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Cool Customers in the Commercial Refrigeration Industry
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Interview with David Hodes* – Managing Director of the Contracting Division of Africa’s largest commercial refrigeration company**

 
 
   
Summary
   
The time to complete a full refrigeration refurbishment for a hypermarket*** was reduced from the projected 72 days to 46 days – a saving of 26 days
An independent study by the National Productivity Institute showed that there was a doubling in the productive use of time by the tradesmen when compared to similar project types
Trading disruption was minimised leading to improved customer satisfaction
The new, much reduced project lead times led to a significant improvement in competitive position
   
 
 

Background

The Refrigeration Supplier (TRS)** is South Africa’s leading contractor for the design, installation and commissioning of refrigerated display cases and cold rooms used in the supermarket industry. It had traditionally been the preferred refrigeration supplier to the Pick ‘n Pay Group. Pick ‘n Pay management had decided that as part of their growth strategy, they would completely overhaul the look and function of over 140 stores, 14 of which were Hypermarkets. The Board had approved capex of hundreds of millions of dollars for the overhaul, the biggest single beneficiary of which would be the refrigeration suppliers. As a preferred supplier, with many years in the business, TRS was in the enviable position of building an order book bigger than any it had ever had before.

The Problem

Having a big order book is usually the stuff of dreams – in this instance though, it came with a catch. There was simply not enough time left before the busy Christmas period to complete the initial refurbishments. When the first tranche of 22 stores was awarded to TRS, it appeared that the only way to meet the demand would be to work huge amounts of overtime and “compromise” on quality. This meant that TRS would have to revisit the work at a later stage, for no additional revenue. It was a case of firing on all cylinders, but this engine only had six when the job demanded twelve!

TRS prides itself on never delivering a job late, and this instance was no exception. However there was a steep price to pay in staff burnout and later reworks. The MD, David Hodes, believed that there had to be a better way and wondered if the National Productivity Institute could provide him with some clues. Time was not on his side, as the second tranche of stores was due to start after the Christmas break, and without any relief for the workers, there was sure to be mass resignations, as the pace simply could not be sustained.

The Solution

The National Productivity Institute had within it a section dealing in the Theory of Constraints. A seasoned practitioner advised TRS to select key members of the team to attend a Thinking Process Workshop.

Hodes recalls: “I was very impressed with the ability of the Thinking Process to bring us all to consensus on what the core problem was: we were tackling the job trying all the time to keep the three major trades (mechanics, electricians and shopfitters) utilised “efficiently”. This was driving the behaviour, comparing the time actually spent on a given task against the budgeted time. The net result of that measure was that people were more interested in making themselves look good than in doing what was necessary as a team, to bring the project in on time, within budget and to specification. I expressed my concern, though, that if the focus was too much on the diagnosis and not on a cure, it wouldn’t count for much.”

Fortunately for TRS, a Critical Chain**** course had been developed by the National Productivity Institute and all members of the TRS team were put through it. Everyone began to understand the meaning of “finite capacity” – the ‘chain’ of the project was only as strong as its weakest link, and this usually related to having the right number of skills in the right place at the right time.

A branch manager for TRS noted; “We finally had some clear visibility into what could and could not be done with the resources we had available. We were able to allocate our people far more wisely and broke out of the habit of reacting to what seemed urgent, instead of focusing on what we knew to be important. By using buffer management, we were able to show all stakeholders in the project, including all the other contractors working on the refurbishment of the store, where the bottlenecks were, and how we all had to support each other in order to remove these bottlenecks, if we were to achieve the goal of delivering the project in a shorter lead-time. I liken our first time out with TOC and Critical Chain as being similar to the first time you manage to ride a bicycle – a bit wobbly, but a whole lot better and faster than walking!”

Hodes concludes: “ We are now very interested in pursuing the Critical Chain multi-project solution. We have seen the benefit of using constraint based management principles in an isolated environment, but as an organisation we are really interested in leveraging our resource pool across all the projects we run concurrently – sometimes as many as twenty or thirty at a time. We now know that efficient use of individual resources is not the same thing as the effective use of critically constrained resources and have changed our measures to incorporate the ideas of Throughput Accounting so that it reinforces the behaviours we are calling for. We see the productivity gain we have achieved as being the single biggest competitive weapon in our armoury and the really good thing about it is that whilst achieving our result, everyone is working less!”

The Results

Critical Chain delivered to TRS Refrigeration:

 
 
   
An additional 1/3 capacity at no extra cost to the Company
Customers satisfied that their jobs were to specification, on time and to budget
A dramatic increase in staff satisfaction thought impossible just 6 months prior
Very competitive pricing options for targeting new supermarket groups
A significant boost to the bottom line
   
 
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*David Hodes was so impressed with the power of the TOC approach that he subsequently resigned from TRS and began consulting to other organisations, using a TOC-based approach. In 1999 he emigrated to Australia and founded TOCCA
**At this company’s request its name is not supplied. Throughout the case study it is be referred to as “The Refrigeration Supplier” or TRS
***Hypermarkets are massive supermarkets, selling full ranges of groceries, homewares, clothing, manchester, sports equipment, whitegoods, gardening goods, electronic goods and appliances, computers etc. Typically, each Hypermarket occupies the equivalent of an entire city block.
****Critical Chain is the TOC approach to Project Management
 
 
 
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