A Dinner to Discuss the Next Step for the Theory of Constraints Program

On August 21, 2007, a dinner at Patio Alejandra was sponsored by Engr. Christine Milagros A. Orbe of the Iligan City Waterworks System (ICWS).   The dinner was sort of a venue for an informal discussion about the two-year program offered by InWEnt, Germany to the City of Iligan.

 

Mayor Lawrence Ll. Cruz, Councilor Moises Dalisay, Jr. and Consultant Adolfo Held

 

In photo, left side :  Mayor Lawrence Ll. Cruz, Engr. Christine Milagros A. Orbe (ICWS Manager), Engr., Jaime Sato (ICWS Employee),  right side : Councilor Moises Dalisay, Jr., Consultant Adolfo Held, Pat D. Noel (Tourism Officer)

After the Consultant left for Germany on August 22, 2007, a series of emails was then sent by InWEnt to make concrete the workshop schedule for the two-year program.  Below is a summary of the details of the proposed workshop proper compiled from the emails sent by Mr. Michael Funcke-Bartz, InWEnt Senior Project Manager on August 20, 2007 and by Ms. Karena Kimmel, Inwent Coordinating staff on October 18, 2007.

1.   Submission of Letter of Commitment by the City to InWEnt, Germany
         through email before December 2007.

2.   Letter of Commitment contains :

      -   allocation of necessary man- and woman power to this working 

            process (team of change-agents) and to maintain this team during

            the process

      -  provide the data which are necessary for analysis and planning

      -  be willing to implement changes which have been proposed together 

             with the team of change-agents

      -  provide workshop facilities inside the waterworks and to care for the 

             catering

3.  Based on the Letter of Commitment, InWEnt and the Iligan City 

         Government will sign a Memorandum of Understanding for the 

         two-year program implementation.

4.  Tentative Schedule of next Workshop is on December 10-14, 2007.

5.  The German-Consultant Lecturer will come to Iligan once every 3 months

6.  City Counterpart

     -   venue to include meals and snacks (25 participants, 1 lecturer, 3 

            facilitators, 1 documentor)

     -  materials and equipment needed during the workshop (3 pin boards, 

            meta cards and push pins, permanent and whiteboard pens, 

            manila papers, whiteboard, LCD projector)

     -  vehicle for the lecturer (hotel to venue and back,  fetch & ferry at CDO 

            airport)

Site Visits of Mr. Adolfo Held to the Waterworks System Facilities

After Mr. Adolfo Held checked-in at the hotel on August 15, 2007, a short meeting was conducted with Engr. Christine A. Orbe, Manager of the Iligan City Waterworks System Office (ICWS), at the ICWS  Conference Room.  Engr. Orbe made a short presentation on the organizational structure of the Office and an overview of the existing water system in Iligan City.

On August 16, 2007, Mr. Held met Archt. Gil R. Balondo, City Planning and Development Coordinator (my boss) and had a short informal discussion.   Then Adolfo and I proceeded to ICWS Office to get ready for the scheduled site visit.  With us were Engr. Josephus Albao and Leelic Dacoco.    We visited the Ditucalan Spring water source, Camague Reservoir, Fuentes Clustering System, Hinaplanon Pumping Stations, and Luinab Reservoir.

Ditucalan Spring Source 

Mr. Held said that the Ditucalan Spring source has still enough capacity to supply the existing water consumers.   The problem lies in the distribution.   It was also observed that the water treatment facility being used is already rusted. 

Ditucalan Spring Source with dam

 

 

Water Treatment Facility 

In photo with me are  Engr. Josephus Albao and Adolfo Held

 

Executive Session on Theory of Constraints

The Executive Session on the Introduction to Theory of Constraints held on August 22, 2007 was a half-day activity attended by the department heads, city officials, representatives from national agencies and academe. Vice Mayor Henry C. Dy attended the session but only for about 30 minutes as he has some other commitments. Councilors Anghay, Dalisay and Maglinao were also present but only Councilor Dalisay stayed till the end of the session. Councilors Larrazabal and Areola sent representatives. Of the 22 departments, 16 department heads attended the session. A complete list of the participants can be viewed here.

The topics discussed during the executive session was sort of a short version of the 2-day workshop since the time allotted was only for half day.

Below are some photos during the session.

Mr. Adolfo Held, TOC Consultant

was given the Certificate of Appreciation
by Councilor Moises Dalisay, Jr. and
Engr. Christine Milagros Orbe, Waterworks Manager

The Executive Session participants with me and the Consultant

Theory of Constraints in the Public Sector

After the Introduction of Theory of Constraints, some participants could not understand the application of this concept to the city government and the public sector in general, even with the examples presented by the Consultant of actual applications of Theory of Constraints.  Since Theory of Constraints has been talking about making money as the goal, how is it then applied to an organization such as the government when its main goal is public service -- delivery of services to the people.

It is actually simple. One just has to replace the concept of money with services. Just like this.

If for the manufacturing/business, the Goal is to make money now and in the future; for the government/ public sector, the Goal is to provide excellent services to its people now and in the future.

Theory of Constraints uses three measurements : Throughput, Inventory and Operating Expenses.

Throughput for business/manufacturing is the rate at which the system generates money through sales; Inventory is all the money that the system has invested in purchasing things which it intends to sell; and Operational Expense is all the money the system spends in order to turn inventory into throughput.

Now, Throughput of the government is the satisfaction of clients/customers to the delivery of services. Inventory is all the money that the government has invested in purchasing things to provide the excellent delivery of services. And, Operational Expense is all the money the government spends in order to turn inventory into throughput.

Attendees to the First Theory of Constraints Workshop

The two-day workshop entitled "Theory of Constraints/Constraint Management as an Innovative Way of Managing Public Services" on August 20-21, 2007 was attended by select government employees from different departments namely Iligan City Waterworks System Office (ICWS), Economic Enterprise Development and Management Office (EEDMO), City Planning and Development Office (CPDO), City Budget Office (CBO), City Treasurer's Office (CTO), City Engineer's Office (CEO), and Gregorio T. Lluch Memorial Hospital (GTLMH).

Many of the participants, 17 to be exact, are from ICWS because InWEnt chose ICWS as the pilot department with which to implement the concept of TOC since my project proposal in Germany was on water improvement. And Michael Funcke-Bartz, the Senior Project Manager, also saw the need to help improve the water system of Iligan.  To view  the complete list of participants during the workshop, click here.

The first day of the workshop started with a prayer given by Mr. Octavius Molo of the City Agriculture's Office, followed by the singing of the National Anthem lead by Ms. Rosa Edrozo of the City Human Resource Management Office.  And I gave an overview of the program.  

The Start of Cooperation between Iligan and InWEnt, Germany for Theory of Constraints

The cooperation between Iligan and InWEnt, Germany started, somehow, during my 1-year training in Germany after I presented my project proposal to Michael Funcke-Bartz, Senior Project Manager of the Sustainable Cities Development Program.

I was granted to participate in a one-year training in Germany when my boss, Archt. Gil Balondo, sent my nomination in reply to the UN-Habitat invitation. The program was on Sustainable Cities Development : Local Agenda 21 in Practice conducted on March 2006-February 2007. It focused on sustainable solidwaste management, water management and wastewater disposal. As participants, we were required to develop a project proposal which we would present to our bosses (Archt. Balondo and the mayor, in my case) for possible implementation. My proposal was on the improvement of water supply and water distribution in Iligan City.

The Beginnings of Theory of Constraints in Iligan

Theory of Constraints (TOC) or Constraint Management was introduced in Iligan City on August 20-22, 2007 at Crystal Inn, San Miguel, Iligan City. Mr. Adolfo Held, a German TOC Consultant visited Iligan from August 15-22, 2007. He gave an introduction of TOC to selected employees from different departments as well as an executive session to the department heads, city officials, representatives from academe and national agencies.

Accommodation of consultant at Cheradel Suites and his airfare from Germany to Cagayan de Oro (vice-versa) was by InWEnt, Germany. And the city’s counterpart is the provision of facilities, venue, meals and land transportation of the consultant (Cagayan de Oro-Iligan, vice-versa and within Iligan).

TOC is a management philosophy developed by Eliyahu M. Goldratt. He introduced this concept through his book "The Goal" in which the story revolves around solving the problem of a manufacturing plant about to be closed, keeping in mind the goal of the company, "to make money". And in the process breaking company policies and changing the way things are used to be done.

 

In Theory of Constraints, an organization is treated as a single system wherein every part must perform well in order to achieve the goal of the organization. However, in every system, there is always at least one constraint (also called bottleneck) that limits the organization in achieving it's goal.

There are two types of constraint :

1. The internal - the constraint exists within the system (resources and policy)
2. The external - the constraint is from outside the system, in which the organization usually have no control of.

The Theory of Constraints process follows these Five Focusing Steps :

1. Identify the constraint(s)

2. Decide how to Exploit the constraint (make sure the constraint's time is not wasted doing things that it should not do)

3. Subordinate everthing else to the above decision (align the whole system/organization to support the decision made above)

4. Elevate the constraint(s)

5. When the constraint is removed, return to step 1. Don't let inertia become the constraint.

The five focusing steps are in a loop because TOC process aims to ensure the continuous improvement in the system and that the steps ensures that ongoing improvement efforts are focused on the organization's constraints.

It is important though, that before applying the TOC process, the organization or the company has already identified its GOAL. Because the TOC process would then be geared towards achieving this goal.

The TOC process can be applied not just in industries or manufacturing plants but as well as in business and services including public/government. Generally, TOC can be applied in all aspects of life.

As one goes through the process, Step 1 of the Focusing Steps uses the method called "Cause and Effect". In order to identify the constraint, one has to develop the Current Reality Tree (cause and effect tree) identifying reasons that are causing the problem at hand. Until such time when one can no longer give a reason or the reason is beyond the organization's sphere of influence , the constraint has then been identified.

With the Theory of Constraints concept, organizations can be measured and controlled by variations on three measures:

1. Throughput - the rate at which the system generates money through sales.
2. Inventory - all the money that the system has invested in purchasing things which it intends to sell
3. Operating Expense - all the money the system spends in order to turn inventory into throughput