TOC - Effective Application of TOC in Mining

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com
Practitioners Alliance - TOC

www.tocpractice.com Johannesburg, South Africa
•The Theory of Constraints

•Effective Application of the TOC in mining
•Grandfather and Son TOC Approach
13th International Conference of the TOC Practitioners Alliance - TOCPA

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Katlego Mabote Resume – Recent
Author and PhD Candidate – Katlego Mabote

Business Architecture SNr Management Role,
PhD Candidate and Author, Master in
Engineering (IE) Six Sigma Black Belt , Business
Strategic Mentor and Leadership Advisor .
Katlego Mabote worked for Companies Such as
BMW SA, Venture SA, Transnet, BHP Billiton
and De Beers Lonmin and Currently with Anglo
American . Katlego has published his first
Academic Research book called The Effective
Application of the Theory of Constraints: The
ART of THINKING around sustainable Business
Growth Model, Innovation, Leadership and
winning the Hearts and Minds.

2019/05/16
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Press

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Agenda
1.The Definition of the TOC and Why
2.The TOC Questions being Asked
3.The TOC Approach and Style
4.Conflicts in TOC application
5.The How and TOC System Thinking
6.The results Achieved
Copyright © Hatch 2018. All

4
Rights Reserved.
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Q1 . The conceptual Approach towards

factory physics
PGM Asset Portfolio vs its Behaviour “Capacity Constraint”
Design Capacity Opportunity or Value
Design Capacity 1.2 Million Ounces Proposition
Actual Achieved Capacity

Actual Achieved MAX 780
Capacity thousands/Ounces
Year by Year
Method of Extraction
Conventional Mining
1 BU Mechanized
Capability
12 BU
Capability Non Performance in A1 . Linear or Non Linear thinking
Some A2. Value Creation or Business As
Usual

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Q2 . How should we think of
performance management?
THE ENTRECHED BELIEVE
P = pc – i/B Performance = potential Capacity less

interference/People Behaviour
Mandated Given was to Approach the Solution with “ Less for
More /Same for More.
With Instruction “To Not” use More for More
Conflict for TOC .

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Q3. Investment Analysis – Benefit Model
1 The constraint issue

Given the current asset base, what is the
real maximum capacity available? Capacity
Unlocking Value
The time issue The performance issue
Utilisation Efficiency
2 3
How can we use the asset base How can we get more from the same,
more completely? or the same from less?

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Q3. Investment Analysis – Benefit Model

STARS –Questioning Approach
1. Where to Start?
1 2. What can we TURNAROUND?
Capacity 3. What do we define as ACCELERATED
GROWTH?
4. How to Guarantee REVENUE?
5. What is Sustainable Results and HOW to
achieve WIN WIN?
Unlocking Value
Utilisation The time issue The performance issue

Efficiency
2
3

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The Appoach deployed Functional View vs

Process View
Tailored TOC Project BU unit per BU not BIG BANG
Functional orientation Total Value Chain

Improvement
Grandfather and
Son Unique
Approach
Process orientation
Employed the Law of Exponential Growth

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Dealing with Hidden Legacy /Reputation

History
Company with more than 6O Years of
History London Listed – 3rd Producer PGM
Approaches before TOC –Hard Truth
1 2
Lean
and Six Hidden
Shadows
Functional orientation Sigma
/Skeletons
• DNA -Not Much Innovation
3 • Hidden Procurement Believes
• Innovation will replace MY
Process orientation
INVOICE – Unspoken Truth
4
Traditional OD
Challenge
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The Appoach deployed Functional View vs

Process View
Hard Truth – Unspoken Truth Over the Consulting
Approach
Consultant seen Hidden truth –

as undercover Get rid of Him or
Boss fromFunctional
London orientation Unlock Value
NOT Win – Lose

Process orientation
Criss Cope Understanding

Mode Mode
60 -90 Days in Search of WIN WIN and 3rd Alternative

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The Intent – HOW – Dynamic Approach

Start with Leadership
us
Unintended Conflict
The US –
Idle time = Bad Behaviour =US Management
and THEM
Employees =
Idle time its OKAY if DEMAND Unintended
its met =THEM Conflict
Example RDO Unintended Conflict

170 Holes Drilled in 3hours –Employee Approach
vs 170 Drilled in 8 hours –Management SOP

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The Law of Power Distance Index –Leadership
Western View vs African View – Hidden Stereotypes
Large Power Distance Small Power Distance
• Inequality is normal • Inequality is wrong
• Superiors are superior • Hierarchy is for practical
The Law of Profit Making and
beings purposes
The Law of Nature

• Power comes before • Use of power should be
Domestication
good and evil legitimate

• Employees seen as • Employees should learn to
Children/ should learn be independent
respect as a key virtue • Decentralization
• Centralization • Subordinates expect to be
• Subordinates expect consulted
to be told
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us
them
Step 1
Close the GAP between the The US –

Management
Conflict – People Constraints – and THEM
To achieve High Productivity Employees =
Effort Unintended
Conflict

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Step 2
false
Close the GAP between the

Conflict – People Constraints –
true By Education and Buy In
Selling and Pulling VS>
Not Telling and Pushing

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uncommon sense
Step 3
false
common sense
Close the GAP between the

Conflict – People Constraints –
Conducted Leadeship
true common nonsense Assesements
uncommon nonsense

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discovering Start with LeadershipPerformance
Step 4
Repeatability
Reproducibility
Reliability
Duplication

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Can’t Rely on Benchmarking

We knew that we can`t rely on the ABOVE
Benchmarking
can result in an
increasing gap
Performance
in performance
Leader when standard
is accelerating.
Follower
Time
18
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TOC business System for General Manager and Exco
Our TOC Strategy

focuses on the following four Pillars
Strengthening Growing Create the

the environment Raise the
Existing TOC
Leadership application where TOC TOC talent
Bar
1 foundations
2 3 may thrive 4
Understand
TOC Frame of
System Flow Buffer and
reference
Flow Model Replenishme Functional
Change
with nt system daily Ops
management
bottlenecks, Material Visibility of
& Shared
buffers & Buffers the whole
Vision
Protective Skills Buffers Dialogue
Critical
Capacity Equipment Reflection
Success
MO picture Buffers Teamwork
Factors
HL Analysis Spares
Big Picture
Variability Buffers
approach
Coaching Style
2019/05/16
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TOC business System for Line Manager
Our TOC Strategy

focuses on the following four Pillars
Awareness Adoption of Effective Simple

on TOC the Flow implementation truthful
1 Leadership
2 Principle 3 of the Buffer
Management
4 measurement
system
discussions
Understand
TOC Frame of
System Flow Buffer and
reference
Flow Model Replenishme
Change Functional
management with nt system
daily Ops
bottlenecks, Material
& Shared Visibility of
buffers & Buffers
Vision the whole
Protective Skills Buffers
Critical Dialogue
Capacity Equipment
Success Reflection
MO picture Buffers
Factors Teamwork
HL Analysis Spares
Big Picture
Variability Buffers
approach
Coaching Style
2019/05/16
Tailored Approach – Model
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Bottom Up not Top to Bottom

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Typical Daily Production Output:

Mining Operations
Budget Actual
Start with NON Performance Business Units

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Food For Thought
There is nothing as powerful as a

CONCEPT,
and nothing more dangerous than a
MISCONCEPTION.
We made Sure the theory is Understood before KPI

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Ed Deming on Measurements
Dr Edwards Deming used say: “97% of what really
matters in an organization can't be measured. Only
maybe 3% can be measured. But when you go into
most organizations and look at what people are
doing, they're spending all their time focusing on
what they can measure and none of their time on
what really matters - what they can't measure.
Why would we do this? We're spending all of our time
measuring what doesn't matter.”
We Employed Deming Approach – Where is HE?? - Ed Deming
Founder of Total Quality Management (TQM)
Few people realise that Toyota does not use any
standard cost accounting for its daily operations

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TOC deals Directly with the CORE PROBLEM of
Modern Day Industry
The CORE PROBLEM in

modern day industry is:
We try to optimise everything
through cost and efficiency.
We plan for perfection.
“Do you want to make

money, or do you want to
show off efficiencies? ….”
– Dr Eli Goldratt

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4 Pillars of TOC and effective application and
results in Mining
What is TOC for US

REFRAMING
• Leadership
• Concept of Revenue Flow (Throughput)
• Concept of Variation and Buffer Management System
• Concept of Behaviour (Non Verbal and Verbal)
• What measurement are Critical

2019/05/16
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Financial vs Operational Leverage

Savings Leverage ↑ Margin In one room but in
two different worlds
Expenses
Costs $ $ Turnover
Revenue
Truly Variable Cost ↑ Margin

Leverage
STOP
$ $
Expenses Turnover
Revenue
Costs
• Reducing Expenses is a guaranteed
way to improve Bottom Line Results
Truly Variable Cost
• The More we Save, the more Money
we Make START/CHANGE TO
• Costs are exact numbers, derived from • The More we Put in, The More we can
history get Out
• Erroneous Assumption: Revenue will • Erroneous Assumptions:
remain Constant – Production / Revenue will increase as
we predict
– The increased funding is available
27
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Levels of Leadership &
Thinking OF HOW TO MAKE MONEY
Level 3
Holdings
Level 2 Mergers & Acquisitions
Level 1 Profit
Diversification
Quality Wealth
(Safety) Creation
Leading Assets
People
Partnerships
World View
Volume
Sustainable Collaboration Strategic Thinking
Behavior Alignment Pyramid
Time Cost Leadership
Pyramid Working BEYOND the business
Management
Pyramid Working ON the business
Working IN the business
Flow of the Vision,
Optimize Everything
through Cost & Efficiency Whole & Sustainability &
Alignment Growth
28
Why?only one way to achieve Results
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The Law of Disruption

P(A) = N Example –
Production Crew
P(5) = 6 Size Achieves
Find the number 5 in 6 combinations WHAT? We ask ?
1+1+1+1+1 5 Cost Saving or
Revenue Growth
2+3 5
4+1 5
5+0 5
6-1 5
8-3 5
Efforts (inputs are Results(Are the Same)
differerent)

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The Conflict NO 1A (The We and US)
Local vs Global
The World of the We Parent to Child Conversation
rather Parent to Parent
and Us
Visible
The World of I
think and you
DO
Invisible to Management
Definition TOC within : Improving Capacity and Scope of making more money and
creating an enabling environment The world of Rule and Order
The world SOP
REFRAMING
How to rescue business leadership from the recession time and begin to
think like business Man not Victims of recession more so Like business
Victors
2019/05/16
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The Conflict NO 1B
Fixed vs Change World
The Law of Taxonomy vs the Law of typology
VS
Levels of
Work
35 50
years years
Years
2019/05/16
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The Conflict NO 2 (The World of what to think
Not How to think) The World of Produce to Stock not by Order
16 15 14 10 13 12
10 10 10 10 10 10
A B C D E F A B C D E F
STOP START / DO
Manage EFFICIENCY Manage FLOW
Control Everything Control Leverage Points
Manage Silo’s Flow of the System as a

Whole
Manage by Budget Manage the Constraint(s)
Individual KPI’s Buffer Management

Cost world (Input control) Throughput world (Lost
revenue)
Management by Numbers Management by Means

(What)
People just work for a People are intelligent

salary and must be and want to perform
controlled
(Leadership, Care & Growth)
(Efficiency driven)
Low morale and spirit Positive and enthusiastic

culture 32
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The Results- Comparison
Revenue Growth of
20% to 30% Year by Year
Reduction in Cost per Ton
The Results- Comparison

1. Low Variability
2. Upward trend
3. Movement from Non performance to performance
33
4. A profit Game
13 International Conference of the TOC Practitioners Alliance - TOCPA
th
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Results
Saffy Wet Tons Hoisted 2013/2014
8 000
Shifts
Worked in
7 000
Shaft Record Request for
Revenue Growth of
6 000
Production additional 20% to 30% Year by Year
supervisory
Initial TOC ops staff
training Ops Reduction in Cost per Ton
5 000
meeting
started
4 000
7 Day Move Avg
Requested
22 winches Linear (7 Day Move Avg)
3 000
for buffer
R4,1m
2 000 Half level
stores to be
Fatality expanded
1 000 to two
Weeks R7m Sect 54
(Not done)
-
02
02
02
02
02
02
02
02
02
02
02
02
02
1/
2/
3/
4/
5/
6/
7/
8/
9/
0/
1/
2/
1/
/0
/0
/0
/0
/0
/0
/0
/0
/0
/1
/1
/1
/0
13
13
13
13
13
13
13
13
13
13
13
13
14
20
20
20
20
20
20
20
20
20
20
20
20
20
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Results
Saffy Tons History
200
Pushed Hard to 200 Revenue Growth of
188
Implement
TOC, partial
161
- Thousands
150 Success
147 Reduction148in Cost per Ton
115
109
100 99
DRY TONS
93 93
85
59
New TOC
50 Leadership
Introduced
Jan 16
Nov 15
FY12 Avg (N)
Oct 15
FY09 Avg
FY14 Avg
FY15 Avg
FY10 Avg
FY11 Avg
FY13 Avg
Dec 15
FY16 YTD Avg

35
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4B TONS RESULTS
Revenue Growth of
36
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Scatter Graph: Crew size vs Production
4B Shaft: Apr-Jul 2015 Revenue Growth of

M2 vs Average Crew Employees at Work 20% to 30% Year by Year
900
800 Potential Bottom Line
After
Value Added: Before restructuring
700 > R450 000 restructuring of crews
Per Crew per Month of crews
600
500
Additional
Revenue: M2
400 R500 000 pm
300
200
Additional
100 Expenses:
R50 000 pm
0
0.0 5.0 10.0 15.0 20.0 25.0

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Results Revenue Growth of

38
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TOC System Thinking Deployed

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TOC strategic design options

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Conceptual Model

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Mining Sector

TOC - Effective Application of TOC in Mining

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Practitioners Alliance - TOC

•The Theory of Constraints

13th International Conference of the TOC Practitioners Alliance - TOCPA

Author and PhD Candidate – Katlego Mabote

13th International Conference of the TOC Practitioners Alliance - TOCPA

13th International Conference of the TOC Practitioners Alliance - TOCPA

Copyright © Hatch 2018. All

Q1 . The conceptual Approach towards

Actual Achieved Capacity

13th International Conference of the TOC Practitioners Alliance - TOCPA

P = pc – i/B Performance = potential Capacity less

13th International Conference of the TOC Practitioners Alliance - TOCPA

Q3. Investment Analysis – Benefit Model

1 The constraint issue

13th International Conference of the TOC Practitioners Alliance - TOCPA

Q3. Investment Analysis – Benefit Model

Utilisation The time issue The performance issue

13th International Conference of the TOC Practitioners Alliance - TOCPA

The Appoach deployed Functional View vs

Functional orientation Total Value Chain

Employed the Law of Exponential Growth

13th International Conference of the TOC Practitioners Alliance - TOCPA

Dealing with Hidden Legacy /Reputation

The Appoach deployed Functional View vs

Consultant seen Hidden truth –

NOT Win – Lose

Criss Cope Understanding

60 -90 Days in Search of WIN WIN and 3rd Alternative

13th International Conference of the TOC Practitioners Alliance - TOCPA

The Intent – HOW – Dynamic Approach

Example RDO Unintended Conflict

13th International Conference of the TOC Practitioners Alliance - TOCPA

The Law of Nature

good and evil legitimate

The Intent – HOW – Dynamic Approach

Close the GAP between the The US –

13th International Conference of the TOC Practitioners Alliance - TOCPA

The Intent – HOW – Dynamic Approach

Close the GAP between the

13th International Conference of the TOC Practitioners Alliance - TOCPA

Close the GAP between the

13th International Conference of the TOC Practitioners Alliance - TOCPA

13th International Conference of the TOC Practitioners Alliance - TOCPA

Can’t Rely on Benchmarking

TOC business System for General Manager and Exco

Our TOC Strategy

Strengthening Growing Create the

TOC business System for Line Manager

Our TOC Strategy

Awareness Adoption of Effective Simple

Bottom Up not Top to Bottom

13th International Conference of the TOC Practitioners Alliance - TOCPA

Typical Daily Production Output:

Start with NON Performance Business Units

13th International Conference of the TOC Practitioners Alliance - TOCPA

Food For Thought

There is nothing as powerful as a

13th International Conference of the TOC Practitioners Alliance - TOCPA

13th International Conference of the TOC Practitioners Alliance - TOCPA

The CORE PROBLEM in

“Do you want to make

13th International Conference of the TOC Practitioners Alliance - TOCPA