Example of a Customer UDE Cloud

You are a salesperson. Your company (the supplier) is selling consumer products. For years, the company has been promoting the purchase of large quantities by offering discounts. After implementing the TOC solution of MTA (make-to-availability), the company adopted the mindset of "stop pushing." You want to offer your customers (shops, retailers, etc.) or potential new customers the opportunity to move to the TOC replenishment model of report daily consumption and get replenishment frequently.

You generally know the typical complaints of your customers or the customers of your competitors. You can focus on one customer in particular (that is the most relevant for your offer) and build the corresponding customer UDE Cloud. You know that your customers complain about stockouts. (Since you are building this UDE Cloud through the eyes of your customers-the shop owners-the usage of "I" or "we" in the answers to the questions implies the shop owner's position.) UDE: We have too many stockouts.

Building the UDE Cloud: [B]: What need is jeopardized?

[B]: Secure revenues from selling products the market wants to buy from my shop.

We [shop owners] know that we make money by selling products to consumers (the people who come to the shop). Consumers who come to our shop and do not find what they want do not generate any income for the shop. Consumers also may not come back. Hence, availability is important.

[D]: What actions do you have to take to meet the jeopardized need in B?

[D]: Buy the products that are selling well as urgent orders with special deliveries.

[C]: What other important need prevents you from always taking the action in D?

[C]: We [shop] need to control cost per unit bought.

The suppliers charge more for urgent deliveries and for smaller quantities. I [shop] can get significant discounts for buying in large quantities.

[D]: What actions do you take to meet the need in C?

[D]: Buy large quantities (even if it is more than we [shop] need for a reasonable period).

[A]: What is the common objective achieved with both B and C?

[A]: Have a successful business.

The Customer UDE Cloud is presented in Fig. 24-8.

Step 4: Check and upgrade.

Let's do the check of the diagonal from the example of the Customer UDE Cloud.

Is [D] jeopardizing [C]?

In D, the shop owner wants to buy products by using urgent orders. The supplier charges more for such orders and hence the price per unit bought will go up, jeopardizing the need C.

Is [D] jeopardizing [B]?

D-buying in large quantities-consumes the cash reserves of the shop owner. Shops hope eventually to sell everything they have bought. However, it is only in the process of sales that it becomes obvious which products sell well and which do not. In addition, the large quantities take long to be sold. Products that are just sitting in stock do not generate money, thus endangering securing the revenues. Moreover, not enough reserves to buy replenishment of products that clients want to buy results in loss of potential revenue, which hurts B even further.

FIGURE 24-8 An example of a "Customer UDE Cloud" (from the perspective of the shop owner and we are the manufacturer).

Step 5: Surface assumptions.

For the Customer UDE Cloud, ensure that you will surface enough supporting assumptions on the B-D arrow. That will help to secure an offer that really brings value to the customer (the shop owner). On the C-D arrow, highlight the assumptions that the customer (the shop owner) feels reflect the policies that suppliers (you) use when determining the terms and conditions for supplying, such as minimum order quantities, shipping costs, frequency considerations, etc.

Examining and challenging these policies can provide opportunities for you to give a Mafia Offer11 to your customer. The assumptions and injections are provided in Table 24-8. Pay particular attention to the C-D assumptions.

Step 6: Construct the solution.

For the Customer UDE Cloud, we recommend focusing the effort on breaking C-D. There are two major reasons: 1. It will be easier for the customers to accept the supplier's offer that will give them what they want-urgent orders ("urgent" meaning whenever they need them and with short delivery times) without paying extra and without demanding a major change or effort from their side.

2. It will be difficult for the competitors to copy because the assumptions under C-D reflect the common policies and business practices of the whole industry. Anything to do with mindset, policies, and procedures demands a strong determination of management and a supportive culture. It may take the competitors a long time to observe your offer, recognize its competitive edge, and agree internally on what needs to be done to catch up with you. This provides a window of opportunity for the company that pioneers offers that break Clouds on the supply side.

Let's continue our examination of the Customer UDE Cloud.

TABLE 24-8 Assumptions and Injections for Selected Arrows Once C-D assumptions (customer shop's assumptions about the manufacturer's behavior as a supplier) are verbalized, it gives the manufacturer an excellent opportunity to develop the solution that will challenge and negate these assumptions. Given that the manufacturer has implemented MTA (as per the storyline), the manufacturer can break the connection between C and D and offer the shop whatever quantities they want to buy, whenever the need is, and at a reasonable price-which will satisfy both the shop's needs, [B] secure revenues through preventing lost sales and overstock, and [C] control cost per unit through making it reasonable to order small quantities.

Step 7: Communicate the solution.

For the Customer UDE Cloud, my recommendation is to develop a presentation that takes the customer through the above steps covering the problem, the direction of the solution, and the proposal based on the injection.

Addressing Multiple Problems-the Consolidated Cloud

Once we master the management tool dealing with individual UDEs, it is only natural that the manager would like to find a solution to a multi problem situation. Managers do not always have the time to conduct a complete TOC TP analysis (CRT and FRT) to develop a comprehensive solution for their area, and hence can use the Consolidated Cloud approach for a shortcut that helps construct a good enough solution that will produce short-term benefits while supporting future improvements.

We cannot call this approach a daily managerial tool, but its foundation is the one-off usages of the UDE Cloud. After using the UDE Cloud several times addressing different UDEs, you may observe a common pattern between the Clouds and you may wonder if there is a more common underlying Cloud and whether all of the UDE Clouds are derivatives of this Cloud. Therefore, you may decide one day to do a deeper analysis.

This process is also known as the Three-Cloud approach. Please note that the Consolidated Cloud (Generic Cloud) represents the reality around the three UDEs that have been chosen for the analysis. It is not necessarily the core problem, as the UDEs may be concentrated only in one part of the current reality and other parts may not be represented in the analysis.

We use three Clouds, as it is usually a good number to get different aspects of the subject or the area under investigation. You may decide to take more UDEs and consolidate more than three Clouds. It may help in achieving group consensus in which its members want to contribute their views on the burning problems that need to be sorted out. The general process for the Consolidated Cloud is given in Fig. 24-9.

When should we use the Consolidated Cloud approach?

1. For analyzing the area under your responsibility. This is the most common use of the method when UDEs deal with the performance of the area and the behavior of the people.

2. Accelerating initiatives. Every organization has improvement initiatives. These are small projects that have been launched with the view that when completed they will bring benefit to the organization. If you are in charge of such an initiative and you are unhappy with the progress, you may consider using this approach. Just collect several of the problems that the initiative encountered and use this method.

3. BM for a POOGI. BM is a kind of problem identifier. It highlights issues that cause penetration in the buffers and cause disruption to the smooth flow of the system. The reasons for buffer penetration are collected and analyzed. We can select three typical problems, build their Clouds, and consolidate them into one Cloud.

FIGURE 24-9 The general process of the Consolidated Cloud.

All of these applications can produce a Consolidated Cloud. Once we construct the Consolidated Cloud, we use it to develop the direction of the solution, a template for the injections, and specific injections to resolve the individual problems. This is a multi-injection solution for a multi-problem situation.12

The Process of Consolidating Process Outline

1. Select three UDEs from the area under investigation.

2. Build the individual UDE Cloud for each UDE using Steps 2 through 5 (write story lines, construct Cloud and checks, and surface assumptions) of the UDE Cloud process.

3. Consolidate the three Clouds into one Cloud.

4. Check and upgrade the Consolidated Cloud.

5. Surface the assumptions underlying the Consolidated Cloud.

6. Construct the solution and check it for win-win.

7. Communicate the solution.

Step 1: Select three UDEs from the area under investigation.

Example: A list of UDEs of a Production Manager in a make-to-order (MTO) environment.

UDE #1-We often do not have sufficient capacity to meet all demands.

UDE #2-Production priorities change too frequently.

UDE #3-We have too many engineering changes.

Step 2: Build the individual UDE Clouds.

In building the Clouds, recall you (the Production Manager, in this case) are always on the CD side and the Clouds are always written from your perspective (the Production Manager, in this case).

For each UDE, build a Cloud and surface the assumptions following Steps 2 through 5 (write story line, construct Cloud and checks, and surface assumptions) of the UDE Cloud process. These Clouds are shown in Fig, 24-l0a, b, c.

Step 3: Consolidate the three Clouds.

Write a generic statement in each box A, B, C, D, and D.

Write down each statement from the same box of each of your three Clouds. You may organize them in a small table: A statements, B statements, etc.

Examine the statements from the same box (A, B, C, D, and D) and write a generic statement that describes all of them. Each specific statement from the same box should be an example/manifestation of the generic statement that you verbalize.

Example: Consolidating B: B-1: Meet our production schedules.

B-2: Effective use of resources.

B-3: Meet our cost targets.

Generic B: Meet our department performance measurements (on time and within budget).

FIGURE 24-10 Examples of UDE Clouds of the production manager.

Consolidating D: D-1: Not accept all customer orders without considering capacity.

D-2: Follow the established production schedule priorities.

D-3: Introduce engineering changes only with regard to schedule and capacity.

Generic D: Not accommodate all customer demands for schedule changes and new product introduction.

Consolidating C: C-1: Satisfy customers' increasing demands.

C-2: Meet customers' changing requirements.

C-3: Instantly provide customers with the latest designs.

Generic C: Provide customers with flexible, fast, reliable service with the latest designs. Consolidating D: D-1: Accept all customer orders regardless of capacity.

D-2: Change the established production schedule priorities.

D-3: Introduce engineering changes without regard to schedule and capacity.

Generic D: Accommodate all customer demands for schedule changes and new product introduction.

Consolidating A: A-1: Have successful operations.

A-2: Satisfy the business objectives.

A-3: Achieve our business goals.

Generic A: Achieve our business objectives.

The Consolidated Cloud is shown in Fig. 24-11.

Flipping Clouds