GA 413 | Understanding the Constraint with Hezi Korn

To make money, they need to keep the clients happy. They need to have employees, they need to have inventory, possibly they need to have the employees happy. They need that in order to make money. But the goal of the company is not to do a quality product. It's nothing of that.

Today I'm excited to welcome Hezi Korn to the show. Now, Hezi is a colleague of Max and Pavel who were featured in episode 410. And so Max, Pavel and Hezi are working together to help companies improve. And they are strong proponents of theory of constraints. They also practice Lean and Six Sigma, but in particular, they're very passionate about theory of constraints. And so Hezi and I continue sort of the conversation that Max and Pavel and I had the other. Well, a few episodes ago and just talking about the importance of not automating before, you know, we understand what the constraint is of a system and some. Some really good principles in there. And then, then we had a really nice conversation on the topic of bottlenecks and constraints and different things like that. So it was a fun episode and I think you're going to enjoy it. Now, show notes for this episode can be found over@gembapodcast.com just look for episode 4 13. Again, gembapodcast.com and look for episode 413. Okay, enough from me. Let's get to the show. Ezzy, welcome to the show. How are you?

I'm doing good. How are you?

Yeah, I'm doing well, man. Doing well.

Nice to see. Nice to see you here.

Yeah, yeah. So, yeah, back in episode 409, we had a couple friends of yours and colleagues on the show, Max and Pavel, and we had really good discussions on all kinds of things on theory of constraints and lean and bottlenecks and. And lots, lots of good stuff. And I'm to have you on maybe to sort of, I don't know, continue the story and all that kind of stuff. But as you know, we do like to get all of our podcasts started with our guests sharing a quote. So do you have one?

Yes, I do. So you want to hear it?

Yeah, I do.

All right. So the quote is like that. Not every change is an improvement, but every improvement is a change. You cannot do anything better unless you can manage to do it differently. You've got to let yourself do better than other people or companies. That's the quote. And it's very relevant also to what I think we're going to talk today. So let me just explain a little bit what I mean. So what it means, not every Change is an improvement, but every improvement is a change. So not every. If we're doing the change and it doesn't affect the total output of the company, whatever it is, it's more shipments, more money. It's not really an improvement. It's a local improvement. It's not company improvement. And what is the goal? What is the goal of a company? One. What do you. What is the what? Every. I'll give you a hint.

Yeah, Well, I mean, I suppose if they're a for profit company, they want to make some money probably. Right? So.

Absolutely right. So every for profit company, the goal is to make money. Yeah, right. How a company makes money, it's not to make. And I'll. I'll give you. It's the company goal is not to make the employee happy. The goal is not to hire employees. It's not to make the customers happy. It's nothing of that. It's to make money. To make money, they need to keep the clients happy. They need to have employees, they need to have inventory, possibly they need to have the employees happy. They need that in order to make money. But the goal of the company is nothing. It's not to do a quality product. It's nothing of that. If we could make money out of thin air, we would do that every day. Right. So. But in our world, in order to make money, you need to have. You need to have all of these things. You need to be. You need to develop a decisive competitive edge from your competitors. Right. You need to have something that the clients need, but they don't get from your competitors. Yeah, right. That's how you make money. So in order to do that or in order to ship more, this is where what we call. We need to look at a system, not at a local. So we don't need. We don't need and we don't want to improve a single process or something within the process. Yeah, that not influence of the output of the process.

Right, right. Even in when sometimes with the. Within the lean community. We'll talk about the difference between System Kaizen and Point Kaizen. You know, System Kaizen assist a whole system and Point Kaizen. Hey, I got this machine over here. Let's do. Let's improve the changeover. Oh, okay, great. You improve the changeover. But if it wasn't a constraint or a bottleneck in the process, it's maybe fine that you did that to give somebody some more time to read their newspaper, but you probably aren't going to get more product out at the end of the day. Right. So I feel like it's really the same thing. But hey, listen, we're jumping into the good stuff before we get any more. Tell us a little bit about yourself as he tells us about your background and how you first got involved in all this continu. Continuous improvement stuff and then what you're up to these days with future state engineering.

So I was, I came from the technical world. It. I worked in a huge company. Maybe you heard about Intel. Yep. And yeah. So I gained all my or some of my mindset I would say from there it's a great university for life and for business life. They, they always looks at preventative versus reactive. So everything is, is they teach you to think of how can I prevent something from happening and not reacting to it. So I think that's, if I can summarize. That's really one of the major things that I came out of it. And then I luckily I was thrown and I met the Eli Goldratt who invented what it's called theory of constraints. And I was again lucky enough to work side to side with him and to be taught by him how to think, how to think system wise and global wise and talking with companies from all over the world, meeting companies from all over the world, sitting with them and see and realize that basically most companies dealing with the same problems, the only difference is their culture. So the problems are the same and the solutions are similar. I believe the culture is different. The way that they think about things and the way that they operate is a little bit different. So it was again I was lucky and blessed to, to meet and work with him and that's it. And that's what I'm doing since I worked with great companies and I'm looking forward for more companies.

Yeah. Hey, tell us your favorite Eli Goldrat story. What's a fun story or memory you have of working with him?

Yes, I'll give you a story. So this is about $3 billion company out in Israel and they all very famous, their whole management came into the room and said look, we are debating, we want to, we want to, we want to take a market share from our competitors and this is an opportunity and we want to crush, we want to crush our competitors by basically lying to our customers. And we know that we are going to lie to our customers because we're going to tell them that we're going to deliver in a certain time. But we know that we cannot do that. But in order to, basically there was an opportunity and in order to take and they Built and they built for. They worked with us or with Goldratt, I would say, and they built their reliability in the market and that what was their decisive competitive edge. And they said, we want to break that reliability and to start and to not be reliable for our customers and we'll be able to take share. So Eli said to them, if that's what you want, I cannot help you because you can ruin your to build reliability. It's something that you build for years and you want to ruin it. You want to ruin it in a nutshell. And it won't help you in the long run. So I think the integrity of Eli Gordrat to the clients, or in this case, the clients of the clients, it's phenomenal. And I would say every company once goal is to be reliable to its clients and to serve them in a way that nobody else serves them. And I think he stuck to it till he died. He stuck to this concept and to this realm all his life. And I think this is what guide me as a theory of constraint person. And it's all about the clients. There is no fake opportunity. Definitely by. By not serving your client. Yeah. So this is kind of one of the stories from Eli Gordon that's interesting.

Because when, you know, reading the books and the goal and all of his other writing that he's done over the years, the many years that he was alive, you know, you hear about always thinking he's a physicist and he's great thinker and this and that. But I'm sure you hear a lot about sounds like he had a really strong moral compass about him as well. Right. Like wanted to do the right thing for the right reasons. Right. This is, this transcends throughput. Right. In a way. Right. I mean, if you're not treating humanity.

So there's the technical thing of how to get more throughput on one side. Right. But it's also the client focus. Right. It's. It's thinking outside in, not inside out. It's not. I have something. Let's push it out.

Yeah.

Let's think about what's the client's needs and let's align everything that we have all the company align to that need that nobody else serve.

Yeah.

So if we do that, this is how we create a decisive competitive edge and that's how we're growing and that's how we, we make our, our company solid in the continuous improvement.

Yeah.

Culture.

Nice. I like it. All right, well, let's get back into this whole discussion of, you know, we're Thinking about improving the system. Don't, don't get trapped in the. Into the local improvements if it's not going to, you know, elevate your constraint. But let's say that we've identified a constraint. Let's. We've identified an opportunity that if we are able to improve it, it is going to make us more money. It is going to be able to help us. So like what are your some of your strategies then for improving these constraints and elevating them?

So we have a lot of options, right. And usually to improve the constraints. So if you think about it, there is a system, right. And the system is unbalanced capacity, right. And there is some operate some operation steps that have more capacity than others. Definitely most most of the most of their operations has more capacity than constraint by design because we have one constraint for a process, right. So if that's the definition, it means that most of or most back to the constraint has more capacity than the constraint. So basically we are not to focus on any of those in order to improve the whole system, we just need to focus on the constraint, right. If we identify the constraints, we just. If we'll improve the constraint by 20%. Only 20%. It's improving the whole company by 20%. Yeah, you don't need to improve everything. So in order to do that usually it's the solutions are very, very simple and very very. And you don't need even investment to do that. We call it exploit the constraint. It's the second step of the five focusing step of the toc. It's first identify the constraint and the second thing and maybe we'll do another podcast of the five focusing steps. Right? But the second step is sorry, the second step is to squeeze or what we call exploit the constraint. We can squeeze out of a constraint so much more. Sometimes we can double the constraints easily without any investment. We're doing lean techniques, we're doing we sometimes full kit or smed is something that improve the constraint. If you do that on the right place. Lean Six Sigma. Sorry. Six sigma methods to reduce the variability if there is a huge or big variability on the constraint. And if you reduce that you're getting more through and sometimes it's. It's not even the in the process itself most of the time is how you either subordinate which is the next step but sometimes subordinate the constraint and sometimes it's how you manage around the constraint. So I'll give you an example and everybody that listen how they can and if any of out of this whole podcast how can we elevate about, I would say maybe sometimes 20 to 25% by doing a simple thing. Right. You want to hear that?

Yeah.

All right. So there is always a break in a company. Right? Breaks. So what if we'll stagger the brakes we'll have on a constraint only. Right. Will have someone coming and work on a break and staggering the brakes on the constraint. So the constraint doesn't go for an hour of break every shift, like half an hour of break and another two 15 minutes. It's an hour out of eight hours of a constraint. And that's in a constraint by definition, every hour lost on the constraint, it's an hour lost for the whole system. Yeah, you cannot do that. You cannot say that for anything else but the constraint. So if that's the case, let's gain an hour every day. So it's three hours in. If you're working three shifts, it's three hours at least. If you're just staggering the brakes, you bring someone else working while with the first one going to break and then when they finish the break, they coming back and then the second one goes to a break. And you keep this constraint working all the time. You're gaining how much you're gaining. But if you don't have a constraint focus, you don't do that.

Yeah.

So if you identify the constraints, your whole mindset around the constraints is, is changing. And then you can do simple things like that. Right. And I'll tell you another story. I think Maxim Pavel, I think they mentioned that in their podcast. We have a client that currently, I'm actually currently at, and they had a constraint that constrained of four, like five robots. One robot was down for a few months. So we said, how can we get out of this constraint more? So we did some studies and we learned that there is a. When the robot pick up the tool that they making, they, they have a retry, right. They meaning that it goes. They don't. Either they don't recognize that correctly or they don't grab the tool in the right place. So how much retries? There was sometimes 30 to 50 or 60% of retries. So we said, what if we'll find a way to reduce the retries? What it will do, Right. So we look, we found very, very simple things. We didn't invest $1 in that. We adjusted the camera exposures and we adjusted something that will offset the gripping of that tool and it reduce 30 to 60% retries to less than 1% retries. Less than 1% retries from 30 to 60% we got with four robots, way more than we got with five robots before ever we opened the gate of, you know, we opened the gate over there and what happened is that we improved the output of the constraint so much that we, that it's start. We started to starve the constraint. The upstream couldn't make enough, fast enough because the constraint did so well.

Yeah.

So this is a major improvement without investing anything.

Yeah.

Zero investment. So when we talk about automations, for example, Right. Where do we do automations? When do we do automations? Do we need even to do automations? Automations is almost the last resort. It's really if we identify that we need. Because automations is not cheap. It's not cheap, not in money, it's not cheap in time and management efforts. So that's what it's not cheap.

And maintenance.

So deploying robotics, deploying the whole process, adjusting. We are in the company again that we are, that I'm in right now. They trying to implement and deploying a robot for more than two years. One robot, one forging hammer that is robotic for more than two years. They're not successful yet. So. And it's more than two years. So this is. So when we talked about, when we talking about automation as a solution and the industry is pursuing automation now like crazy. Why do they do that? Because it's a trend. Yeah, but does it make a value for the company that you. The question is always you need to answer for any investment that you're doing, either capital investment or focusing investment, is do I ship more after it's been implemented? If the answer is yes. Okay, is that the only way that I can do that? Right. But if the answer is no, because it's not a constraint, you don't need to improve it.

What if the answer is yes, we can ship more, but you do the math and it's a million dollar machine and we're only going to ship enough to improve our profits by, you know, $100,000, you know, something like that. Right. You know what I mean? So like where does the return on investment sort of calculation come in? And yeah, it's tricky, right?

Absolutely. There is of course, of course you do the analysis of what is the investment. And again, it's not always it's the money, it's the time. Money can come easy. Seriously, time doesn't. It's how much time and how much out of. It's not only the cost, you need to take in that cost all the time that you're going to disrupt the constraint, every hour that is lost on the constraint, it's an hour lost for the whole company. So we can calculate that. We can calculate how much an hour of the constraint worth for the company. We take how much the company makes and we, we see how much an hour it makes.

Yeah.

So sometimes it's thousands of dollars.

So let's change gears a little bit because obviously there's some situations to where automation is required. You know, Toyota can't achieve attack time of 60 seconds, you know, without automation all over their line. Right, right. So if you were called into Toyota as he. Here you go. They call this. Hey, I heard this guy in the Academy podcast. He's super smart, really nice accent. Let's bring him in here. And so you walk into the Toyota facility and, you know, there's this. The machine is running maybe perfectly meeting their goals, their tact time and whatever. Look, what would you do on maybe not Toyota, but maybe a company that's doing very well. You know, maybe the constraint, if you will, is the market, perhaps, you know, we just need to go sell more because we're doing everything that we can here. Like, how do you help a company like that improve? Is it serious just when the constraint is the market? Just go and work with the sales team and, and that sort of thing. Or, you know, like, how do you help a company like that that's doing very well? Because there are some companies out there that their lines are balanced and you can adjust their attack time and they got it. You know, they, they, they do their calculations, they change their standard work and that are ready to go. Right. So how do you help a company like that?

So first, we are in an environment right now that there are few companies like that in the whole world. Yeah, most of the company, if you think about it, look at how the supply chain looks like now. Right. There is way more demand on most of the industries than they can supply. We are in an environment that. I will be surprised that there is a company that is the market, though, again, there is companies that are in this situation. So you're right. First we need to identify if the, if the constraint is internally or externally. And internally we can deal with it. We can deal with it. Also when it's externally, in order to do externally, like if it's the market, we need to build a competitive edge. What is our competitive edge? We don't go and say, oh, let's, let's go and sell more. We need to sell something different. We don't sell products, we don't sell Quality we need to look at, we need to learn our clients and actually our clients clients. We need to put ourselves in our clients shoes to find what is their pains or not even the pains. What do they need that they not are served by the, by their market. And then this is where we're going to focus. We're going to focus on what the needs and sometimes you know, even the clients, how would I put it? They don't know. It's like Apple. Did they ask you, did they ask you what you need? They tell you that you need a smartphone. They didn't ask. Oh, maybe you miss it. What do you miss? And then you say hey, I'm missing a smartphone. They didn't ask you, they developed that. Right. So the clients of companies sometimes don't know because the market nobody gives. Nobody gives that service, nobody gives that things that is missing because nobody has these capabilities. But if you identify what it is and you develop these capabilities now you offer their clients something that nobody offer nobody because everybody offer. Product quality is almost a given in these days. Right. You don't get a competitive edge by oh I'm better. Yes, everybody thinks they are better. But if I can deliver that to you in four weeks instead of eight weeks and nobody reliable, 98% reliable, nobody else can do that. If you say hey maybe I can do that in two weeks but you'll pay four times all of this money goes to the bottom line because you didn't do anything different, you just manage yourself different to do that.

Yeah.

And you can do that when the need that.

Yeah.

So you need to change your mindset of what, what are you, what are you selling? And then you need to change the salesforce to change to thinking. Thinking that.

Yeah.

And if you have control on the operations and you know, and I can tell in a 98% to our clients, I can deliver that either it's eight weeks, four weeks or two weeks. This is the date and I'm meeting the date 98% of the time. I'm reliable. In most of industries reliability, it's a huge, especially in the environment that we are now. It's a huge. And now all the lead times and all the supply chains are increased dramatically. But if I can reduce that and get back even to previously normal lead times, I'm a golden in the market. I can get business as much as I want day in, day out. I don't need a salesforce even so it's easy. People think that the market is hard to deal with if you're in the right mindset. It's not very hard. It's not very hard because you're offering something we call it and not we. And Eli Godrad called it the mafia offer. Now it's easy to develop a mafia offer. It's an offer you cannot refuse. If you need that in, in four weeks instead of eight weeks, how much you will pay for that? Right. So if you have a flat tire on a regular day, you don't have. Oh, sorry. On a regular day and you have a meeting and you need to get a meeting, that is a million dollars worth meeting, how much will you pay to repair the flat tire or to get to the meeting? You'll pay almost anything, Right. But if it's on Saturday and you don't have any meetings and you are okay, you'll wait an hour, you wait two hours for the toga or someone to repair how much you will pay then to repair the flat tire. So it's the same with clients, right. If the clients need it and it's another four weeks that the line is down because of that or we don't build that big machine or whatever it is what it works for me, will I pay my. Whatever they buy for me, it's nothing for the worth that it's worth for them. So that's. It's easy for companies to pay for the value that you bring.

Yeah.

And this is how you deal with the market constraints.

I love it. I love it because I feel like it's so important to, you know, move the constraint around because that means continuous improvement is happening if the constraint is always in process B, where we're failing as continuous improvement people. Because it should not continue to always be that once we've elevated it, the constraint by definition moves somewhere. I mean, we're dealing with it right now at Gemba Academy. Our constraint in our video production business, if you will, our assembly line, if you will, is typically our final editors. The people who have to take the video that was shot in our studio and then all the graphics and all that, and then they have to glue it all together, right. You know, to make this video. Well, this is takes. It takes some time, right. Whereas we can bring somebody into our studio and they can, in an hour or two, they can shoot say 10 videos, right. So that part's done easy, right? These pre production steps, we call it. And then when you get to the post production. Yeah, well, guess what, we're bringing on some more editors. We're streamlining our editing process. We're making sure that all the Materials that the editor needs are there and they're ready. Their kit, if you will, is really good. And now guess what's happening. What's happened is the constraint now is moving back to our script writers. They're like, holy smokes, they're about to run out of work. So we have to go faster. Right. And so it's interesting that for so many years our video editors are always our constraint. We've now begun to elevate them and now they're no longer the constraint. Now it's moving to the script writers. And yeah, so I feel like this is.

So I want to make something clear that is very confused, I think in the market, in the industry.

Yeah.

We don't want the constraint to move. We don't want the constraint to move. So there is. So. Yes. What is the goal? So let me ask you. So I know that you are the interviewer, but let me ask you. Yeah, what, where do you want, where do you want the constraint to be? Internal or external?

Well, honestly, I mean, at this point I. Let's see. I mean, I would actually prefer that we have to go out and get more business, you know, that our guys are sitting around, you know, not sitting around, but they can do more, you know.

Absolutely, yes. You always want to have a protective capacity internally to meet the demand. The demand, meet the market. So you always want to have the constraint in the market. You always want to elevate yourself. Yep. To be above the market. Yep. This is a healthy. And if you have a constraint internally, so you can say, yes, but internally I have a control. I'm saying you have control also on the. Externally. Right. Because if you offer, you have a mafia offer, you go to the market, you talk to the market, you solve your clients problems that your competitors are not.

So I guess what I'm saying is when the, when the market is, in our case, the market is the constraint that we can't make enough videos. I mean, we, if I had the money, I would hire 500 video editors to come in here and we, you know, we become the next Netflix. So I guess what I'm saying is for us, the, the, the market is almost an infinite constraint for us.

Right. You know?

Right. You know what I mean? And so not like a car, there's only so many cars Toyota will be able to sell. Right. But for us, in a theory, I mean, I suppose there's a number like, okay, you got a million videos, that's enough, maybe, you know, but we're not even anywhere close to that. So for Us.

Us.

It's balancing like right now, video editing has always been in constraint. Now it's moving it around to now the script writers maybe are feeling the pressure. And so we elevate that constraint because eventually all of it needs to. More needs to go out. And so we can never stop improving our process. You know what I mean?

So let's have a small session about your business for a second. Right? Yeah. So your. So now your constraint is internally and it will take a long, long effort.

Always has been, always has been to.

Move it to the market, right?

Yeah. And may never, right? Maybe never.

May, may never. I agree. So you want in your organization to keep. If the editing is the constraint, you want to keep it in the editing the constraint. So it's the same thing the story that I told you about the robotic. And then we. When we did the improvement. Like you did in the editing. You did improving in the editing. Now there is more flu, more flow. Sorry. And more through the process. Right now you can get more through the editing. So you need to make sure that the upstream which is making the videos are having more capacity than the editing to keep the editing as a constraint. Right. So it's the same thing over here. Right. You have these five robots, but now five robots working and we're getting like I think more. I think we got maybe now 70% more than ever been. Now we looking upstream and we're focusing upstream on how much we doing upstream to make sure that robots are enough to constrain.

Yeah.

So we are focusing for the last three months of improving the upstream. And upswing is not everything is what is really blocking the upstream to feed the. This operation at its level that it will be always have work and then we always have a buffer before it. Yeah. So it's. It's the same. It's the same situation in your studio. You have the editing, you have to making the videos and you always want to make more videos. Then you have capacity to editing. So if you increase the editing, you have to make sure that you're increasing the. Increasing the videos capacity to add protective capacity in the. You always want to have a protective capacity in making videos. Yeah, above the thing. So this is how the balance between constraint and the upstream of the constraint. You also want to look at the downstream to make sure that the downstream have enough. Enough capacity so it won't be another. Or that the constraint won't move downstream if you increase the whole. The whole capacity of the upstream and the constraint. So you want to look also downstream and make sure. That everything have protective capacity above the constraint. And when you elevate the constraint, you don't want to be a balanced capacity. Balanced capacity doesn't work. It will halt your whole operation.

Yeah. The lean guys out there are disagreeing. Yeah. So I know, I guess this is the argument between a TOC approach and drum buffer rope and you know, all the rest of it and see it like and, and, and, and my philosophy and most lean thinking philosophies is we have attack time. Right. And, and, and Gemba Academy is a bad example because from our videos we, we do. We arbitrarily create attack time. Right. Which was again, if we could make unlimited videos. Beautiful. Let's do it. Right?

Yes.

For us, we have a go. We have a certain threshold. Every month we want to produce this much content. X number of videos, let's say. Yeah. And so we know what our attack time is. Right. Okay. And so we know that every X days, you know, a video must be coming off the assembly line. And so for us, what's happening is we get to a point to where we have enough capacity at our video editing that the upstream starving our editors now. And our editors are like, right, I have nothing to work on. And this is terrible. This is terrible, right?

Because it's terrible because you lost. If he's not working for an hour, you lost an hour of editing that you cannot catch up afterwards. What? So you will. You need to. You want to make up on making videos, not on making editing.

Yeah. Here's where I think the, the fundamental. This is great discussion, by the way. I feel like the, the fundamental disconnect that we're having is that in our case, let's say that arbitrarily. I don't want to share two minutes. I can't say so much, but let's just say arbitrarily, every three days we have video comes off the assembly line. Okay, let's use that as an example. And so what's happening is we had one editor. Let's say we have one editor at one point we only had one editor. Okay. Well, it was me in the very beginning. But I don't edit anymore. I don't edit anymore. But we have really guys, good guys now. Not me. And so, so hey, one guy. And every three days a video comes off a machine into the market onto our website. Really? Okay. Beautiful. Okay. And then meanwhile, it's easy for the upstream guys to keep this one person busy. Right. The one editor have always have. We call it kits. You know, a kit is all the things they'll need. Right. To produce a video. Okay. So no problem keeping this one editor fed, for lack of a better word. Right.

Okay.

Now we bring on a second editor. Oh, okay. So now every. Every three days, two videos are coming off the assembly line. Right. So now we've effectively doubled the number of kits, you know, that are required. Okay. Up front, add a third, fourth, and a fifth editor. And now what's happening is the upstream is having to work much, much harder. Right. Because there's just so much more capacity and this final step of our value stream, or whatever you want to call it. Right. So I guess what I'm trying to say is as we increase our capacity at that final step, eventually it's no longer the. It's no longer the constraint. Because sometimes if we're not careful, one of those editors is sitting there without work.

You know, I agree. And it's not. It's not that it's more. It's not longer a constraint. You open the constraint too much for the upstream. Right. So it's the same again. The same that happens in the company that I am right now.

Yeah.

And what we did, we always need to look at what's going on. So we have another. We didn't do all the improvements that we can on the constraint. I believe that in the constraint we can even open maybe 40 or 50% more without investment of what we are right now, maybe even double the capacity. But why should I do that if I don't have the upstream? So I always want to keep that constraint, a constraint. Right. And I need to go and create upstream for all the process upstream to make sure that they will be able to be in the level of the constraint. So I'm stopping elevating the constraint. I'm stopping elevating the constraint if I don't have enough protective capacity upstream. And I need to create the protective capacity upstream to support the constraint. So I don't want the constraint to move. I just don't want it to move because it's. To elevate this constraint, we need to buy another new line, which is a few million dollars and a lot, a lot of efforts, and we don't have the space for that. And so it's maybe to building another, you know, to build another building. I don't know. So, yeah, I think.

Yeah. And I think we're probably saying the same thing, Hezzy. We're saying it in different ways. Like in lean terms, I would call it the pacemaker. Right, right.

The.

The last process whereby everything after it flows. Right. So in classic lean terms, we'll call it the pacemaker.

Okay.

And so the pacemaker is typically again, the last process down furthest downstream, whereby everything after it flows. Our case, the pacemaker is our video editors. Right. Our video editors. Right. And so what's happening is as we can create capacity at our pacemaker, or maybe you would call it our constraint. Okay. You know, we do have to elevate other areas upstream, you know, so in lean terms, we're going to have a cycle time taktime graph. Right. And our takt time, in my case is always kind of going down. The line is always moving down. You know, it's getting tougher and tougher because again, we have almost infinite demand for the videos that we're sort of producing. That we're producing. And so whether you want to say the constraint is moving or not, we've got to get better upstream to keep our pacemaker happy, you know, so if.

You look at the. On in your case, it's easy. You need to look at both. And what, what you want to do is to be about 20%. We like to see between 20 to 30% protective capacity upstream to the capacity of the constraint.

Yeah.

So if your editors, if your editors can do five, you know, five, five videos every three days, Right. We want to make sure that you can produce about probably seven. Right. To feed them with seven. So they will always have a buffer before them so they will never starve.

And to do that, we may have to go and hire another script writer. Right. Because whether you want to say the constraint move to script writing or not doesn't matter in the end, they're not able to go fast enough. Right. To keep, keep this pacemaker or this constraint fed at the end of the line. You know, I think that's what I was trying to say and maybe our words got twisted a little bit. I think we're saying the same thing. We just say slightly different terms.

Yeah, no, no, it's. It's great. It's. It's just. And what we're talking about is a system view is to look at a system. We don't look at the script writers or the editors or making the videos. We need to look at how much, how much videos we make in a certain. In a certain time. Yeah, right. What is the output of the system? So how do we get more output of the system? How we make five, making six. How we make six, seven. Right. In order to do that, you need to always make sure that you have more capacity upstream to the pacemaker.

Yep, yep, 100%. Hey, we've gone way longer than we typically go. This has been a really fun conversation. Has he? So one thing I'm curious about like for us also like in our video production process, something that's a very important tool for us, sort of a. So we're a big agile Kanban using company. So we've got big Kanban boards where we're moving. Each video is a card if you will. Right. And it has child cards, you know, because each video might have a quiz and it might have some support documents and these are all created in other value streams that run in parallel to our video workflow value stream. Okay. So for us using a Kanban board has been very, very helpful. And we actually just started out over the last maybe two years. Now we are also looking, we also leverage GANTT charts, you know, to really help us make sure that we understand critical path and all that. So I'm curious like from like a TOC perspective, where are you, are you guys using things like GANTT charts and are you into like agile Kanban boards or. And I know a lot of you do as manufacturing but like in some cases more like software or something like that. If you ever work in that world, I'm be curious to hear a TOC perspective on that.

So I just want to make sure that I heard you right. You're talking about project management or you're talking about for our manufacturing, what the manufacturing tools that we have.

Yeah. So like in our example, Gamba Academy example, we manufacture, we're a manufacturing company, we manufacture videos. Right. So for us, the tools that we're using to do our manufacturing for sure we've got our traditional value stream maps where we've timed everything we understand even some detailed process maps where we get into like a handoffs and swim lanes and different. So your traditional sort of process flow type analysis, we've done all that. But from a day to day management we use agile Kanban boards, you know, to really track where things are okay within our, our process. But then we also are in parallel with that looking at like Microsoft Gantt charts and different things like that to where we're saying hey, are we winning or are we losing right now? Because sometimes when you're looking at a Kanban board, you can't always tell are we winning or losing, you know, where everything is. But you know, hey, what was the plan originally? So this is where our GANTT charts are coming in. So I, I'd be curious if you, I know in a Traditional manufacturing environment this might not be as applicable but I know you don't work in just manufacturing so I don't know like from a TOC perspective if you guys are doing any of that.

So actually I'm going to answer you on both. On both things. Right. So we have tools for project management environment that implement critical chain project management which takes resources and times and the critical path plus the resources and will give you a critical chain. Right? Yeah. And we have a software. It's not us develop it. It's a company's amazing, amazing tool and it's cloud based, easy to use, really really powerful. And you can use that in order.

To not just last planner tool or something like that or. What are you talking about? Which software?

It's called Exapron.

Okay.

So there's a couple. There's a couple. There's exit prone and there's a realization. So it's. And each one has its advantage and disadvantage and depends on the environment. But they're both great softwares for example and again they are used to manage projects, multiple projects. They give priorities, they give the resources tools to see to focus what to work on and more important what not to work on. Yeah. Which is even more important. Yeah. And then to see if we are winning, if we are on schedule, if we are behind schedule. If we are behind schedule. It tells you you know what the countermeasures that you need to do. Like it really keeps you on task according to what you're planning. Yeah. That's regarding the project management environment. If you talking about manufacturing environment we have tools and again in manufacturing we have two environments. One is make to order and one is make to stock. So make to order. It's again the same tool can manage both environment and it's also give you the planning tool to have the right thing at the right time and to choke the release to make sure that you release on time, that you make it on time. That's the tool that gives you the enable you to implement the method to get to the 90. You remember we talked about 98% on time.

Yeah.

That's the tool that gives you upfront before you even on the sales to the salespeople. Right. It gives the tools to say hey, this is what you need. I can 98% this is the data that I can make it. It's not a lead time, it's not over promising. It's really according to using like Monte.

Carlo simulation and things like that or.

No, not at all.

Okay.

It's really managing the constraint and what are you committed to the constraint? And then it sees what's the next slot on the constraint. Okay, right. That you can make that and how long it will go through the constraint. Then you can predict when it's going to be completed.

Got it, Got it.

And so this is one. So this is one. One thing. And the other thing is to make the stock is according to stock level. So basically you don't make four orders, specific orders. You just need to keep the inventory available for the clients at all time. Right. So you. That's the trigger for you to release. Right. On when to release, how much to release, what's the frequency, all of this manager management across and give priorities on each. The priority is one for the whole company. Right. So it's what the priority of the work order. And if you have hundred work orders, what do you do first, what do you do second? What is more important, what is more urgent? Right. So it gives you all of that. And it's also. And in this environment, you can also reserve capacity for orders that need to be done in four weeks instead of eight weeks. So in four weeks, you give them the right priority and they can go through in four weeks instead of eight weeks. Because most of the time it's not the time of making it, it's the time of waiting. So you just cut this time of waiting. You just elevate the priority. Boom. You don't do anything, you don't expedite. You just automatically give it the right priority and then it's go through in four weeks instead of eight weeks. You don't do anything different. The people doesn't even know on the floor. Yeah, it just doesn't know. They just do it.

So if people are still listening, that means they're really into this conversation. So I thought, what the hell, let's just keep going. I have a couple more questions. I mean, we don't ever do podcasts this long, but as I said, if they're listening right now, hey, they're really into it. And they're like, keep going. So.

So I'm sorry for that.

No, it's not you.

It's just me. I'm very passionate about what I'm doing.

I love it, man. It's been great. I really love it. So Throughput dollar days. This has always been one of my favorite TOC concepts. Throughput dollar days. Talk about what is throughput dollar days for folks that aren't familiar with it and how does it play into everything we've been talking about?

Okay, so throughput Dollar days are related to the environment of make to stock and a stock in general. It can be even a distribution environment or retail environment. And what it says, it says I have a stock out now companies, okay, I have a stock up of one day or five days, they don't realize what's really the loss of revenue by having a stock out for one day, two days or five days or a week or two weeks. Again, we're talking about the environment that we are right now with the supply chain problems. Right. And how much they're really losing. Right. So what it does it takes okay, how much did I sell, how much did I shift on that product in the last month, in the last two months, in the last three months, whatever the windows is and then say okay, so how much every day that I'm not having that, how much do I lose every day? So and this gives you really to know how much you're losing. So for a fast runner, the throughput dollar days will be, you know, way higher than a slow runners. Because a slow runner maybe you ship once a week, but a fast runner you ship multiple units every day. Yeah. So obviously with the risk of not having one day on the slow runners maybe you, you don't lose anything. But on the fast runners you're definitely going to lose, you know, the numbers of units. And if you have it for five days, it's five times the loss. So this is kind of a measurement that keep you really see visual really how much, how much you're losing and where you need to put the efforts to either expedite or whatever you need in order to make it. But in an environment of manufacturing or environment that it's in your control, you basically we don't make to stock, we make to availability. It's a mindset. You really make the whole operations operate into making sure that there is always available inventory and it's dynamic to the fast runners, the slow runners, the, the frequency and it's really aligned to the demand. We don't use forecast. Right. Forecast is something that it's not definitely not accurate and it makes you either having stock outs or overstock. So there is a method, the TOC method to how to manage inventory and to manage inventory is according to recent demand and how to and according to recent demand. This is how you replenish the inventory and you use buffers to that. And according to the buffers you also use priority. So the as lower the inventory that you have to the buffer, the more priority you have. Because if you have, let's Say you have nine, nine, the buffer of nine and you have two pieces in inventory. It's higher priority if you have out of seven out of the nine. Right. So you make the. You, you make. The priority will be by how much inventory you have and how much you have on the way to that if you have pieces that are already made. So it's a whole method to neglect or us relying on forecast and basically better inventory and get to the optimal inventory, which has nothing to do with money. It's all about availability of the client. You remember, the client is first we look at the clients and we align everything to our clients. So. And again, the goal is to make money. So we don't want to put a lot of money in inventory on the other side. So we are balancing it by really having the right buffer and replenish it to that buffer. And if we need, we increase the buffer or if we need of the demand going down, we reduce the buffer. So we always have the right inventory in place and we all align to that. Yeah. So I agree with you that that's one of the best thing that is not existing elsewhere is to know how much you're really losing or how much, how much you need to put your efforts through how much dollar you're losing every day that you don't have something available.

Yeah, for sure. Ah, good stuff.

Yeah.

Ah, well, Hezzy, man, this has been a heck of a conversation, man. It's been fun.

I know, it's my. Can I say it's my first time?

Yeah, you can, you can. No, it was great. Rad. It was great. So hey, if people want to connect with you, what's the best way?

So of course it's to send the email. Connect with me with LinkedIn. LinkedIn. It's heavy corn. I say up front, my LinkedIn is not adequate. It's not. I need to work on that. But It's. It's either LinkedIn email hcorn@futurestatengineering.com Acorn with.

A K. All right, my friend. Well, hey, it's been good. And so yeah, we'll have show notes, we'll have the links, everything for what has even talked about talking about on. So go to gembapodcast.com episode 413. All right, Hezzy, thank you, man. This has been fun.

Thank you, Ron. It is from me as well.

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