What About Industry 4.0?

Industry 4.0

Dreamstime - Crystal BallProductivity – the value created per unit of resources deployed — is the primary driver of standard of living. In manufacturing, the “resources deployed” include raw materials, human talents, skills and efforts; and capital investment. Several times in the past, the availability and application of new technologies have occasioned marked improvements in productivity. These improvements have benefitted increasing numbers of people.

“Industry 4.0” refers to a group of digital technologies that, when employed in an interactive and integrated fashion, promise to initiate a fourth industrial revolution. In essence, Industry 4.0 extends the industrial “Internet of Things” beyond local manufacturing process condition sensing and analysis to automated decision making, integrated across entire value chains.

The Boston Consulting Group, (BGC) an international consulting firm, identifies nine key emerging digital technologies that comprise Industry 4.0: [1]

  • The industrial Internet of Things
  • Horizontal and vertical integration
  • Digital simulation technology
  • Autonomous robots
  • Big data and analytics
  • Augmented reality
  • Additive manufacturing
  • “The Cloud”
  • Cybersecurity

BGC does a good job of introducing these component technologies that can read and download. However, the point of this post isn’t the component technologies. The point is how those technologies might be employed to actually result in significant increases in productivity within manufacturing firms.

Goldratt’s Four Questions

Eliyahu Goldratt, author of The Goal, noticed that employment of new technologies in the past often resulted in large improvements for some firms, while many other forms experienced little, if any, improvement at all. Goldratt uses the logic of his Theory of Constraints to propose a series of four questions for those considering employment of Industry 4.0, or any other technology: [2]

Question #1 – What is the power of this technology?

In the case of Industry 4.0, massive employment of digital sensing, communication, evaluation and feedback promises to significantly improve productivity, primarily through increased throughput and reduction of wastes, across entire value chains.

Question #2 – What limitation does it alleviate?

Absent the technologies of Industry 4.0, many forms of waste across an entire value chain (e.g. raw materials variations, machine conditions or human errors) are not sensed, identified and acted upon quickly enough to prevent or alleviate them, or to prevent additional wastes.

Question #3 – What rules do we use to work around that limitation now?

Local methods for sensing and communicating conditions that create wastes are employed. Heuristics are often employed to guide remedial or corrective actions.

Question #4 – What new rules will be necessary with this new technology?

Industry 4.0, above all, requires a comprehensive systems approach to entire value chains. Such an approach will require redefinition of relationships among the components of entire value chains. It also entails significantly increased reliance on machines for making routine decisions and taking appropriate actions.

For Smaller Manufacturers

All manufacturers, large or small, must remain competitive with, literally, a world of competitors and potential competitors. To do so almost doubtlessly requires the employment and integration of new technologies as they become available. The logic behind Industry 4.0 provides a platform – a basis for thinking and acting – for the introduction of new technologies over time. The changes in thinking that Industry 4.0 requires are monumental.

As a beginning, smaller manufacturers should become increasingly aware of the emerging technologies that comprise Industry 4.0, and, even more importantly, how they fit together. Look for future posts to this blog on Industry 4.0, especially as a platform for systematic actions. Buckle your seat belts.

Chuck - SedonaThoughtful comments and experience reports are always appreciated.

…  Chuck Harrington (Chuck@JeraSustainableDevelopment.com)

P.S: Contact me when your organization is serious about 21st century manufacturing … CH

This blog and associated website (www.JeraSustainableDevelopment.com) are intended as a resource for smaller manufacturers in the pursuit of Sustainability. While editorial focus is on smaller manufacturers, all interested readers are welcome. Blog posts are published weekly.

Transparent globe image: licensed through www.dreamstime.com


[1] Read or download BCG’s paper at: https://www.bcgperspectives.com/content/articles/engineered_products_project_business_industry_40_future_productivity_growth_manufacturing_industries/

[2] E. Goldratt, Beyond The Goal: Goldratt Speaks on Theory of Constraints, audible presentation, LLC Gildan Media (Presented on CDs, available from Amazon)

 

The Future and Dr. Deming

Dr. Deming

Deming New Economics Book JacketEdwards Deming is best known for his teachings on statistical methods for quality control. However, his legacy goes well beyond his work on variance. In the final years of his life, Dr. Deming recognized that the Industrial Age was ending and that a new philosophy of manufacturing management was needed. That new philosophy, which he called a “System of Profound Knowledge”, was outlined in Deming’s The New Economics for Industry, Government and Education. [1]

This post builds on Deming and Profound Knowledge, a post to this blog from October 2013. “System” is the key concept in Deming’s new philosophy. This post emphasizes systems thinking by relating Eliyahu Goldratt’s Theory of Constraints, especially as presented in his book The Goal [2] to Edwards Deming’s System of Profound Knowledge. – C.H.


Deming’s System of Profound Knowledge

Edwards Deming is arguably the best known of the later 20th century quality experts. He taught quality methods and practices in Japan in the 1950s and ‘60s; then helped American manufacturers catch up to Japanese in the 1970s, ‘80s and into the ‘90s. Late in his life, Deming formulated a System of Profound Knowledge to serve as a guide to manufacturing managers and leaders to address the future.

Dr. Barbara Berry [3] describes the System of Profound Knowledge as a “management system grounded in systems theory”. She goes on to say:

“Deming believed profound knowledge generally comes from outside the system and is only useful if it is invited and received with an eagerness to learn and improve. A system cannot understand itself without help from outside the system, because prior experiences will bias objectivity, preventing critical analysis of the organization.”

Deming’s System of Profound Knowledge [4] consists of four interdependent components. Manufacturing leaders need to thoroughly understand all of them and how each interacts with the others:

> An understanding of the theory of knowledge

>> A knowledge of variation

>> An understanding of psychology

>> An appreciation for systems

The Goal and System of Profound Knowledge

I’m convinced that Goldratt developed the thinking behind The Goal quite independently from Deming’s work on the System of Profound Knowledge. However, these two eminent management philosophers come to remarkably similar conclusions regarding the bases for a 21st century model of management thinking. Here are some parallels:

Theory of Knowledge

Deming holds that knowledge is more than just information. Knowledge results from systematic evaluation and verification. Systematic analysis, evaluation and verification are achieved through application of a process. Deming suggests the PDSA (Plan – Do – Study – Act) cycle.

Similarly, Goldratt suggests that managers use a scientific approach to thinking. The introduction to the 1st edition of The Goal says: “The secret to being a good scientist, I believe, lies not in our brainpower. We have enough. We simply need to look at reality and think logically and precisely about what we see. The key ingredient is to face inconsistencies between what we see and deduce the way things are done. This challenging of assumptions is essential to breakthroughs.”

Some years after the publication of The Goal, Goldratt presented a set of Thinking Processes.[5] The Thinking Processes are tools for use in analyzing relationships within systems. Like the scientific method and PDSA cycles, the Thinking Tools provide a means for systematic analysis, evaluation and verification.

Knowledge of Variation

Variation and its causes lie at the heart of Deming’s work with quality. Deming teaches that two modes of variation exist: common cause and special cause. The former are an intrinsic characteristic of the production process. The later are due to sporadic events outside the production process. Deming uses simple experiments including his famous red bead experiment to demonstrate the futility of trying to control common cause variation from within the process.

The Goal tells the story of a Boy Scout hike. The scout hike provides an analogy for a manufacturing process consisting of serially related operations. The effect of variation in walking speeds over time in a line of hikers provides insight as to the nature of a constraint and the effects of that constraint on throughput and on work in process inventories. The scout hike also demonstrates that the process itself can be modified in order to reduce the common cause variation.

Psychology

Deming recognized that people are not simply extensions of the machinery. He decried command and control management and advocated “leadership, for a change”. Deming appreciated that people are motivated intrinsically, and that extrinsic efforts to motivate are futile, if not counter-productive.

The Goal is extensively psychological. First, it is a business novel — an exposition of principles through a story that readers can readily relate to. Secondly, Jonah — one of the primary characters — is a Socratic teacher. The story demonstrates human reactions to change and human behaviors under stress.

An Appreciation for Systems [6]

“Perhaps Dr. Deming’s greatest contribution and biggest departure from the past was to view an organization as a system. He defined a system as a network of interdependent components that work together to try to accomplish the aim of the system. The aim for any system should be that everybody gains, not one part of the system at the expense of any other.” [7]

Similarly, The Goal presents a manufacturing organization as a system. As the title of the book suggests, the system exists to pursue an aim — a goal — that may not be obvious to everybody involved with the system. The story examines components of that system, their dependencies and their interactions. They learn that actions to optimize individual components of a system do not result in optimizing the system as a whole with respect to the goal of that system. They also learn that Pareto’s Principle doesn’t necessarily apply when analyzing systems. Said briefly: The Goal could be a text for Systems Thinking 101.


What does all of this have to do with Sustainability? Both The Goal and The System of Profound Knowledge provide insight as to how manufacturing organizations can survive and prosper in the 21st century. Both advocate significant changes in management thinking. Interestingly, the first editions of The Goal (1980s) define the goal of a manufacturing organization as “make money now and in the future”. Later editions (1990s) modify that to “become an ever-flourishing company” [8] — recognizing, as Deming did, that the aim of an organization goes beyond making money.

Chuck - SedonaThoughtful comments and experience reports are always appreciated.

…  Chuck Harrington (Chuck@JeraSustainableDevelopment.com)

P.S: Contact me when your organization is serious about prospering in the globalized 21st century … CH

This blog and associated website (www.JeraSustainableDevelopment.com) are intended as a resource for smaller manufacturers in the pursuit of Sustainability. While editorial focus is on smaller manufacturers, all interested readers are welcome.


[1]  The System of Profound Knowledge is discussed in detail in Edwards Deming, The New Economics for Industry, Government and Education – 2nd Edition, MIT Center for Advanced Educational Services (1994)

[2] Goldratt, E. and J. Cox, The Goal: A Process of Ongoing Improvement, 3rd Revised Edition, North River Press (2008)

[3] Dr. Barbara Berry, There is a Relationship Between Systems Thinking and W. Edwards Deming’s Theory of Profound Knowledge, available for download at: http://www.berrywood.com/wp-content/uploads/2011/08/DemingPaper.pdf

[4] The System of Profound Knowledge is discussed in detail in Edwards Deming, The New Economics for Industry, Government and Education – 2nd Edition, MIT Center for Advanced Educational Services (1994). Additional information is available on-line at: https://www.deming.org/theman/theories/profoundknowledge

[5] The Thinking Processes are discussed in detail in Goldratt’s It’s Not Luck, North River Press (1994)

[6] For more on systems, see Systems and Constraints, this blog: http://blog.jerasustainabledevelopment.com/2013/09/25/systems-and-constraints/ and More on Processes and Systems, this blog: http://blog.jerasustainabledevelopment.com/2013/05/15/more-on-processes-and-systems/

[7] Deming Institute website, www.deming.org

[8] Cox and Schleirer, editors, Theory of Constraints Handbook, Introduction by Eliyahu Goldratt, McGraw Hill (2010)

 

Appreciating the Theory of Constraints

The Theory of Constraints (ToC) offers manufacturers one of the most powerful tools available for systematic improvement of their business. ToC’s power lies in its use of what Nobel Prize winner Daniel Kahneman [1] calls “slow” thinking – deliberate, logical thought from first principles – and in ToC’s holistic systems approach to manufacturing. Systems and Constraints, an essay from almost two years ago, provides an introduction to ToC and its thought systems. – C.H.

Systems and Constraints – from 26 September 2013

The Theory of Constraints

In 1984, Israeli physicist Eliyahu Goldratt surprised the manufacturing world with The Goal, [2] a business novel that offered a different approach to continual improvement and to attaining operational excellence. That approach, which Goldratt later called the Theory of Constraints (ToC), amounts to an application of systems thinking [3][4] to plant floor manufacturing.

ToC takes exception to much of the basic thinking behind costs-and-efficiencies based management. This includes taking exception to accounting ideas such as producing “profits” by rolling costs into work in process and finished goods inventories. It also includes taking exception to operating ideas like striving for 100% on-line, at rate performance for all of the production equipment, all of the time. Instead, ToC emphasizes throughput (revenues, not inventory accumulation), investment (inventories, equipment and facilities) and operating expenses. Performance improves when throughput increases while investment and operating expenses decrease, in an absolute sense or in proportion to the increase in throughput. Emphasis on improving throughput trumps emphasis on reducing costs because costs cannot be reduced to less than zero, while throughput, in principle, can be increased without apparent upper bound.

ToC regards a manufacturing facility as a system consisting of interacting and interdependent processes. Those processes are not all equally important to increasing throughput. A few, usually one, process limits — constrains — the system. ToC focuses on identifying the limiting process and addressing that limitation. “Addressing that limitation” means increasing the capacity of that process, such that it no longer bottlenecks the facility. In addition, ToC uses a buffer before the constrained resource and a raw materials release system to prevent overproduction at non-constrained resources. Once a constraint is addressed and throughput increases, another constraint will be revealed — otherwise, throughput would be unbounded. So, ToC is an ongoing process of identifying and addressing constraints.

As production capacity increases, the constraint to increasing revenues eventually moves from the factory to the market. Often, improved lead times provide an advantage on attaining new business. Moreover, Goldratt noticed, through actual ToC implementations, that the “improvements in operations not only open new opportunities but actually provide the company with a decisive competitive edge”.[5] Goldratt’s later business novel, It Isn’t Luck, [6] provides examples of businesses with a decisive competitive edge. It Isn’t Luck also describes the thinking processes involved.

“A decisive competitive edge is gained only when a company satisfies a significant market need to an extent that none of its significant competitors can.” — E. Goldratt

For Smaller Manufacturers

The Theory of Constraints is very powerful because the systems thinking behind it is very powerful. As one would expect with a system, a full implementation of ToC almost always needs to be holistic (across the entire business unit), rather than piecemeal. A full implementation also needs the support of somebody with extensive training in ToC and its implementation. The thinking behind ToC is so different that implementations during periods of duress may be easier than implementations during good times, because of less staff and corporate resistance to the necessary changes.

That said, managers of manufacturing concerns can learn quite a lot by reading Goldratt’s business novels and studying Goldratt’s thinking process. It was once said that Goldratt’s personal objective was nothing less than to teach managers how to think.


In Monet's GardenThoughtful comments and experience reports are always appreciated.

…  Chuck Harrington (Chuck@JeraSustainableDevelopment.com)

P.S: Contact me when your organization is serious about pursuing Sustainability … CH

This blog and associated website (www.JeraSustainableDevelopment.com) are intended as a resource for smaller manufacturers in the pursuit of Sustainability. While editorial focus is on smaller manufacturers, all interested readers are welcome. New blog posts are published weekly.


[1] Daniel Kahneman, Thinking Fast and Slow, Farr, Straus and Giroux (2011)

[2] Goldratt, E. and Cox, J. The Goal, A Process of Ongoing Improvement, Third Revised Edition, North River Press (2004)

[3] For more on systems and systems thinking, see: More on Processes and Systems, this blog (16 May 2013): http://blog.jerasustainabledevelopment.com/2013/05/15/more-on-processes-and-systems/

[4] Dettmer, William, Goldratt’s Theory of Constraints, A Systems Approach to Continuous Improvement, ASQ Quality Press (1997). As his title suggests, Dettmer does a good job of formalizing the process aspects of Goldratt’s business novels.

[5] From Goldratt’s introductory chapter in Cox and Schleirer (editors), Theory of Constraints Handbook, Introduction by Eliyahu Goldratt, McGraw Hill (2010). The Handbook is a tool for those actually involved in ToC implementations. It is rather pricey. However, Goldratt’s introductory chapter itself is available in Kindle format from Amazon for a few dollars. It is well worth reading.

[6] Goldratt, E. It’s Not Luck, North River Press (1994)

 

Focusing Improvement Efforts

Everybody Can Always Improve 

Competing in today’s globalized economy is tough. Competing tomorrow will be even tougher. The need to constantly improve manufacturing processes, products and business practices is obvious enough. How to decide what should be improved next may not be so obvious. Removing the Blocks, a post from last year, provides the insight necessary to focus improvement efforts where they can do the most good.


Removing the Blocks

From: 6 March 2014

Sometimes, improvement doesn’t require innovation or invention. Rather, existing, perhaps even obvious paths to improvement can often be revealed by removing the blocks that obscure them. Consider the question: “why didn’t we produce one more (whatever you make, including dollars) last (shift, month, quarter, year)?” Regardless of how many you did produce, there is always some reason why one more didn’t happen.

The Primacy of Throughput

Eliyahu Goldratt’s Theory of Constraints provides a widely applicable method for addressing the “why didn’t we produce one more…” question. Theory of Constraints began with the familiar factory floor problem of getting orders out when promised. Theory of Constraints, as its name implies, focuses on locating, prioritizing and elevating constraints to throughput. Initially, “constraint” referred to some specific piece of equipment or work center that, for whatever reason, consistently limited the throughput of the entire facility. [1] [2]

Goldratt’s idea of throughput is worth considering. For Goldratt, “throughput” might be defined as a measure of progress toward achievement of the organization’s goal. Since a business unit is a system, that goal needs to reflect the throughput of the entire system, not the performance of various parts of the system. Goldratt originally defined the goal of a commercial enterprise as “to make more money now, as well as in the future”. [3] [4]

Be aware that “throughput” refers to products sold — to revenues, not to building (and valuing) inventories. Unlike conventional managerial accounting methods, throughput trumps operating costs as a managerial tool. [5] Simply put, costs cannot be reduced beyond zero, while throughput has the potential for increase without apparent upper bound.

“Zoomed out” Blocks [6]

As mentioned, Theory of Constraints was originally envisioned as a tool for factory floor improvements. However, as improvement progresses, the operative constraint zooms out from the factory floor to policy issues, or to the market, or to many other areas.

Tesla Motors is currently facing a numerous and diverse array constraints as they attempt ramp up throughput of their electric automobiles. Tesla’s current situation provides a rather extreme example of the sorts of constraints that must be prioritized and addressed in order to bring a new industry to global reality. Here are a few of them:

Quality: For a new product like Tesla to rapidly gain traction globally, product quality (and all that “quality” means) must be exceptional. Tesla has won prestigious awards for design, quality and safety. Still, when three Tesla automobiles were involved in fire situations, public reaction (fanned by the media, of course) was harsh, never mind that the fires were related to significant impact situations, that nobody got hurt in any of the fires, and that thousands of ordinary automobiles are involved in fires every year.

Tesla Model SRecharging: Since potential customers are reasonably concerned about recharging the Tesla automobile wherever they go, Tesla is building extensive networks of recharging stations in North America, Europe and China (Tesla’s biggest markets). Also, Tesla automobiles are equipped with GPS locators, so drivers always know where near-by charging stations are.

Dealer Networks: For sound reasons, Tesla prefers to market its automobiles directly to consumers, rather than through a conventional dealer network. However, several States have passed laws to require that automobiles be sold exclusively through dealers. Tesla’s preference for direct sales requires that Tesla provide satisfactory vehicle delivery, maintenance and service alternatives to local dealerships.

Supply Chain: In 2014, Tesla’s current manufacturing schedule will require almost half of the lithium ion batteries produced in the world. So, Tesla has announced that they will build a “gigaplant” to produce the batteries that will power Tesla vehicles, to be on stream in 2017. This in addition to the usual problems associated with locating and proving suppliers for any rapidly growing manufacturing business.

Surviving / Striving / Thriving

Firms in crisis — survival mode — may have little alternative to intense costs management — including cost reductions that are likely to have negative consequences in the future. Firms that are on a more solid footing, however, should emphasize throughput increase over operating costs reductions, as Theory of Constraints suggests.

This does not mean that operating costs controls are not important. It does mean that the opportunities for improvement through increased throughput usually far exceed those of costs reduction. It also means that emphasis on costs — especially allocated costs or costs that do not involve immediate cash expenditures — often lead to poor management decisions.

Chuck - California Coast 2Thoughtful comments and experience reports are always appreciated.

…  Chuck Harrington (Chuck@JeraSustainableDevelopment.com)

P.S: Contact me when your organization is serious about pursuing Sustainability … CH

This blog and associated website (www.JeraSustainableDevelopment.com) are intended as a resource for smaller manufacturers in the pursuit of Sustainability. While editorial focus is on smaller manufacturers, all interested readers are welcome. New blog posts are published weekly.


[1] Information on Theory of Constraints, as cited in this post, relies primarily on E. Goldratt The Goal, Third Revised Edition, North River Press (2004) and on E. Goldratt, What is TOC?, Chapter 1 of J. Cox III and J. Schleier, Theory of Constraints Handbook, McGraw-Hill Professional (2010).

Note: Several individual chapters of the Handbook, including Chapter 1, are available for inexpensive download on Amazon.

[2] Wikipedia, referencing Goldratt’s The Goal, lists the steps in the Theory of Constraints program of on-going improvement as follows:

Assuming the goal of a system has been articulated and its measurements defined, the steps are:

  1. Identify the system’s constraint(s) (that which prevents the organization from obtaining more of the goal in a unit of time)
  2. Decide how to exploit the system’s constraint(s) (how to get the most out of the constraint)
  3. Subordinate everything else to the above decision (align the whole system or organization to support the decision made above)
  4. Elevate the system’s constraint(s) (make other major changes needed to increase the constraint’s capacity)
  5. Warning! If in the previous steps a constraint has been broken, go back to step 1, but do not allow inertia to cause a system’s constraint

(http://en.wikipedia.org/wiki/Theory_of_Constraints)

[3] Goldratt later rephrased this goal as “to become an ever-flourishing company” to emphasize the importance of building stability as the business grows. “(T)o become an ever-flourishing company” implies an emphasis on Sustainability. For more on this, see Beyond Red Curve, Green Curve, this blog: http://blog.jerasustainabledevelopment.com/2013/12/11/beyond-red-curve-green-curve/

[4] My personal choice for most manufacturing firms is to express this goal operationally as net sales dollars (revenues minus directly associated raw materials costs) and return on capital employed objectives.

[5] For more on managerial accounting and Theory of Constraints, see Thomas Corbett, Throughput Accounting, North River Press (1998) or Eric Noreen, et al, The Theory of Constraints and its Implications for Management Accounting, North River Press (1995).

[6]  “Zoom lens” thinking is a hallmark of this blog. For more on zooming in and zooming out, see Green and the Zoom Lens Mind, this blog: http://blog.jerasustainabledevelopment.com/2012/02/22/green-and-the-zoom-lens-mind/

 

On the Shoulders of Giants

Of Giants and Manufacturing

The cathedral in Chartres, France is a truly remarkable example of what committed people can accomplish. Magnificent 12th and 13th century stained glass windows are the http://www.dreamstime.com/royalty-free-stock-photos-vitrages-chartres-cathedral-image21220268cathedral’s crowning glory. My personal favorite set of those windows shows the four Evangelists, each perched on the shoulders of a major Old Testament prophet. The windows embody an idea perhaps best expressed by Sir Isaac Newton: “(I)f I have seen further than others, it is because I was perched on the shoulders of giants”.[1]

Thriving in manufacturing in the 21st century will require a new generation of thought leaders, riding on the shoulders of 20th century giants. My vote for the four giants of 20th century manufacturing management thinking is Edwards Deming, Eliyahu Goldratt, Taiichi Ohno and Peter Drucker. It is useful to consider what these four (and a fair number of other) 20th century giants said, in order to find and build on common themes. The following post from last year looks at two of those giants and the common ground beneath their teachings.

====================

Deming and Profound Knowledge

From: 3 October 2013

A recent post to this blog discussed systems thinking and Eliyahu Goldratt’s Theory of Constraints, especially as presented in his book The Goal.[2] This post continues that line of thinking by relating The Goal to Edwards Deming’s System of Profound Knowledge.

Deming’s System of Profound Knowledge

Edwards Deming is arguably the best known of the later 20th century quality experts. He taught quality methods and practices in Japan in the 1950s and ‘60s; then helped American manufacturers catch up to Japanese in the 1970s, ‘80s and into the ‘90s. Late in his life, Deming formulated a System of Profound Knowledge to serve as a guide to manufacturing managers and leaders.

Dr. Barbara Berry [3] describes the System of Profound Knowledge as a “management system grounded in systems theory”. She goes on to say:

“Deming believed profound knowledge generally comes from outside the system and is only useful if it is invited and received with an eagerness to learn and improve. A system cannot understand itself without help from outside the system, because prior experiences will bias objectivity, preventing critical analysis of the organization.”

Deming’s System of Profound Knowledge [4] consists of four interdependent components. Manufacturing leaders need to thoroughly understand all of them and how each interacts with the others:

>> An understanding of the theory of knowledge

>> A knowledge of variation

>> An understanding of psychology

>> An appreciation for systems

The Goal and System of Profound Knowledge

I’m convinced that Goldratt developed the thinking behind The Goal quite independently from Deming’s work on the System of Profound Knowledge. However, these two eminent management philosophers come to remarkably similar conclusions regarding the bases for a 21st century mode of management thinking. Here are some parallels:

Theory of Knowledge

Deming holds that knowledge is more than just information. Knowledge results from systematic evaluation and verification. Systematic analysis, evaluation and verification are achieved through application of a process. Deming suggests the PDSA (Plan – Do – Study – Act) cycle.

Similarly, Goldratt suggests that managers use a scientific approach to thinking. The introduction to the 1st edition of The Goal says: “The secret to being a good scientist, I believe, lies not in our brainpower. We have enough. We simply need to look at reality and think logically and precisely about what we see. The key ingredient is to face inconsistencies between what we see and deduce the way things are done. This challenging of assumptions is essential to breakthroughs.”

Some years after the publication of The Goal, Goldratt presented a set of Thinking Processes.[5] The Thinking Processes are tools for use in analyzing relationships within systems. Like the scientific method and PDSA cycles, the Thinking Tools provide a means for systematic analysis, evaluation and verification.

Knowledge of Variation

Variation and its causes lie at the heart of Deming’s work with quality. Deming teaches that two modes of variation exist: common cause and special cause. The former are an intrinsic characteristic of the production process. The later are due to sporadic events outside the production process. Deming uses simple experiments including his famous red bead experiment to demonstrate the futility of trying to control common cause variation from within the process.

The Goal tells the story of a Boy Scout hike. The scout hike provides an analogy for a manufacturing process consisting of serially related operations. The effect of variation in walking speeds over time in a line of hikers provides insight as to the nature of a constraint and the effects of that constraint on throughput and on work in process inventories. The scout hike also demonstrates that the process itself can be modified in order to reduce the common cause variation.

Psychology

Deming recognized that people are not simply extensions of the machinery. He decried command and control management and advocated “leadership, for a change”. Deming appreciated that people are motivated intrinsically, and that extrinsic efforts to motivate are futile, if not counter-productive.

The Goal is extensively psychological. First, it is a business novel — an exposition of principles through a story that readers can readily relate to. Secondly, Jonah — one of the primary characters — is a Socratic teacher. The story demonstrates human reactions to change and human behaviors under stress.

An Appreciation for Systems [6]

“Perhaps Dr. Deming’s greatest contribution and biggest departure from the past was to view an organization as a system. He defined a system as a network of interdependent components that work together to try to accomplish the aim of the system. The aim for any system should be that everybody gains, not one part of the system at the expense of any other.”[7]

Similarly, The Goal presents a manufacturing organization as a system. As the title of the book suggests, the system exists to pursue an aim — a goal — that may not be obvious to everybody involved with the system. The story examines components of that system, their dependencies and their interactions. They learn that actions to optimize individual components of a system do not result in optimizing the system as a whole with respect to the goal of that system. They also learn that Pareto’s Principle doesn’t necessarily apply when analyzing systems. Said briefly: The Goal could be a text for Systems Thinking 101.

===================

What does all of this have to do with Sustainability? Both The Goal and The System of Profound Knowledge provide insight as to how manufacturing organizations can survive and prosper in the 21st century. Both advocate significant changes in management thinking. Interestingly, the first editions of The Goal (1980s) define the goal of a manufacturing organization as “make money now and in the future”. Later editions (1990s) modify that to “become an ever-flourishing company”[8] — recognizing, as Deming did, that the aim of an organization goes beyond making money.

Chuck at Rene 2 - August 2014Thoughtful comments and experience reports are always appreciated.

…  Chuck Harrington

(Chuck@JeraSustainableDevelopment.com)

P.S: Contact me when your organization is serious about pursuing Sustainability … CH

This blog and associated website (www.JeraSustainableDevelopment.com) are intended as a resource for smaller manufacturers in the pursuit of Sustainability. While editorial focus is on smaller manufacturers, all interested readers are welcome. New blog posts are published on weekly.

Photo: © Tashka | Dreamstime.comVitrages Of Chartres Cathedral Photo


[1] The “On Shoulders of Giants” idea is attributed to Bernard of Chartres, who was Chancellor of the cathedral school at Chartres around 1124. The “Giants” window dates from, perhaps, 50 – 100 years later. Isaac Newton’s quote was about 500 years later. Professor William Cook’s “The Cathedral”, a DVD course from The Great Courses, Chantilly VA, Lecture 12, does a nice job of describing and explaining these wonderful windows.

[2] Goldratt, E. and J. Cox, The Goal: A Process of Ongoing Improvement, 3rd Revised Edition, North River Press (2008)

[3] Dr. Barbara Berry, There is a Relationship Between Systems Thinking and W. Edwards Deming’s Theory of Profound Knowledge, available for download at: http://www.berrywood.com/wp-content/uploads/2011/08/DemingPaper.pdf

[4] The System of Profound Knowledge is discussed in detail in Edwards Deming, The New Economics for Industry, Government and Education – 2nd Edition, MIT Center for Advanced Educational Services (1994). Additional information is available on-line at:  https://www.deming.org/theman/theories/profoundknowledge

[5] The Thinking Processes are discussed in detail in Goldratt’s It’s Not Luck, North River Press (1994)

[6] For more on systems, see Systems and Constraints, this blog: http://blog.jerasustainabledevelopment.com/2013/09/25/systems-and-constraints/  and More on Processes and Systems, this blog: http://blog.jerasustainabledevelopment.com/2013/05/15/more-on-processes-and-systems/

[7] Deming Institute website, www.deming.org

[8] Cox and Schleirer, editors, Theory of Constraints Handbook, Introduction by Eliyahu Goldratt, McGraw Hill (2010)