Become a recession-beater

John Tripp, managing director of Goldratt theory of constraints (TOC) consultancy TOC Scotland, is almost pleading with manufacturers to "wake up". He insists that only by abandoning the outdated and, quite simply, “wrong assumptions and measures” of the last Century, and injecting new thinking will we turn our manufacturing recession around. Easy words, perhaps, but Tripp is worth listening to because he's done it: he's helped manufacturers to become world-beaters more times than he cares to remember. This unassuming yet forthright and pragmatic industrial engineer – who served his student apprenticeship with Pye TV in Lowestoft in the mid '70s, before moving on to Gramac, Project Office Furniture and McCoa in the Far East as plant manager – has been striving to improve performance since 1984. It was then, he says, that he met Dr Eli Goldratt, the self-styled father of TOC, and author of management best seller 'The Goal' and latterly 'Necessary but not Sufficient', at a Goldratt TOC seminar in London. "It seemed such a logical approach to improving the flow of product through companies," he recalls. "By the end of the day I was working for them." He's referring to Goldratt's Creative Output and its product OPT (Optimised Production Technology), the TOC-based system which, at the time, was revolutionising production for the few that cared to listen to what then seemed heresy. Sadly, so good was it that too often it put pressure on other departments – as they became consequential constraints – which eventually led to collapse. And that led to the departure of Goldratt from Creative, the formation of STG with its OPT products in this country ... and the rest is history. Suffice to say Manugistics bought STG this year and is basing its whole manufacturing strategy on what was OPT (MCS, July/August 2001, page 5) as the world sees a resurgence of TOC and Goldratt himself, supported by big guns SAP, IBM and Mapics. Why? Because, as Tripp explains, TOC categorically deals with what's wrong with British industry. It gives the lie to the old ways of focusing only on cost reduction, keeping people and machines busy, and cost accounting rules that were barely adequate 70 years ago. Says Tripp: "For example, independent research shows that with TOC you can find at least 30% more capacity... One of our customers recently improved sales from £3m to £6m a month in just three months, with no significant increase in resources. Inventory dropped by £4m; profits increased by 400%; on-time delivery jumped; and lead times dropped. That company is now investing huge sums in machine tools in the UK." What an outcome; and what a testimony. But there’s more. Tripp is unequivocal: "UK manufacturing won't get lasting advantage by looking at production alone. As you fix one constraint you run into the next. To get lasting improvement means looking at the whole business... So you need leadership." It always comes to this. Tripp quite rightly avers that projects that succeed in spades are those driven from the top with determination, understanding and a holistic view. One of his users, he says, threatened with production being moved to a sister plant in Eastern Europe, reversed the decision precisely through these. "With our help, the managing director and his team took a holistic view, identified their limitations, and then used the Goldratt measures to look for systems and TOC processes to overcome them." And that meant everything from replacing transfer costing standards with "reviewing against throughput per constrained unit", to sending all department leaders on the TOC training courses to help them understand their own and each others' problems and solutions. Notice Tripp barely mentions IT – except to consolidate, automate and support the thinking. To Tripp, APS and TOC, though both designed to handle the realities of today's customer-focused, make-to-order manufacturing world, are not synonymous. His key advice? "We can beat anyone, anywhere by manufacturing here in the UK. Dump cost accounting, performance and product costing. And build company-wide improvement plans."