5 reasons (at least) to explore Theory of Constraints

Theory of Constraints is a “business philosophy” or “management paradigm” that takes into account the existence of constraints, e.g. limiting factors hindering the organization to achieve more of its Goal.  It focuses on the one that limits the performance of the whole system and strives to achieve more of the organization’s Goal (patient’s treatments, throughput, sales… whatsoever).

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Theory of Constraints is around since the 1980s but is still barely known. Here are 5 reasons (at least) to explore Theory of Constraints (ToC) and check what good it could do for your organization.

1. Theory of Constraints is not theoretical

The name does not sell and is probably somewhat misleading, but Theory of Constraints is more a body of knowledge than a mere theory and its applications are very real and concrete.

Yes ToC has a lot of metaphoric jargon and it takes some time to get used to it. But after all Lean has a lot of jargon too and makes even people “speak” japanese. Six Sigma has its jargon as well. If you want to share with the community, you have to speak the lingo.

Yet being still “confidential” (this point being discussed later), ToC claims relatively few success stories. Compared to Lean with Toyota, ToC has no such lighthouse, no convincing, undisputable and compelling success story so far. The lack of appealing buzz makes ToC still look theoretical. (In the ToC lingo we call this a Negative Reinforcing Loop.)

2. Theory of Constraints (ToC) is a growth oriented approach

ToC is about breaking the limiting factors and getting more out of the organization’s processes and resources, exploiting wasted precious and scarce capacity.

While many organizations seek survival through cost cuttings and savings – which is limited and potentially deadly – those embracing ToC will challenge expanding their business and growth.

Breaking the constraints is for example drastically speeding up deliveries, getting more out of a very expensive or scarce resource. This could be a factory delivering widgets, a hospital treating more patients or an administration significantly speeding up the delivery of documents.

In project management ToC changes the paradigm and ensures projects to finish on time and more likely within allocated budget.

Any organization achieving its Goal significantly faster and better will soon attract market’s attention and get more demand.

In contrast how many new customers will cost reduction or variability reduction attract?

Which doesn’t mean cost reduction and variability reduction should be disregarded, as we will see right now.

3. Theory of Constraints and Lean make a great pair

ToC is often described as a focusing means/tool/approach (you name it) that is a good catalyst to Lean and/or Six Sigma.

While ToC identifies leverage points and critical root causes of problems, Lean and Six Sigma are great ‘tools’ to exploit the leverage points and solve problems.

The synergy using ToC, Lean and Six Sigma is known as TLS. From what I have experienced, seen, heard or read, ToC is most often used in pair with Lean rather than with SixSigma, or sometimes as a TLS trio.

Good news is all prior investment in Lean or Six Sigma training is still valuable, ToC will simply supercharge them.

With ToC, improvements show on bottom line, which is not always the case with Lean. ToC proposes a structured and logical approach applied system-wide, while Lean initiatives are too often used to chase opportunities to optimize locally, failing to improve globally.

4. Theory of Constraints proposes a consistent framework across all activities

ToC originated in manufacturing and just as many approaches, methods or tools it soon proved usable in other environments.

But unlike some of the others, ToC did not simply transpose into other environments but developed specific tools and approaches for those branches while keeping consistent.

I am thinking about Critical Chain Project Management (CCPM) which revisits project management and corrects the flaws of the Critical Path Method (CPM).

I am thinking about Logical Thinking tackling non-physical constraints such as beliefs, policies or resistance to change.

ToC does also challenge supply chain management, accounting or marketing.

Regardless the various applications, the core concepts of constraints and the scientific approach remain the same.

5. Theory of Constraints is still “confidential”

ToC is not very famous compared or Lean or Six Sigma, but there is an advantage in this ‘weakness’: organizations using ToC and achieving more of their Goal usually outmatch their competitors with a kind of secret weapon.

It happens over and again: a very poorly performing unit achieves a fast, unexpected and surprising turnaround, attracting attention from its peers wondering how this could be possible.

In corporations the now admired unit would share its secret, but it could remain the secret weapon for any organization facing tough competition.

Theory of Constraints is not meant to remain secret, it just failed to get enough attention until now. Those using it to outmatch their competitors will not complain. Those being outmatched or seeking a way to a breakthrough now have 5 reasons to give it a try.

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Value Stream Mapping is a tool for pivoting

“Pivot” has become a buzzword in business, referring to a shift in strategy or a significant change made in product, service or business model as a result of experiment.

When a solution or an assumption does not lead to or deliver the expected outcome, a significant change may be required to adjust to the reality instead of sticking too long with the flawed parameters.

Pivoting suggests a change of direction and this is the intent with Value Stream Mapping (VSM): pivoting from vertical to horizontal.

VSM reveals the physical and information flows across an organization (horizontally) end to end, which is “pivoting” from the traditional point of view which is vertical, divisional or departmental way of considering organizations and responsibilities.

By pivoting, VSM reveals all the waste created by local optimizations and required adjustments at interfaces, e.g. duplicate inventories, buffers, different batch sizes or different rules and policies, etc.

VSM is a tool for pivoting or shifting the point of view, the way we look at value creation with the customer waiting at the end of the value stream.

Together with the improvement potentials revealed, Value Stream Map enables pivoting: changing the process, the product or the business model in some extend.

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The very minimum to know about Overall Equipment Effectiveness (OEE)

Overall Equipment Effectiveness (OEE) is a KPI which reflects overall equipment or machine performance in a single number, expressed in %.

OEE compares the actual ok output to the total output achievable in perfect conditions. As perfect conditions are not likely to be permanently granted, OEE is a mere theoretical benchmark, nevertheless something operational staff should aim for.

Overall mean encompassing  three other key metrics: Availability, Performance and Quality.

  • Availability is the readiness of the machine / equipment to operate when required
  • Performance is the actual run rate compared to the nominal run rate
  • Quality is the number of good parts or quantity right first time compared to the global quantity (good and no good)

Everyone of these metrics is expressed in %, OEE = availability x performance x quality

As OEE is multiplying fractions, the result cannot be greater than the smallest value of Availability, Performance or Quality. That is why OEE is a severe KPI: if one of the intermediate KPI decreases, the OEE decreases faster.

OEE came with Total Productive Maintenance (TPM) and aimed primarily to maximize assets’ yield. OEE was designed to grasp the real performance and not being fooled by tracking assets’ utilization.

By utilization I mean the ratio machine time used / available time. A machine used for production 90% of the available time, seems good. But if this machine runs at 60% of its nominal speed and 15% of its output must be discarded, OEE will be 90% x 60% x 85% = 46 % which is not good at all, as more than half of its productive capacity is wasted.

Demonstrated capacity

The OEE performance is a snapshot of demonstrated capacity, e.g. what the machine / equipment / supplier can really achieve.

The capacity above demonstrated capacity up to nominal maximum capacity is wasted.

It is like a beaker (fig.) having a 100ml capacity but all the leaks limit the real capacity to 60%.

Changeovers are usually a major cause of machine downtime and account as “leaks”. Changeovers duration can be drastically reduced with SMED, thus fixing the leak and recovering some or the wasted capacity.

When breaking down all causes leading to waste of capacity, it soon becomes clear that maintenance issues account only for a (usually small) fraction. OEE therefore gained interest for itself, not only as a KPI within Total Productive Maintenance (TPM).

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Overall Equipment Effectiveness (OEE) is a Goal Tree

Overall Equipment Effectiveness (OEE) is a well-known KPI in many industries for nearly forty years in western countries. It reflects overall performance in a single number, and is built upon or integrating three other metrics: Availability, Performance and Quality.

  • Availability is the readiness of the machine / equipment to operate when required
  • Performance is the actual run rate compared to the nominal run rate
  • Quality is the number of good parts or  quantity right first time compared to the global quantity (good and no good)

Everyone of these metrics is expressed in %, OEE = availability x performance x quality

As OEE is multiplying fractions, the result cannot be greater than the smallest value of Availability, Performance or Quality. That is why OEE is a severe KPI: if one of the intermediate KPI decreases, the OEE decreases faster.

If someone is in charge of improving OEE, he or she will “speak” a Goal Tree, and it goes like this: in order to achieve the highest value of OEE, we must have:

  • the machine / equipment steadily ready to operate
  • running continuously at nominal speed
  • producing only good parts

Now with this said, what to do next? Where are the leverage points?

OEE is great to give a snapshot of performance taking into account the three high-level must haves, but when it comes to action OEE must be broken down to find where and what to act on.

In Logical Thinking Process lingo, Availability, Performance and Quality are Critical Success Factors (CSFs), high outcome objectives that enable achieving the Goal: the highest OEE.

Critical Success Factors are very useful because they provide top management the minimal but sufficient dashboard to monitor progress towards the Goal.

These Critical Success Factors are dependent on underlying Necessary Conditions.

Availability for example depends on machine’s technical condition as well as on setup and material availability. It depends also on availability of trained and entitled workforce, work orders and possibly other documents.

OEE Goal Tree

Example of OEE Goal Tree

Performance will probably depend on the machine’s condition, itself depending on the maintenance policy, maintenance frequency, and so on. Performance is also depend on the proper use of the machine by workers, the type and quality of raw material, the type and condition of its tools.

The breakdown goes on this way, from each Critical Success Factor down to the least Necessary Condition, building the whole Goal Tree. In order to list all Necessary Conditions, the same phrase applies: “In order to achieve… We must…”

The list may go on, both horizontally and vertically, according to the business.

The more regulatory constrained the business, the more likely to have a horizontally-wide Tree, as those regulatory constraints will add many mandatory Necessary Conditions.

What I really like with Goal Trees is the provided guidance by the necessity-based logic, insuring a complete and robust Tree is built. On top of it, it helps discriminating the must-haves from nice-to-haves.

Therefore it’s easy to respond logically to the claim “the machine is too old to achieve good performance, get us a new one!”. When considering what can be done to improve OEE, the age of the machine does not appear as being the biggest influencer.

In fact, many examples show that properly tended old machines can still be performant assets.

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Why 5S’s Scrub & Shine is not (only) about cleaning

This post refers to the third S of the series of 5 from the 5S methodology and which stands for Seiso, which can be translated as ‘cleaning’ or for the sake of verbs starting with an S: Shine, Scrub, Sweep, Sanitize and the like.

Once a certain state of cleanliness has been reached, any abnormality should be visible and trigger a corrective action.

A nut or a bolt found on the floor should immediately call for an investigation: is it fallen off the product which is manufactured or from the machine near by? Is it fallen off the tightenings box delivered to the assembly line?

In each of these three cases a missing nut or bolt can lead to a serious problem:

  • the product may not be assembled correctly
  • the machine may be affected in some way
  • the assembly line may be stopped because one part is missing in the precisely counted supplies

Therefore, picking up the nut or bolt and throw it into a trash bin is no good practice. Worse would be simply putting it back to a box holding similar parts on the line.

  • Simply disposing parts is not grasping the opportunity to solve potential problems and to improve the situation by solving it
  • Putting it back into a box may end up putting it into the wrong box, potentially leading to a later problem

Many people convinced to be knowledgeable about 5S would pick up the stray nut or bolt and get rid of it in any way they consider best and think they did the right thing about 5S.

In fact they help housekeeping, not 5S.

They may pick up stray parts over and over again if nothing is done to understand the origin, cause and designing a robust solution for it not to happen again.

The true 5S spirit would grasp the opportunity to understand where the part came from, why, and how to prevent other parts to fall onto the floor or how to prevent potential later problems.

A seemingly unimportant part as a nut or bolt may be critically important and if missing can lead to a catastrophe.

Until being absolutely certain this is not the case, any discovery of stray material (or document) should be suspected as source of potential major problem and trigger an investigation.

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Thinking Processes – Transition Tree

The Transition Tree is the fifth and last tool of the Thinking Processes, sixth optional one of the Logical Thinking Process. The Transition Tree is a step-by-step sequential depiction of how to implement the change.

Basically, the Transition Tree combines an entity of current reality, a statement of need and an action (injection) to create a new reality (expected effect). This basic structure is repeated from the lowest or farthest condition to change up to the closest to the objective on top of the Transition Tree.

For communication purpose, a justification of the rationale is added to the expected effect to justify the next new need and level of change.

According to Dettmer, and as reported in his book The Logical Thinking Process, the Transition Tree is not very popular among users, especially when they are professionals knowing well their processes and not feeling the need to go through a painstaking Transition Tree. They don’t need the details of a Transition Tree.

Experience showed that people tend to add more details to the Prerequisite Tree and skip the Transition Tree. Therefore the sixth tree of the Logical Thinking Process is more an option.

In my opinion, the Transition Tree option is to consider when facing reluctant stakeholders who may not be that familiar with the reality of the situation or the details of processes. In such a case, a Transition Tree is a good communication and pedagogic tool about the necessity to change and how it is going to be implemented.

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Thinking Processes – Prerequisite Tree

The Prerequisite Tree (PRT) is one of the Logical Thinking Process tools, mentioned among the Thinking Processes by the Theory of Constraints community.

The Prerequisite Tree is used to surface and overcome obstacles to achieving the change towards the organization’s Goal by setting Intermediate Objectives (IOs). These IOs are sequential steps to implementing the change or steps helping to overcome or neutralize the obstacles.

The Prerequisite Tree is a necessity logic-based tree, like the Goal Tree and its building starts from the Goal or objective downwards. The objective may be the result of an injection identified in a prior Future Reality Tree (FRT). The implementation sequence starts from the bottom up to the top as each layer is dependent on the layer underneath.

The underlying IOs are the tasks required for attaining the objective. If Obstacles surface, additional IOs are required to bypass or neutralize them.

IOs are depicted in square cornered boxes while obstacles are depicted as hexagons or “stop signs”.

Prerequisite Tree

Prerequisite Tree

The graphic convention I use is the one recommended by Bill Dettmer, putting the IOs on top of the obstacles they help to overcome. The original convention is to put obstacles on a side between two IOS and link them with an arrow to the arrow linking the IOs.

Prerequisite Tree original design

Prerequisite Tree original design

The Prerequisite Tree is the preparatory work for the coming implementation action plan as well as a useful communication tool and a means to overcome fear and/or resistance to change. Obstacles may be stated in sentences starting with “yes, but…”.

The related Intermediate Objective(s) prove there is a way to neutralize, bypass or overcome the obstacle.

Obstacles may be real, not only reluctance or fear about change. The lack of a specific required know-how is a valid obstacle and the corresponding IO may be hire the needed know-how or develop it by training.

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Logical Thinking Process

LTPThe Logical Thinking Process refers to the work of William (Bill) Dettmer summarized in the book of the same title. The Logical Thinking Process (LTP) is a one to six steps* integrated process using sound logic and a set of tools to provide executives and system managers an effective method for designing organizational strategy, planning its deployment, evaluating its effectiveness, and making corrections as needed in the shortest possible time.

Bill Dettmer & Chris Hohmann

Bill Dettmer & Chris Hohmann

*the number of steps required or used may vary by necessity or choice/experience of the practitioners

It starts with the Goal statement, the Vision or what the Lean community refers to as “True North”. The Goal can be set only by those who created the system, the system owners or those having the responsibility to conduct the organization toward the Goal set by the founders.

The Goal is dependent upon a series of Necessary Conditions, among which some high level terminal outcome are called Critical Success factors. The visual representation from the Goal down to Necessary Conditions forms the Goal Tree.

The Goal Tree is a benchmark but the actual condition of the organization may not be the one required.Thus the Goal Tree gives input to the next tool in the Logical Thinking Process: the Current Reality Tree (CRT).

With the CRT, the organization is assessed or “audited” about gaps between the Goal Tree requirements and the actual condition. Gaps lead to Undesirable Effects or UDEs. These UDEs are the inputs for the next tool: the Future Reality Tree (FRT) in which the UDEs are neutralized with “injections”; causes or conditions not yet existing and designed to turn UDEs into their opposites: Desirable Effects (DEs), without bringing negative side effects.

Logical Thinking Process
Between CRT and FRT is another tool, called Evaporating Cloud (EC) or Conflict Resolution Diagram (CRD). It is specifically used to solve conflicts, like going for small batches wanted by sales and going for big batches wanted by production, for example. Each party has good reasons to demand for what they see as being the best, but usually the conflict is based on false assumptions the EC helps to surface and then “evaporate” the conflict.

The Prerequisite Tree (PRT) is the next tool of the LTP. It is used when stakeholders argue about obstacles to implement the solutions found with the FRT and EC. Every obstacle is then neutralized or by-passed with Intermediate Objectives (IOs), smaller necessary steps and conditions to fulfill in order to bypass the obstacles.

Finally the Transition Tree (TT) is a kind of detailed action plan but still at system level. Actions, combined with the actual reality and the needed condition lead to the desired new reality and closer to the Goal.

>Watch Bill Dettmer’s video explaining what the Logical Thinking Process is

Rational, logic, robust

All the Trees and the Cloud are based on logical relationships between their entities, which makes them as well as the whole process unbiased of beliefs, false assumptions, emotional and irrational choices, and filter out irrelevant or unnecessary “nice-to-haves”.

The result, if correctly built, is a very robust and complete roadmap to the next level towards the organization’s goal.

The various tools, especially Goal Tree, Current Reality Tree, Evaporating Cloud and Future Reality Tree may be used as stand-alones or in combination. When rolling out the whole Logical Thinking Process, the work group may stop when the FRT is complete and checked, as they feel no need to get into more details with the next trees.


Don’t be afraid by all the metaphoric jargon, it must be learnt but is not that hard. All the available body of knowledge relies on this jargon and it’s the Theory of Constraints community lingo. No way to do without it, like it or not.

Thinking Processes versus Logical Thinking Process

There is a subtle difference between Thinking Processes – plural – and (Logical) Thinking Process – singular.

  • The Thinking Processes refer to the five tools, four trees and one cloud, from CRT to TT and do generally not include the Goal Tree.
  • The Logical Thinking Process is the process described previously, using the same tools plus the Goal Tree. Bill Dettmer keeps considering the trees and cloud as tools, not as processes and sees only one overall process.

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Why I don’t like Lean houses, except one


Chris HOHMANN – Author

I never liked the (Toyota inspired) Lean houses and their many variants. First all these models are generally understood as prescriptive rather than descriptive, thus those new to Lean tend to adopt and copy one model without necessarily understanding its real meaning.

The building blocks of Lean houses are principles, methods and tools, reinforcing the feeling that it’s all about “techniques”.

The house building metaphor also suggests a beginning with sound foundations, robust pillars and when the roof is atop, the organization is done.

We’ll see later it is not in this way.

To add to the confusion, with the broad choice of variants, which is the right one to look at?

The answer should be “the one fitting your purpose, the one you define and build yourself”. But model seekers look for ready-to-use templates, not concepts. So the large choice of variants is more puzzling than guiding. And another bad news: genuine Lean transformation does not come as instant pudding (tribute to W.E. Deming’s quote).

I kept ignoring those houses until I saw John Shook’s new interpretation of the Lean House.

In this model, called the Lean transformation model, there is no prescription, only five questions corresponding to the roof, the pillars, the center and the foundations.

It strangely starts with the roof, because this is what you’re striving for, your Goal. All you will build is done in order to achieve your Goal, the purpose of the organisation.

The first pillar is process improvement and it answers the question about how to change current condition in order for the purpose to become true, how the change has to be conducted?

The second pillar is about capability development, answering the question about how to give people the means and know-how to conduct the change?

Both pillars are necessary for continuous improvement. No point kaizen, kaizen events and the like, real continuous improvement through experimenting and learning to solve problems.

In the center of the house, a character represents management and leadership behaviors and the question is: what management and leadership behaviors do you need in order to make the change happen?

The foundation is made of mindset, the basic beliefs and assumptions. Not the current ones but the new mindset, the basic beliefs and assumptions necessary to make the change happen.

For more details about this model, you may read my other post and watch the embedded video.

What I like with this model is the fact it is really generic: the 5 questions apply to any kind of organization. Furthermore, asking questions leads to build a specific house, a model designed for your purpose and not someone else’s model.

Another reason why I like this model is its convergence with the Logical Thinking Process. When I hear John Shook presenting his model, I “see” a Goal Tree and a Future Reality Tree, bridging Lean and Theory of Constraints. For more about this, read my post: Lean transformation model as TP trees

Read Michel Baudin’s answer to this post: http://michelbaudin.com/2016/09/02/why-i-dont-like-lean-houses-except-one-christian-hohmann-linkedin-pulse/

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Continuous improvement: how easily focus is lost

In an industrial environment improvement opportunities are literally infinite, especially if nothing has been done so far about improvement and maturity, about industrial best practices and considering methodologies like Lean, Theory of Constraints (ToC) or Six Sigma was nearly nonexistent.

When starting to improve, it happens quite often: committed people get lost and lose focus. Instead of concentrating on the core issue to achieving the Goal,  they dilute efforts on lesser important subjects, secondary objectives or even unimportant things.

As a consequence real improvements are delayed or even won’t happen.

How to prevent this from happening? Here are three things that will help:

  • Choose proper KPIs
  • Have a sponsor keeping some distance
  • Start with a Goal Tree

Choose proper KPIs

Measurement is the first improvement step. Choose the (few) KPI(s) that really reflect the achievement of the assigned key objectives and assess the effects of improvement efforts with these figures.

Assigned key objectives points to a Goal set by the organization’s owner or the delegate executives. Bottom-up chosen improvement targets lead most often to local optimization which is scarcely contributing to the overall system improvement, hence the reservation about point kaizen or kaizen blitz workshops focused on local improvements/problem solving.

Expected improvement is generally about productivity, quality, timely deliveries or any combination of them. Outcome should be measured in physical units, e. g. widgets per hour, right first time rate or on time in full (OTIF) deliveries.

Pitfall to avoid with KPIs is to choose activity-related instead of outcome-related ones, like the number of kaizen events held in the week rather than additional widgets made ready for shipping.

Teams may get some scolding for not delivering the expected results even though they were convinced to have worked hard and gotten nice results. They are just not aligned with top management’s expectations.

Back-standing sponsor

Having someone higher ranking / legit, keeping some distance from details and looking at the project with a broader perspective is a good way to prevent shop floor teams to get pulled down into details and away from their objective.

The sponsor should have authority to both help the team to overcome some difficulties, when decisions are to be made with other stakeholders and authority to demand regular reports and direct the team when necessary.

Regular reports and expectation of results are powerful incentives for the team not to lose themselves during their improvement journey.

Having a back-standing manager is common practice in the consulting business where a manager will follow, support and coach the consultants shop floor team, making sure focus is kept on the right objective and progress is consistent.
Some customers can’t understand the importance of this management they consider costs added, not value-added, an easy way to charge more (Yes this may happen, but let’s assume the consultants we’re considering are good ones with real care about delivering value and some ethics).

Well, the cost of meaningless efforts, wasted time and resources on ill-chosen or defined objectives is often much higher than the cost of the back-standing manager.

When the Goal is defined at the top-level and the objectives assigned to the teams, the project governance is usually defined as well, with someone high-ranking taking the sponsor / jury role. Bottom-up initiatives do not always have it.

Start with a Goal Tree

My regular followers are used to read my posts promoting this fantastic tool: the Goal Tree. Many of you readers may not yet be familiar with Goal Trees, and I strongly recommend you to learn more about them and evaluate the potential benefits using them.

At the beginning of a project, building a Goal Tree is a smart investment worth the couple of hours required: a well-built Goal Tree will give guidance toward the assigned or chosen Goal as well as the associated few Critical Success Factors to achieve and the list of Necessary Conditions to fulfill.

The Goal Tree is built upon necessity logic (in order to achieve… we must…) and thus prevents to get lost in nice-to-haves or irrelevant “improvements”.

From the moment I used a Goal Tree from the start myself, I kept focused, consistent and more efficient for myself or the teams I worked with. Conversely, when I thought I could save the effort starting with a Goal Tree it went not that brilliantly, with some deviations, drifting and the like.

These unpleasant experiences were powerful reminders, especially when the back-standing manager legitimately “kicked the a**”.


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