CII Communique July 2011

tributeImprovements in Project Environment• Touch time in projects is higher relative to leadtime, as compared to manufacturing.• Projects are huge ‘A’ type structures.• Projects have higher variability.• The problem in projects is inflation.• Standard rule is to reduce the number of openprojects by 25%.• A system has to beput in place to ensurethat every due datecommitment is givenbased on the yet unallocatedcapacity ofthe bottleneck.• Bad multi-taskingis most damagingin managing acompany.• The reduction of‘bad multi-tasking’immediately reduces the touch time.• Set reasonable priorities: the laying out ofpriorities by top management is usually notefficient.• Most delays in a project do not delay the project.• The problem is that ‘safety’ is put at the task level.• All safety should be put only at the ‘projectlevel.’• It is a mistake to think that the project will finishon time by finishing each of the tasks on time.• Parkinson’s Law: ‘Work expands to fill the allottedtime.’• The project buffer should be one-third of the totallead time.• The priority is now set by how much of the taskis consuming into the project buffer.• Real completion is measured by how much ofthe critical chain is done.• In a project environment, typically afterimplementing TOC, lead times are cut by 30%and OTD goes to around 95%Dr. Eli Goldratt in his book ‘The Critical Chain’explained how these elements work in a real businessenvironment.Arun Bharat Ram, Past President, CII, Chairman, CII EducationCouncil, and Chairman, SRF Ltd, with Dr. Eli GoldrattHow can we see the opportunities?• Put your goal in life higher than your impressionof your father’s goal in life.• Eli’s initial goal was to ‘teach the world tothink.’• Description of ‘good luck’ is ‘Preparation meetsOpportunity.’• Description of ‘bad luck’ is ‘Reality meeting Lackof Preparation.’• There is a parade ofopportunity constantlygoing past your nose.Products & MarketsIt is time to develop newproducts at the pace themarket wants! Do wesense these changesin the markets and inour customers? Is ourmarketing suggesting new offers at the samepace?• The lifetime of golf clubs is 3 months.• Development time of new products is toolong.• Today, companies develop more than onegeneration of the same product at the sametime.• When market life becomes less than total supplytime, obsolescence increases.• When obsolescence increases, retailers askfor rebates which reduce the margins of themanufacturer.• In a Make-to-Stock (MtS) environment, whocreates the low price in the market?• Work on customer consumption on a replenishmentbasis.• Excess capacity has to be converted intosales.• Mining equipment is now being sold on a ‘payper metric tonne extracted’ basis.• Any machine which costs more than US$50,000can be sold on this basis.22 | July 2011 Communiqué