the US, he’d pay $45,000 in taxes of one type or another and be left with $55,000.  This is pretty darn good!  EBITDA represents 5% of sales, which is better that most distributors.  However, cash-wise, he is out $520,000 ($500,000 ΔInventory + $200,000 ΔA/R – $125,000 ΔA/P – $55,000 Net Profits).  This represents a 10.6% ROI, which is much nicer than banks pay on savings accounts.  However, it will take him over 9 more years to earn back his investment and that assumes he doesn’t grow.  At 25% T/Sales, growth will gobble up more cash in A/R and Inventory than it produces NP and A/P.  Consequently, the growth of a startup is constrained by lack of cash.  If you have the cash, you are better off buying a going concern.  In the example I gave in the webinar of combining two similar companies, you paid out $9m for the two companies without putting up any money yourself.  You got $2.4m back from using TOC Replenishment on their inventory.  Net profits were $1.36m after one year.  This is a return of 21%, which is twice as good, unless you want to consider that you didn’t put up any investment, which makes the return infinite!  And, the present value over ten years of that return is $27m.

 

Great webinar – THANK YOU!

Charlene Spoede Budd

 

Excellent Henry!

Jaime Marun

 

Amazing

Denis Louchanskiy

 

Thank you Henry – much food for thought & action.

Rodger Morrison

Rob Newbold: Change and the Partnership Paradigm

 

The pdf of the material used in the webinar 

Webinars calendar

See more on TOC for Change Management on TOCPA


Feedback and discussion

Rob, You presented great substitution: the mostly unsuccessful Change Management you proposed to build up Partnership with simple three A. Looks Great.

Jan Ray

 

I use what I term the three T’s in my interactions with people, which is Transparency leads to Truth which leads to Trust. Often in change situations we are not or tend to be not as transparent as we should be. How key is transparency in the AAA method? I think the use of Vision has become management speak and people start to switch off. Do you think we should be more down to earth and say what it is we think the change will bring in benefits and align those benefits to the change makers? Are we sometimes being too clever? [The questions were answered by Rob during the webinar, the answer is included in the webinar recording]. Thank you to you all for this interesting discussion.

Chris Mackenzie-Grieve

 

It looks like Partnering and selling/Buy-In any proposed direction of solution to a significant problem are one and the same thing, except in my humble opinion that one is pointing to the Road, or to say it the Follow Up of progress – the initial thing is selling, then control the way of implementation and achievement of agreed objectives. Can you elaborate on this please? What about when the proposed solution is out of the scope or current paradigm where the system is operating, how do you reach agreement on what is required, if don’t have a clue about it? [The questions were answered by Rob during the webinar, the answer is included in the webinar recording.]

Jorge Ramirez

 

A great webinar with a lot of food for thought. Rob has always a unique approach to things. A change perspective which is to be discussed… thank you Jelena Cohen and Rob. Great webinars!!!!

Spyros Bonatsos

Gerry Kendall: Viable Vision – Bringing all of TOC together

The pdf of the material used in the webinar

Webinars calendar

See more on TOC for Strategy on TOCPA


Feedback and discussion

Great Gerry, THANK-YOU!!!

Rudi Burkhard

 

Great thanks, Gerry

Jan Rey

 

Many compliments to Gerry for this very interesting webinar!  Keep it up with the great work!!

Brunello Menicucci

 

Thank you Gerry

Mike Noone

 

Pedro Castro, Mexico:

It is a honor be part of this webinar. Thank you very much & Congratulations for your speech is great.My question is about If ToC is able to include complex tools as Demand Driven? Clarifying, sometime a big and principal constraint(depending of industry), the market demands some aggressive mix of production order, and the market day by day request for small and diversity orders. There are a tools called DDP Demand Drive Planning. I saw Lean techniques are required to support. To attain one of the foundations of Dr. Goldratt recommend pursuit to have lowest possible of inventory to increase business profits.

Gerry’s response:

One of the pillars of TOC is “Inherent Simplicity”. In Eli’s words, “The more complex the problem, the simpler the solution must be or it will not work”. In my experiences, TOC has always made good use of tools and concepts, with excellent results, as long as the solution made life easier and simpler for the users and for management. I’ve implemented Viable Visions, for example, with manufacturers and distributors with a mix of standard production orders and custom product orders and non-standard orders (e.g., where quantities ordered exceeded more than 50% of stock). TOC with tools like “Demand Driven” have figured out ways to help average humans to do a great job in these complex environments. In fact, in my 25 years doing TOC, I’ve never had a client who fit easily into standard TOC paradigms. The challenge was always to find ways to simplify the solution.

About inventory, how do we ever know that we have the “lowest possible inventory”? We really can’t, because we are in a dynamic environment where demand, replenishment times and reliability of supply all change over time. So what TOC provides in this dynamic environment is a solution that automatically adjusts inventory targets according to the changes in these parameters. The software that I’ve worked with since 2004, from IDEALLC, called Elucidate, brings inherent simplicity into reality. It also manages and integrates all levels in the supply chain, allowing for a true, demand driven approach to managing inventory. I know there are other great tools in the market also using these TOC concepts and adding to them.

So the short answer to your question is, “Yes”!

 

Reiner Hansen:

Have you used the viable vision to help startups? Do you  think it fits startups in early stages? 

Gerry’s response:

No. And No. Every Viable Vision has a marketing component, that starts with analyzing sales to existing markets. It relies on identifying a factor from actual sales and operations experience that allows the company to identify a way to gain a decisive competitive edge. 

What Eli said about startups, and I agree wholeheartedly, is that they need to first find out if the markets they are planning to sell into have significant UDEs that their new products or services help overcome, better than the competition. The TOC Thinking Processes and analytics are excellent for this type of analysis.

 

Rudi Burkhard:

How do you get to the right person at your target? The CEO and team? How do you get proper metrics in place early enough .. just before start of implementation? 

Gerry’s response:

When we started the Viable Vision marketing process, we ran seminars that Eli presented. Most attendees (at least at my seminar) were already well acquainted with TOC. My first 4 Viable Visions resulted from that. Since then, it’s been by word of mouth from clients, and from working with another ex-CEO of a public company who retired and went into consulting and brought me into his clients. 

Regarding metrics, since I launch Viable Visions using a Strategy and Tactics tree with the top management team, I get the first metrics agreed to during the launch of the project. For manufacturing, it typically starts with Due Date Performance and Throughput. Every company already has standard P&L and Balance Sheet reporting. What I do is work with their financial people to get some basic Throughput Accounting statements in place. I also work with management to identify some leading indicators (I don’t call them metrics – just indicators) and get those going to help determine early if we’re on the right path. E.g., % of orders in red, green, black. 

For projects, I’ve found that most companies I’ve worked with don’t have any formal reporting or statistics in place. Good software will tell you how many of your projects are red, green and give early warnings on projects in danger of being late. They will also show resource overloads and projected resource loads for projects that are planned but not yet active. 

For distribution, total inventory and shortages are key metrics. Don’t be surprised if inventory initially goes up with new targets, since we are short of inventory in some locations for some SKUs. And it often takes longer to reduce excess inventory (because those items are often slow moving) than it does to order inventory to increase to target.

 

Max Krug:

Do you have a process to evaluate the sales staff to understand if they are capable of doing solution selling?

Gerry’s response: 

I use roles plays during Sales Training and then go out in the field and debrief after every call. If I go out on 5-10 calls with the salespeople, I can easily tell which ones are capable. The best ones are the ones that already have a curiosity about how customers are using the products they sell in the customer’s environment and ask lots of questions. The worst ones read Powerpoint slides, ask few or no questions, and are spouting product features in the first 2 minutes of every call and don’t change their behaviors.

 

Felipe Duenas:

Does Viable vision concept apply if you are going to run a DEVOPS project?

Gerry’s response: 

I want to sress that Viable Vision is not about a single DEVOPs project. It is a strategy to achieve a major improvement in the bottom line through gaining a Decisive Competitive Edge in the market, typically by combining major improvements in operations / logistics / project management with a “Mafia Offer”. Every client I’ve worked with also develops and offers new products to the market. To the extent that they integrate the TOC  CCPM approach to developing new products with the TOC approach to market research and overcoming UDEs with engineering approaches that make new products practical to produce, they are following (as I understand it) the principles of DEVOPS. In other words, I think that DEVOPS should not just be about development and operations, but also about marketing and sales. But I have no experience with DEVOPs so this is just from my very limited understanding. I have clients who use AGILE in projects and have gained great benefits by integrating the thinking with Critical Chain.

 

Joe Magid:

What’s the largest company or division you’ve executed this with? Do you think there is a practical limit to the size (and therefore limit to a division)? 

Gerry’s response:

The largest company I’ve worked with in Viable Vision is about half a billion (US $). No, I don’t see a practical limit. I prefer to work with companies in the $10-$100 million range but only as a personal preference.

 

Jim Walker:

For those who are listening, please know that Gerry is peddling a process that works. It does not work without real effort.  It does not work without the correct sales team. 

Gerry’s response: 

I had the pleasure of working with Jim Walker in one of the first Viable Vision efforts. I agree with Jim that you must have a solution sales team or the effort will not yield the desired results. I actually don’t “peddle” – except when I’m riding bicycles. I use the same TOC process to gain buy-in to Viable Vision (overcoming the Layers of Resistance to Change) that we have sales teams use in Viable Vision projects.

 

Jorge Ramirez:

Gerry, Thanks, very enlightening presentation. In your experience, what are those few factors that “constrain” management teams to buying in to the VV Bumpy road in terms of their current understanding and way of analyzing any solutions? Once on board, what are those “must never forget” issues to assure or at least, that will significantly smooth the way. What do you think it will take that TOC Knowledge, but more important, the way to face problems, will stay in the Company, after the consultant is gone? 

Gerry’s response:

I started working in 1968. In almost 50 years of work, I’ve never seen a smooth road to improvement, with or without TOC or Viable Vision. Management teams have to be excited enough to want to overcome long standing conflicts – the ones that make it painful for them. This means they must believe that the aggressive financial goals alid out in a Viable Vision are feasible – not a dream. What gets them excited are two things:

  1. The insights into their company brought by the cause-effect analysis of the Viable Vision consultant.
  2. The road map that shows that even though the project may be 2-4 years long, they will see tangible results within the first 3-6 months. This is vital.

After that, what helps them buy in is gaining a deeper understanding into the solution components through some basic training to begin with. Every management team  I’ve worked with has loved the simulators and exercises that I discussed in the webinar.

I have one other thought to share – don’t assume that any initial buy-in is enough to sustain the effort. Skepticism creeps in throughout the project and must be openly invited (for managers to share) and the consultant must be willing to discuss all concerns. This doesn’t prevent the bumps but it makes them easier to overcome.

Dr. Roy Stratton: From flow line to project management: Does TOC offer a unifying theory?

  

The pdf of the material used in the webinar

Webinars calendar

Read more on TOC-Lean-Six Sigma on TOCPA


Feedback and discussion

I have, for a long time, thought that TOC is generative rather than prescriptive. Dt Stratton makes a well reasoned argument for this viewpoint, connecting the influence of TOC thinking to several prescriptive tools and approaches. If you missed the webinar, make time to watch the video when it is published.

Jeffrey Schraeder

 

Attended the session; appreciated the context/perspective provided in considering multiple frameworks in comparison to TOC’s basic principles.

Joe Magid

 

Sindre Kentsrud:

Roy, I am a TOC/Lean novice. I believe TOC and Lean can benefit my company greatly. I am trying to convince top management (which are very cost focused) to embrace these practices. So far I have been unsuccessful. Could you give some advice on how to convince them (as well as other co-workers), and how to integrate TOC/Lean culture into a company in the best possible way? Kind regards, Sindre, Norway.

Roy’s response:

Dear Sindre,

You are not on your own but lean tends to be more readily accepted than TOC. However, when lean is accepted its is often only in part and understanding the importance of capacity buffering is often ignored resulting in only short term adoption having picked the low hanging fruit.

However, this is even more difficult in MTO and ETO environments. The question should not be which approach but the need to adopt a systems approach that uses flow as a proxy for productivity as in the Theory of Swift and even flow.

I hope my presentation shed some light on the underlying similarities between these developments and particularly lean and TOC. Any text book on operations typically presents these developments (strategy, Quality management, lean) as separate chapters – they need to be more effectively linked. TOC provides a means of doing this and clarifying the tension between local and global as well as means of resolving it. In each case (QM, lean and TOC) ongoing improvement involves the adoption of management signaling tools suited to the environment.

As a starter I would suggest you look for evidence of the dysfunctional influence of local cost and efficiency measures in building a case for change before exploring what a systems approach looks like. TOC has thinking process tools and exercises to help explore the issues and the options that do not need to be labeled so avoiding the barriers this often creates.

I hope that is of some use to you.

Roy

 

Ian Heptinstal:

Hi Roy. A thought on buffers and colours, what do you think? It seems to me that yellow = within control limits (common cause), but BOTH red and green are outliers and special causes. Sure red has a short-term priority over green, but for POOGI, both red and green be investigated. Implication is that “yellow = OK/expected”, and not green.

Roy’s response:

Hi Ian,

Good point. In DBR green is often seen as redundant and can be viewed as the lower control limit that might signal a change that needs to be taken note of.

In MTA yellow is more clearly the common cause region and green and red the specials requiring intervention to adjust the target.

There are limits to these comparisons as these different tools are pragmatic solutions that have proved to provide useful guidance as to when and how to intervene to meet the needs of different environments. What interests me is how some applications of lean and also TOC seam to ignore the need for such tools and particularly the continual improvement function.

Thanks for your question.

Roy

 

Oded Cohen’s comment:

The buffer status is a major signaling mechanism.

We are in agreement that a yellow status is a signal to management that the system is under control.

When dealing with Red and Green the signals have to be interpreted within their context.

It is important to be clear on what is the buffer monitoring and the timing of the sampling of the buffer status.

For example – in DBR  and S-DBR:

  • Having Green during the flow of the WO through production is not redundant. It just signals to management not to waste their valuable capacity on WOs which are flowing OK.
  • Finishing a WO in green may signal that the PB may be too long. Yet, if other WOs are late  or demand significant management intervention to complete on time – Green may point management in the direction that needs further improvement especially if the reason for the green is lack of proper subordination to the plan.

Regarding the Red signals:

  • Reds during the flow of the WO or project – prompt management to check the situation and take recovery actions only when needed. The priority is for the checking.
  • Completing a WO or a project in Red does not mean that further actions have to be taken as long as the promises for delivery and availability have been fulfilled.

 

Sanjeev Gupta: CCPM – Project Factory, 3 Webinars

Webinar 1: Focus & Finish: Operating Motto for a Project Factory

The pdf of the material used in Webinar 1

Webinar 2: Role of Buffers in CCPM

The pdf of the material used in Webinar 2

Webinar 3 “Project Planning for the Real World – A Tutorial” 

The pdf of the material used in Webinar 3

Webinars calendar

See more on CCPM on TOCPA


Sanjeev’s post on Linkedin 10 Feb 2018:

YOUR PROJECTS HAVE A SCHEDULING PROBLEM IF:

1. You have tried creating a single source of truth but people prefer their own “back pocket” schedules

2. You have frequent meetings to resolve schedule/resource conflicts

3. Everyone is constantly firefighting and waiting on someone else

4. People are perpetually overloaded

5. High priority projects get done in half the time – which only means that with correct scheduling, all projects can get done much faster.

If you have a SCHEDULING PROBLEM, improving processes or soft skills WON’T improve project delivery or resource efficiencies. ONLY fixing the scheduling problem will.

PLEASE FIX THE SCHEDULING PROBLEM.


Feedback and discussion after Webinar 1

Even beyond Projects, I believe this is highly relevant to other digital knowledge-work environments as well – including IT Service Factories where the absence of physical material (to materialize queues and work-in-process) and a prevalent lack of manufacturing background, makes most people overlook the need for Manufacturing Wisdom in order to manage what I would call their “Invisible Plant”. Especially when it comes to segmenting activities according to their relevant manufacturing layout (eg. Intermittent vs. Fixed). I am proudly going to print out this “Focus and Finish” motto with due credit, and display it prominently at my workplace – including in my corporate email signature . Thank you Sanjeev and hats off TOCPA for sharing such gems of a kind.

Paul Merino

 

An additional issue is that as project time extends, the number of changes (e.g. red time on project is 25 weeks instead of 10 weeks) and queries and client requests for status updates and the management and resource time is consumed. Is the point that when doing buffer management not to switch priorities based on small differences between relative buffers on subtasks. It would be an example of trying to be more accurate than the noise. Thanks very much. Very helpful.

Colin Beattie 

 

It was a great session.

Robert Bolton

 

Just caught the recording. Great presentation Sanjeev. Very clear and thought provoking.

Ian Heptinstall

 

Just watched Sanjeev. Great stuff! Thanks for giving him a stage. Good to see that he sees the same issues with CCPM and comes up with very similar solutions to us. The Operating Motto stuff is interesting. I see it as the synthesis between the behavior needed for the system as a whole and the behavior that satisfies the local need/desire (such as being ‘productive’ in Sanjeev’s example).

Hans Steenpoorte

 

A question from Doug Krsek:

How would an organization/department/group manage work across both project and operational support tasks like in an IT group?

Sanjeev’s answer:

Two things are important

  1. WIP Control (total planned WIP of project and operational tasks should be less than the capacity). Since the operational tasks are not known as far in advance of project tasks, you leave aside some capacity for operational tasks when you stagger the projects.
  1. Task Priorities across project and operational tasks.

 

A question form Uwe Techt:

If I understood Eli right, he said, that staggering based on resources will show too much variability. Because of that he called for staggering on phases. Is there a contradicting with your argumentation?

Sanjeev’s answer:

Yes, staggering based on resources/tasks will show too much variability. However a more important issue is that it will cause tasks to spread apart and resources to get spread thin.

 

Here is Sanjeev’s explanation why the middle graph shows the tasks duration multiplied not by 3, but less:

When all resources are allocated to one project, resource utilization is lower (not all of the resources will be busy all the time because of dependencies etc.). When fewer resources are allocated to one project, they are more fully utilized and that’s why the duration does not increase by 3X but less.


Feedback and discussion after Webinar 2

Another EXCELLENT workshop, Sanjeev.

Charlene Spoede Budd

 

You say that the timeline is determined by the client. This does not avoid the problem of buy in with your resources. If it is decided by management edict and they feel it is too short would they not be demotivated by this? [Answered by Sanjeev in the webinar.] Excellent session Sanjeev.

Mike Dinham

 

Returning to ‘The market sets the duration’. A senior executive will want to know whether his organisation is taking too much risk or not. If duration and buffers are set only by ‘market demand’, how can they judge whether they are taking too much risk by accepting a crazy due date. Surely there is a need for a zero-based approach to planning? [Answered by Sanjeev in the webinar.]

Ian Heptinstall

 

Project Buffer goal then it is not to reducing the Project due date, and maybe achieving a competitive advantage, but rather it is to add required flexibility to be able to comply with any committed Due date, and be reliable on it? A Competitive Edge may come firstly from reliability of Due Date, rather than reduced lead time? [Answered by Sanjeev in the webinar.]

Jorge Ramirez

 

Market usually provides less time than is necessary (owners/ operators approach EPC’s late from the beginning…). PM’s are given ISD that ate unreasonable (granted with traditional task level buffers!) Any recommendations for dealing with resources pay rates (time sheets vs. fixed rate), resource managers incentive? [Answered by Sanjeev in the webinar.]

Luis Cabana


Return to Webinars Calendar

 

Nerius Jasinavicius’s Webinars

To see the recording of Webinar 1 Not a Workplace But Business scroll down

Webinar 2: Using TOC implicitly at the Board of a non-TOC company

28 January 2020

The pdf of the webinar Using TOC implicitly at the Board of non-TOC company

The comments about the webinar

Robert Bolton

Great talk Nerius. Congratulations on your board role. you are probably making a great impact. Well Done!!

 

Witt Stewart

Thank you Nerius! Keep up the good work

 

Charlene S. Budd, PhD, CGMA

Hi, Nerius.  Thanks for presenting your webinar yesterday.  I was unable to attend yesterday, but I just saw the recording and want to compliment you on the presentation.  Your ideas are extremely good.  I regret not being present to support your approach.

You are reminding accounting people of something they most likely were exposed to at university, but were not permitted to use when newly hired into business.  In the U.S., a Cost Accounting class is where accounting majors are introduced to management decision analysis, termed Direct or Variable Accounting.  This approach requires totally variable cost that naturally can be related to the unit level – primarily materials and outsourcing costs, which, when subtracted from Revenues, results in Contribution Margin or Throughput

Not only small-sized and medium-sized businesses need this information – ALL businesses do!  By encouraging organizations to use it, you make the accountants feel good about their contribution and the managers, when they have the information they need, will make decision improvements on their own.  This allows managers to also feel good.  Then they can seek out help to make even better decisions.  Top managers (CFOs, CEOs, Directors, etc.) frequently make very poor decisions because they do not have the relevant information they need.

Fully allocated costs to the unit or product level is NOT relevant for internal decisions.  Management must use non-variable costs, but in total, not allocated.  I am convinced that monthly internal income statements must show Revenue, Variable Costs, Contribution Margin and 1/12 of Total Annual Estimated Manufacturing and Labor Overhead (from the annual master budget amounts).

Please do not limit your approach to small and medium-sized businesses.  I suggest you might have a conversation with the highest-level accounting-trained person you can find in an organization and ask them about their course work and training and if they remember Direct or Variable Costing for operating decisions.

Nerius:

Hi, Charlene,

Thank you for your support. My challenge is more with non-finance people. They are told (nobody knows by whom) to look for “full costs” and make decisions accordingly. As they do not know all the assumptions behind cost accounting, therefore it is not easy to explain why cost-accounting is not good for decision making. But step-by-step I will get there ?

 

Webinar 1: Not a Workplace But Business

5 December 2017

The pdf of the webinar Not a Workplace But Business 

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See more on TOC for Small Companies on TOCPA

 

John Covington: Management Attention – a key constraint or something deeper?

 

The pdf of the material used in the webinar

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See more on TOC for Leadership and Change Management on TOCPA


Feedback and discussion

In the webinar John mentioned 12 characteristics for a CEO that were developed by Chesapeake Consulting – to approach such companies. John was asked to share these characteristics. Below is John’s answer.

TOC friends:

I was unable to find those characteristics.  About three months ago I had a computer snafu and lost a bunch of stuff – obviously that was one of them.  From off top of my head here are some of the items:

  1. Intelligent
  2. Humble – do not think they know it all.
  3. Willing to trust us
  4. Privately held company
  5. The one who is in charge
  6. They have money
  7. Bonus if they have spent money with us in the past.
  8. Active in community affairs

John

 

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