Throughput Accounting

Goldratt Theory of Constraints Throughput Accounting Training Courses and Workshops

Our Throughput Accounting training goes beyond knowledge. We also provide workshops that convert knowledge into skills showing you how to do things. Our training courses are mainly given in-house at our clients and we have public courses as well. See our events pages for public courses. Where possible we will try to include you at our in-house venues when public courses are fully booked.

THROUGHPUT ACCOUNTING AND MICROSOFT EXCEL WORKSHOP

Using Excel to do Throughput Accounting calculations and prepare reports is easy if you know how. Learn how to integrate TA performance measures in management reports. This course teaches you how to create Throughput Accounting tables and charts that are used to report performance critical to achieving business goals. A basic knowledge of Microsoft Excel is a prerequisite before registering for this course. Use your own notebook or rent one of ours at an additional fee. 

Price: $450.00 US Dollar or equivalent currency excluding applicable taxes. Additional fee for laptop notebook rental: $100.00 US Dollar or equivalent currency excluding applicable taxes. 

To register your interest or to request more information please fill out this form.   

THROUGHPUT ACCOUNTING WORKSHOPS

Throughput Accounting Workshops teach the conceptual concepts and how Throughput Accounting is applied in businesses. There are three levels: 

    • Beginner – basic overview (e.g. non-accountants and junior accounting personnel)
    • Advanced – general subject coverage (e.g. accountants, operations and marketing managers)
    • Executive – interpretation of reports (e.g. decision makers who need to understand the reports that finance produces)

The workshops are given in-house at clients that provide their own facilities and at public venues. We encourage clients to share facilities to save costs and to share the knowledge.

 

Study material and meals are included. Our venues are specially chosen for suitability.

 

The TA Workshops are endorsed by the Chartered Institute of Management Accountants. In order to keep standards high, attendees are limited to twenty per workshop.

 

Price: $450.00 US Dollar or equivalent currency excluding applicable taxes.

 

To register your interest or to request more information please fill out this form.    

 

 

MAXIMIZING PROFITABILITY WORKSHOPS — FREE half day workshop in Denver

 

In this highly interactive presentation, “Dr Lisa” Lang engages the group in discussion and hands-on participation to discover how to LEVERAGE their existing resources using the Theory of Constraints to maximize profitability. An approach to developing a “Mafia Offer” and to achieving rapid sustainable growth (a Viable Vision) is discussed, along with: 

 

· How to make management decisions that are aligned with profitability goals
· How to increase profitability by increasing capacity with no corresponding increase in expenses or capital investment
· How to create a “Mafia Offer” that allows this newly created capacity to be sold
 
Dr Lisa provides a unique, counter-intuitive perspective based on scientific methods, causing participants to challenge their current assumptions and think bigger. Participants will learn to make decisions and strategic plans that are aligned with maximizing profitability. 
 
The value to participants will include:
· Improved understanding of how to leverage their constraint and existing resources to drive profitability
· 4 metrics and 3 decision rules to make day-to-day and mix decisions that maximize profitability
· How to have the biggest and quickest impact with their Lean and Six Sigma efforts
· The guidelines and examples for creating a “Mafia Offer” – an offer that is so good your customers can’t refuse it and your competition can’t or won’t offer the same.

If you are frustrated with your profit level and are tired of playing Whac-A-Mole, then this event is for you!  

Price: FREE for C-Level Executives, Business Owners, Vistage/TEC Members or Employees of Vistage/TEC Members.  $99.00 for Managers and Consultants. 

To register on line click here or by fax click here

Dr Lisa’s Max Profit Blog – Theory of Constraints, Throughpuot Accounting, Mafia Offers

Sun, 01 May 2011 17:22:00 -0500

You know that song by Sugarland called All I Want To Do? There’s a line in it that goes something like “I got better things to do than my to do list anyway …”



Every time I hear that I just think – then you’re not doing your “to do” list correctly!


I know, I know – I’m weird. But, I think it’s true for a lot of people.


The traditional way of making a “to do” list is to brain storm all the things we need to do. But that is NOT how we do it in Theory of Constraints (TOC).


To make sure that you don’t have better things to do than your “to do” list, don’t use the brain storming method. Instead, understand what you’re trying to achieve and ask “What’s keeping me from that?”


List each obstacle to your goal, the result you’re after or to completing your project (depending on your situation). What it takes to overcome each of those obstacles is what you want on your “to do” list. That way you are only doing what needs to be done to get the result and aren’t getting side tracked by doing (or procrastinating doing) what really isn’t necessary to get the result.


In this way you will end up with a list of things “to do” that, when completed, should be getting you closer to your goal or whatever it was that you’re trying to achieve.


Too often when we brain storm, we put “to dos” that really are NOT needed to get the result we are after. This just delays the result.


Can you think of a time you brain stormed a “to do” item that really didn’t need to be done? Let me know by leaving a comment on this post.

 
Wishing you success.,

Dr Lisa
President, Science of Business

P.S. For those of you keeping score at home this is part of the Theory of Constraints Thinking Processes and it’s how we build a Prerequisite Tree (PrT).

Sun, 27 Mar 2011 19:00:00 -0500

“Now let’s go live to Suzy who is reporting live from the level 5 hurricane… Suzy, how is it out there?”

storm4.jpg
“Well Bob, I can barely stand up as I’m getting pelted with hail in 70 mile per hour winds.  I hope you can hear me because I can’t see the camera man 2 feet in front of me.  Things are pretty crazy out here; the entire area has been evacuated.  I expect to be completely blown off my feet any minute, so back to you Bob.” 
storm11.jpg
“Thanks Suzy, stay safe out there.  Now, in other news …”
Have you ever noticed that every network that reports the weather also reports it “live from the eye of the storm”?  I have even seen this live reporting watching the news in China and Thailand too.  I did not understand a thing during the news, except when they were reporting “live from the eye of the storm”. 
 
I said to Brad – hey look they’re reporting “live from the eye of the storm” here too.  We mused over the way the warm dry newscaster interacts with the reporter that puts their life in danger.  
Well, the week before last I finally heard about a limitation to this kind of live reporting.  Evidently it’s nuclear radiation.  Many stations told their reporters to stay at least 50 miles away from the troubled nuclear reactors in Japan.  I was relieved.  
But before they decided to pull back, reporters were right in the thick of things.  It seems to me that if nuclear radiation is where you draw the line, you would know that right from the start.  (NOTE:  they may have had a trigger for pulling the reporters back, I don’t know.  It just didn’t seem that way.)
Deciding after the fact can be problematic.  You might try to stick with the current approach, policy or plan for too long.  But, if you know what would cause a change of plan, you’ll identify the need for the change and then change faster.  
Now I realize that you can’t predict everything, but many things can be predicted.  For example, what will you do, how will you handle these situations in your business:
  • You lose 25% of you business in 1 day.  (heaven forbid, knock on wood)
  • A customer threatens not to pay $750,000 in products or services.
  • You get sued.
  • You way oversell your capacity.
  • You work through your entire backlog (while sales remained constant) because you’re using the Velocity Scheduling System or Project Velocity System.
  • You’re NOT going into the red zone of the buffer anymore which is slowing your ability to continuously improve.  (Remember we expect to go into the red zone of the buffer about 5% of the time so that we can collect those whys and identify our biggest disruption to flow so we can identify our one and only improvement project.)
  • And, what’s your trigger to go out with your mafia offer – how will you know when your operations are ready?
 What is your list?  You don’t have to get crazy, the first 3 I listed above, I hope, are very unlikely to happen to you.  The remaining items, though, may be more probable since they are negatives due to success.  So what things are most likely to happen at some point?  Then starting with the highest probability one, how could you prevent or best deal with each?
 By doing this exercise, you will be improving your systems and processes to protect against any negatives from success and from stagnation.  This will make your company more viable and more able to handle growth.  

In Theory of Constraints (TOC) this is called coming up with your Negative Branch Reservations.  We like to do this NBR analysis whenever we’re going to make a change/improvement.  But most of us don’t take the time to do this.  In particular, I very rarely see that clients have prepared for their negative branches to SUCCESS.  So basically I’m suggesting you do this now. 
 For example , if you don’t know what your trigger is for shortening your buffer, it may not get shortened (or shortened fast enough) and your continuous improvement may be stalled.  But if instead you include in your SOP that when we’ve had 1 month of 1% or less stuff going into the red zone we are going to shorten our buffer — now you know, and chances are it will get done and done quickly.  (something we do in the Velocity Scheduling System Coaching Program — scheduling for custom job shop)
 I’m just suggesting a little preparation instead of waiting until the reporter’s hair is falling out and deciding that you should have pulled out sooner (not that that happened).  
 How many people do you know that did not react fast enough in the 2008-2009 down turn?  How many of those did not live to fight another day?  What are YOU doing to make your company more viable to ensure you can take market share during the next downturn?
 Remember — hope is not a strategy.  
 Let me know what you think, by leaving a comment on this post.    
Wishing you success.,
Dr Lisa
President, Science of Business

Sun, 13 Mar 2011 18:53:00 -0500

We all want to increase sales, but getting new customers can be a challenge. In fact, this was the number 1 challenge readers of this newsletter listed (click here to sign up).

And it’s no wonder, according to a 2009 Marketing Sherpa study if you have 100 opportunities only 4 are likely to move from “sales ready lead” to “qualified prospect” to an actual customer.

And those numbers are based on “averages”. If you have a more technical sale (which many of you do) requiring a higher quantity of information transfer where the quality of that information, the timing of the delivery and the method/quality of that delivery can all cause your actual average to be lower.

But there is some good news. One proven way to increase conversion rates is to get the prospect to seek YOU out.

How much do you love it when a customer or prospect comes to you with what basically amounts to “I need help…”? If you’re like me, you LOVE it LOVE it LOVE it!

WHY do we love it?

* Because if they were willing to ask for our help:

* They know enough about what we do that they think we have the expertise to help; and

* That they, at some level, already trust us.
Which means the normal conversion rates don’t apply — we have a much higher likelihood of winning this business.

If you didn’t trust someone, would you ask them for help?

If you didn’t think someone could help you, or thought they were an idiot, would you ask them for help?

No! So if someone does ask you for help. This is a really good thing.
So one of the key marketing questions (if you want more sales) is – how do I get more existing customers and new prospects to ask me for help on work I want to do and I’m qualified to do?

Here’s the formula we’ve been using to elicit the “I need help” response:

1. Shine a light on the problem. (there needs to be a message to market match)
2. Verify or validate the problem.
3. Show that it’s even worse than that. (don’t exaggerate, be truthful in all of this)
4. Provide the light at the end of the tunnel.

And yes, for the Theory of Constraints fans out there you’ll notice that this is based partially on the TOC Buy-in process. Step one would be equivalent to “Agree on the Problem” and step four would be equivalent to “Agree on the Direction of the Solution”.

Let’s go through this with an example. Let’s say that I sell tooling for machine shops. And shops that use my tooling can reduce their setup times typically by 25%.

1. What problems do your customers or prospects have, that are significant, but that you can help solve?

They have long setup times. So long that a fair amount of their production capacity is spent setting up machines. Capacity that could be used for shipping more jobs.
2. How can you verify or validate this problem?

The National Institute of Standards and Technology (NIST.gov) reports that US manufacturers waste 25% to 65% of their capacity being “ineffective”[1]. That’s a large portion of US manufacturing capacity that is not productive.

[side note: I had to go find this statistic, but it wasn’t hard to do. And look at the power of having a government agency showing that what I’m writing about is important.]

3. How is it even worse than that for your particular target market?

And custom machine shops are undoubtedly at the highest end of that spectrum. Machine shops rarely have the luxury of staying in one setup for any length of time. The nature of a custom business is small runs that don’t often repeat.

4. What kind of hope is there for solving this problem?

But, a number of custom machine shops are turning these statistics around using tooling that’s designed for quick setups. This tooling costs the same as traditional tooling, the only catch is that you will need to do a little up front work with your tooling supplier.

Now, I do not sell tooling. But if I did, I could use this information in my marketing to get existing customers and prospects to respond and fairly quickly ask for help designing tooling that will reduce their setups. Will everyone? No, of course not. But the best ones will (the ones that really relate to the problem) and they are much more likely to turn into a sale.

The response you’re after could be to get them to download a report on using tooling to reduce setup times or to sign up for a webinar or to sign up for a consultation with you (depends on your sales process and what you’re selling).

We are closing over 67% of the people who contact us from this type of marketing. That means 67 sales out of 100 instead of 4. And selling Velocity Scheduling System and Mafia Offer Boot Camp is not only a technical sale, it’s a counter intuitive one. So before you go dismissing this technique, convinced it won’t work for you – I suggest you give it a try.

If YOU generated your marketing materials or wrote your newsletter and articles with the objective of getting prospects to ask for help – would you get a few more quality leads?  (that’s Mafia Marketing)

If you wanted help applying this concept to your business — getting more customers and prospects to contact YOU – wouldn’t you contact me? :-)

Let me know what you think, by leaving a comment on this post.  I read ALL your comments!

Wishing you success,

Dr Lisa
President, Science of Business
P.S. FOR CUSTOM JOB SHOPS ONLY: The next Velocity Scheduling System Coaching Program starts on March 28.

P.P.S. Ready to increase sales? Need a Mafia Offer? The ON-LINE Mafia Offer Boot Camp is open for registration!

Sun, 27 Feb 2011 22:12:00 -0600

I spent this last week with Dr Eliyahu Goldratt. As many of you know I used to work for him as his Global Marketing Director. He invited me to come and check out what he’s been working on. So, here’s my take on it …




One of the key differences in his thinking is that management attention is the constraint.


While your bottleneck may move around, the only reason it moves or that you even have an internal bottleneck is because either 1) you’re not paying attention; and/or 2) you’re not focused on dealing with it; and/or 3) you’re not taking the right actions.


So the issue is one of focus (at least initially). Most management teams are not working on the right things and waste a lot of time doing what really doesn’t make a difference, most of which doesn’t need to be done.


A management team will be effective if they do the things that need to be done and don’t waste time doing what doesn’t need to be done, shouldn’t be done or multi-tasking between too many things. Doing the latter is what consumes all your time and leaves you little or no time to do what should be and needs to be done.

That is all really easy to say, but harder to execute.

Let’s say that we ARE paying attention and that we ARE focused. Now all we have to do is to take the right actions. Piece of cake, right?

No.

… because the action that you think is the right action typically is not. If you’ve been studying Theory of Constraints for a while or reading my stuff for a while you know that our intuition about what specifically to go and do is often WRONG.

Here are just 4 examples:



So, here’s my advice.


1. Understand what you need to be focused on to meet your goals. I’m assuming that you ARE clear on your goal.


2. Focus on that and nothing else (stop multi-tasking and stop your people from multi-tasking).


3. Get’er done, one tactic at time.


If you are not sure of any or all of these – get yourself one of those TOC consultant types. A good TOC expert can get you focused, help you figure out how to stay focused, and get you set up with the right strategy and tactics (specific actions to take) to achieve the results you’re after.


And the return on this investment should be fast and substantial. If you are not sure what your next step should be, contact me for a free 1 hour strategy session. There’s no charge, we’ll see if we can get you pointed in the right direction.



Wishing you success,


Dr Lisa


President, Science of Business, and your favorite TOC Consultant type!

P.S. FOR CUSTOM JOB SHOPS ONLY: The next Velocity Scheduling System Coaching Program starting soon!


P.P.S. Ready to increase sales? You need a Mafia Offer? The ON-LINE Mafia Offer Boot Camp is open for registration!
 
2011 Copyright, Science of Business.  All rights reserved.

Sun, 13 Feb 2011 23:27:00 -0600

This week I have a new video for you. This video was taken during the 2009 TOCICO conference in Tacoma and this is the first time I’m making it available.


Many of you listed Throughput Accounting as one of your interests. So I dug this video out and uploaded it for your review. Prior to today, this video was only available if your purchased it through the TOCICO.

It’s called “The Fastest Way to Increase Cash Flow” and it’s 48 minutes long. Please let me know what you think of it, by leaving a comment on this post. 


Let me know what you think, by leaving a comment on this post.
Wishing you success,


Dr Lisa


President, Science of Business


P.S. FOR CUSTOM JOB SHOPS ONLY: The next Velocity Scheduling System Coaching Program is starting soon!

P.P.S. Ready to increase sales? Need a Mafia Offer? The ON-LINE Mafia Offer Boot Camp is open for registration!

Copyright 2011 Science of Business

Sat, 05 Feb 2011 11:00:00 -0600

This text is from a county emergency manager in Minot, North Dakota

WEATHER BULLETIN

Up here in the Northern part of North Dakota we just recovered from a Historic event — may I even say a “Weather Event” of “Biblical Proportions” — with a historic blizzard of up to 25’ of snow and winds to 50 MPH that broke trees in half, knocked down utility poles, stranded hundreds of motorists in lethal snow banks, closed ALL roads, isolated scores of communities and cut power to 10 ‘ s of thousands.


FYI:
Obama did not come.
FEMA did nothing.
No one howled for the government.
No one blamed the government.
No one even uttered an expletive on TV.
Jesse Jackson or Al Sharpton did not visit.
Our Mayors did not blame Obama or anyone else.
Our Governor did not blame Obama or anyone else either.
CNN, ABC, CBS, FOX, or NBC did not visit – or even report on this category 5 snow storm.
Nobody demanded $2,000 debit cards.

No one asked for a FEMA Trailer House.

No one looted.

Nobody – I mean Nobody demanded the government do something.

Nobody expected the government to do anything either.

No Larry King, No Bill O ‘ Reilly, No Oprah, No Chris Mathews and No Geraldo Rivera.

No Shaun Penn, No Barbara Streisand, No Brad Pitts, No Hollywood types to be found.


Nope, we just melted the snow for water.

Sent out caravans of SUV ‘s to pluck people out of snow engulfed cars.

The truck drivers pulled people out of snow banks and didn’t ‘ t ask for a penny.

Local restaurants made food, and the police and fire departments delivered it to the snow bound families..

Families took in the stranded people – total strangers.


We fired up wood stoves, broke out coal oil lanterns or Coleman lanterns.

We put on an extra layers of clothes because up here it is “Work or Die”.

We did not wait for some affirmative action government to get us out of a mess created by being immobilized by a welfare program that trades votes for ‘ sitting at home ‘ checks.
Even though a Category 5 blizzard of this scale is not usual, we know it can happen and how to deal with it ourselves.
I hope this gets passed on.

Maybe ……

SOME people will get the message ……

The world does Not owe you a living.

12/29/10
—————————————————————————-

Isn’t this interesting?  I don’t know if it’s really true, that it was sent by an emergency manager in North Dakota, but I love the message.


Now for the Theory of Constraints lesson …


If you were in charge of emergency management for your county how would you prepare?


In Theory of Constraints, one of the things we use to prepare is the phenomenal human ability to find anything and everything wrong with an idea. We call it the “yes, but”.


Whenever we are presented with an idea or solution that did not originate in our own heads, we think and sometimes say “yes, but …”.


We are saying yes to part of the solution, BUT we have a concern about another part of the solution or about a negative that we think could result.


And in some cases the “yes, but” could be the result of our misunderstanding of the solution.


But in any case, and in many company cultures saying it out loud is frowned upon, at least depending on whose idea it was. So many “yes, buts …” never get verbalized.


What a shame and what a missed opportunity!


We use the “yes, buts” technique in the Velocity Scheduling System and our Mafia Offer Boot Camp.


“Yes, buts” can clear up miss understandings, improve already good solutions and help you to find a solution for what seems like an impossible situation.


So if you were in charge of emergency management, would you encourage “yes, buts”? Would you follow every potential negative to see where it leads and determine if it’s worth being prepared for?


I think you would. So why not do that as you’re making decisions in your company? Why not make voicing “yes, buts” a positive thing?


Let me know what you think, by leaving a comment on this post.   


And you may also want to check out this related article:
http://drlisamaxprofit.blogspot.com/2009/12/theory-of-constraints-poogi-part-53-yes.html


Dr Lisa Lang
President, Science of Business
 
2011 Copyright, Science of Business.  All rights reserved.

Sat, 29 Jan 2011 14:01:00 -0600

Back in 2008 I did a presentation at the TOCICO conference called “Achieving Success with a Mafia Offer.” In this presentation I covered how we increased leads for one of our clients (a custom machine shop) using the internet, among other things.


Sometimes having a great offer, a Mafia Offer, is NOT enough to increase sales. Often you have to let the world know about your offer. In this video I explained how we did that. What I did NOT reveal was one of the TOOLs we used to do that.

????????? ???

????????? Click the video to watch it. It was delivered to standing room only!
It is very high content and only 35 minutes.

We were able to drive leads to their website using videos. We could get a number of positions on the first page of Google for their appropriate keywords. And they had a big jump in sales as a result.


The reason I did not reveal the tool was twofold:
1) It wasn’t available even if you wanted it.
2) I wanted a head start with it. (We now have over 95% of our business coming from the internet, so we’re all set there.)


So I’m now ready to reveal my little secret and it is now available for you to try and then purchase if you like.


They open up these trials and allow purchasing for only short periods of time. That’s so they can control the number of subscribers and keep their service levels high.


If you’re interested in using videos and video distribution to drive your Google positions, then give Traffic Geyser a try. You can do a 30 day trial for $1 by clicking this link.


Seriously, this gives you the tools to blast your content out in the form of video, podcasts, audio, articles and more, and have the world at your fingertips. I’ve used the system 2008, and it’s been my little secret until now. Definitely the best dollar you could possibly spend today.



Whether you need or want this tool or not — watch the video above. It was very well received and I covered what it takes to be successful with a Mafia Offer.

If you have questions or comments, please leave them on this post.  I’m happy to answer questions about how to get started with Traffic Geyser.   


Wishing you success,
Dr Lisa
President, Science of Business

From time to time I may bring you news of books, seminars, audios, and other products or resources I have reviewed and want to share and recommend to my readers.  In the interest of full disclosure, I am an affiliate for some of these products, which means if you buy it through this newsletter, I get a commission on the sale.  But the commission comes out of the seller’s pocket; you do not pay extra. 

COPYRIGHT 2011 Science of Business

Thu, 20 Jan 2011 02:08:00 -0600

Check out this article 5 Strategies for Growing as a Domestic Manufacturer
where the Velocity Scheduling System is named a key strategy for growing domestic manufacturing.

Thu, 20 Jan 2011 01:31:00 -0600

In this new article recently published by Roll-Kraft, Dr Lisa reveals the secret to scheduling a custom job shop or machine shop. She explain where shops typically go wrong and specifically what to do differently. If you follow these instructions, expect improved due date performance and reduced lead times.

Check out that new article here: Job Shop Scheduling SECRET

Thu, 09 Dec 2010 18:27:00 -0600

Through the month of December 2010 get The Goal movie based on The Goal book by Eliyahu M Goldratt for $645.  It’s regularly $895 and not often on sale.

Available in English, Spanish, Chinese and Hindi.

Order Here

Fri, 13 Aug 2010 14:37:00 -0500

Here is an excerpt from of Chapter 22 Mafia Offer:  Dealing with a Market Constraint of the Theory of Constraints Handbook

————————————–
Introduction: What Is a Mafia Offer?

A Mafia Offer sounds like something out of a movie, not something that could seriously help you make more money in your business by increasing and controlling your sales.

Dr. Goldratt first introduced the concept of a Mafia Offer in his book It’s Not Luck (Goldratt, 1994, 133). Later, he defined a Mafia Offer as “an offer they can’t refuse” (Goldratt, 2008, 67). But in writing, he more frequently refers to it as an unrefusable offer (URO; Goldratt, 1999, 120) and more recently he (and Goldratt Consulting) emphasizes the need to establish, capitalize, and sustain a decisive competitive edge (Herman and Goldratt, 2008).

For this chapter, I will use the term Mafia Offer and have defined it as follows: An offer so good that your customers can’t refuse it and your competition can’t or won’t offer the same. In addition, I will refer to the operational improvements required for a Mafia Offer as the decisive competitive edge, operational advantage, or competitive advantage.

A Mafia Offer is simply the offer you make to your market—your prospects and customers—to make them desire your products or services and something that your competition cannot quickly match. And, of course, the offer you make is a combination of your products, services, and how you deliver them. Moreover, for your offer—the solution you’re selling—to be unrefusable, you are most likely offering something of equal or greater value than the price you are charging.

Many people confuse a Mafia Offer with a unique selling proposition (USP), customer value proposition (CVP), or a sustainable competitive advantage (SCA).

At first blush, it would seem that a Mafia Offer is similar to these other terms; however, when most people are talking about these alternatives they are actually quite different from what TOC experts mean by a Mafia Offer.

USPs, CVPs, and SCAs take what you already do and state it succinctly and with more specificity aimed at one or a few of their customers’ problems or gaps in current market offerings. These alternatives can be Mafia Offers, but most of the time they are not. Furthermore, an SCA is, in my view, an operational or technological (although these are not typically sustainable) advantage and not an offer per se.

Most companies offer solutions that solve their customers’ various problems or symptoms.  With a Mafia Offer, we are addressing our customers’ core problem as it relates to doing business with our industry.

A Mafia Offer typically requires that you do something different (make operational improvements to establish a decisive competitive edge) to address your prospect’s core problem. These operational improvements allow you to actually deliver something unrefusable to your customers and something that your competition can’t or won’t do because they are not willing to or don’t know how to make the same improvements. In other words, you have to establish an operational advantage.

In this way, a Mafia Offer is a sustainable market offer built on this advantage. Mafia Offers are not a positioning or a tag line and “can only be created by satisfying a significant need of the market to the extent that no other significant competitor can” (Herman and Goldratt, 2008).  A Mafia Offer is where we start if you have a market constraint.
——————————————

Spend just two hours reading this chapter and if you don’t get at least one good idea for your business, contact me and I will give you a refund!

—Dr. Lisa

That’s a Mafia Offer and it’s real. The purpose of this chapter is to introduce you to the Mafia Offer—the Theory of Constraints (TOC) marketing solution. The chapter progresses from the discovery of what a Mafia Offer is, to the guidelines for creating an offer, to how to present an offer, and ends with how the reader can create their own Mafia Offer.

The best way to read this chapter is in order. Each section builds on the subsequent sections, so that when you reach the summary you will have a very good understanding of what we in TOC call the “Mafia Offer.”

Click here to get the BEST price for Chapter 22 on Mafia Offers! (this is for the DIGITAL version of Chapter 22, there is not a printed version of just Chapter 22).  Amazon offers this as a Kindle version but you DON’T need a Kindle to purchase and read it.  They offer Kindle readers for the PC, Mac, Iphone, Ipad, Blackberry and Android.
 
The PDF version is ONLY available here:  Mafia Offers:  Dealing With a Market Constraint

Copyright 2010 Science of Business

Thu, 05 Aug 2010 14:05:00 -0500

I just completed my first Stompernet faculty office hour where I covered the Theory of Constraints Thinking Process tool called the Cloud or the Evaporating Cloud.  The cloud is used to understand the root cause of undesirable effects and/or conflicts.

While the cloud is part of the complete Theory of Constraints Thinking Processes, it is also a very useful stand alone tool.  You can use this quick reference guide to get you started. 

Here is the one page overview I created for quick reference:  http://budurl.com/cloudsum

If you want a book on the subject, here’s a couple that I recommend:
Thinking for a Change by Lisa J. Scheinkopf.
The Logical Thinking Process by H. William Dettmer (Bill Dettmer)

And in this one, Dr Goldratt talks about how to think and why clear thinking is so important:
The Choice by Eliyahu M Goldratt  (it’s a novel)

If you want to be notified when the video is ready, sign up for the Theory of Constraints Ask Dr Lisa newsletter, here:  /free-newsletter/

Here’s to Maximizing Your Profits!

Dr Lisa
(c)Copyright 2010, Dr Lisa, Inc. All rights reserved.

Tue, 03 Aug 2010 17:19:00 -0500

I interviewd Pam Watson Korbel on the 7 Synergies for Business Success.  We found a lot of similarities between what Pam does and recommends and what we at Science of Business do (Theory of Constraints) and recommend.  Here is the video interview and below is Pam’s article on the 7 Synergies.  Please leave your comments to this video!
7 Synergies for Business Success

Who can deny that they want more money, less work, more fun.™ In fact, no one has ever told me that this SmartGrowth brand promise was senseless. More often, they want to know the formula to achieve this level of freedom. The seven synergies for business success will lead you to this fountain.

Many of you will work hard to set goals and devise business plans to achieve growth… in sales, in profits, in business valuations. At the same time you probably feel a little “befuddled” about what to expect given the current state of the economy and business environment.

The following list of “tried and true” business synergies come from over 20 years of experience working with hundreds of small and mid-sized companies throughout the United States. The principles work during an economic upturn or downturn. Whether it was the Mid-western recession of the mid-80’s, the early 90’s California recession, the late 90’s boom or today, time has proven these growth principles. Keep them in mind as you plan today and in the future. Each synergy includes a checklist of tangible actions you can take in your business to implement each principle.

1. Grow from the inside out.

To profitably grow your sales, build off the foundation already proven successful in your company. Focus on your customer base and your product and service portfolio. Prioritize opportunities according to this list:

• The easiest way to grow your sales and profit is to sell more of your existing product to your existing clients.

• The second easiest way is to sell new products to existing clients.

• The third priority should be to find new clients for your existing products.

• Do not create new products for customers you don’t have yet.

Another way of looking at this is that it is easier and less expensive to find new products for existing customers than it is to find new customers.
___ an ideal client profile exists

___ sales and marketing budget that targets existing and new customers

___ system for competitive research

___ defined process to generate leads

___ defined process to maintain client relationships

___ defined process to submit bids and write proposals

___ a process exists to identify opportunities for new products and services

___ existing customers are served first each day

2. Develop a “brand promise” and live it daily.

Once you have been in business for two or three years, your customer base is large enough that, through a focus group or interviews, you can uncover why customers “really” buy from you. That is brand promise. When you know and understand that promise, integrate it into every aspect of your business. Just think of McDonald’s brand promise to provide you with consistency. Do they live that promise daily? Would they be where they are today if they had not?

___ clients provide referrals

___ company maintains a client/prospect data base

___ system for regular customer feedback and research

___ system for gathering input about products and services

___ incentives provided for repeat business with company

___ the company has a written definition of quality

___ vendors must meet standards for quality

___ company defines a competitive market position that is unique

___ the company can measure “real” image and reputation

3. Put people first.

On one of my new motivational calendars this saying appears: “Keep your employees happy and they will keep your customers happy.” Another page says, “Companies don’t succeed, people do.” Whether times are good or not, the most successful companies have found that people are the critical difference to long-term success in a competitive environment.
___ employees are encouraged to cross boundaries

___ turnover is below the industry average

___ an employee appreciation plan is in place

___ an employee recognition system is in place

___ managers may deviate from defined policies to be flexible with employees when it does not hurt the business

___ employees receive on-the-job and/or classroom training every year

___ employees understand what decisions may be made without management approval

___ the company has an employee manual

___ every employee has a job description

4. Values validate valuation.

Having worked at Enron in its early days of the 80’s and now lived to see where it ended up, I have no better testimony as to the importance of defining company values and living them. In the end, they do validate your company’s valuation.
___ prospective employees are screened for their fit with company values

___ a written, company values statement is provided in the employee handbook and visibly posted throughout the company

___ the executives discuss the company’s values statement during employee orientation and at least twice a year at company meetings

5. Lead to create and maintain wealth.

Michael Gerber of the E-Myth has a great saying, “Owners need to work ON their business not IN it.” How much time do you spend every week working IN versus ON your business? Your job description and duties should be oriented so that the business operates without you. Those businesses have higher valuations.
___ an exit plan for the business exists

___ succession plans exist for each shareholder working in the business and every key manager and key employee

___ the valuation of the business is re-evaluated annually

___ the industry system for establishing business value is well understood (value drivers, methods of valuation commonly used, trends)

___ owners spend four or more weeks a year away from the business

___ strengths, weaknesses, opportunities and threats reviewed twice a year

6. Hire both leaders AND managers.

Leaders work on strategy, vision, mission, values and goals. They rely on managers to create systems, implement goals, and deliver the brand promise. Every business needs both leaders and managers. The person who can be both a leader and manager is truly gifted and rare.
___ regular meetings are held at the shareholder, executive and employee levels

___ the company has 5-year, 1-year, quarterly and monthly goals

___ the company posts its mission, vision, values and goals

___ the company has a business plan (sales forecast, expense budget, organizational chart and plan)

___ outside advisors meet regularly with the shareholders and management

___ employees document policies and procedures

7. Monitor, Monitor, Monitor…whatever you measure will improve.

I have never seen this fail. When clients are short on cash and they start measuring it, cash improves. When businesses do not have enough sales to cover overhead and they monitor sales daily, sales increase. When employees overspend and management starts monitoring, expenses decline.

___ each business function develops monthly and quarterly goals

___ each business function has one to four key numbers that it monitors via a written report

___ each employee understands his/her one key measurement

___ each employee has a performance contract or scorecard

___ each employee has a performance review twice a year

___ employee compensation is driven by performance and merit

___ company measures itself against a budget

___ company compares results to industry standards and sets goal to exceed the industry

___ financial statements are produced by the 10th of each month

___ monthly sales reports are prepared by the 5th of each month

___ sales are measured daily

The Intangible Synergy – The quality of the CEO is directly proportional to the quality of the company.

Great CEOs incorporate the skills of discipline in their personal lives and those skills carry over to company results.

___ Company executives, managers and employees follow a time management discipline.

___ The company follows a regular meeting schedule.

___ Wellness is promoted among all stakeholders.

___ Personal balance is encouraged among employees.

___ All stakeholders are satisfied with the communication practices.

___ Stakeholders share a positive affirmation that the company will succeed.

With these simple tenets, there is no reason for more money, less work and more fun™ to be a mystery. If you have not started setting goals and developing a plan for this year, start now. If you have, did you incorporate these guidelines?

The big payoff if you follow these guidelines is simple freedom to choose your activities. By growing successful businesses, women business leaders will achieve the freedom to spend more time on corporate boards, community service and public policy.

You can contact Pam at http://www.smartgrowth.com/.

Thu, 29 Jul 2010 20:49:00 -0500

Chapter 22 of the Theory of Constraints Handbook is my chapter.  It’s titled Mafia Offers:  Dealing with a Market Constraint.

Here’s the Amazon description:
“Spend just two hours reading this chapter and if you don’t get at least one good idea for your business, contact me and I will give you a refund!” Dr Lisa Lang That’s a Mafia Offer and it’s real. The purpose of this chapter is to introduce you to the Mafia Offer-the Theory of Constraints (TOC) marketing solution. The chapter progresses from the discovery of what a Mafia Offer is, to the guidelines for creating an offer, to how to present an offer, and ends with how the reader can create their own Mafia Offer. A Mafia Offer delivered correctly, can give you better control over your sales. What’s better control? How about closing as much as 80 percent of your opportunities?

Because this chapter is on marketing, I thought that a good marketer should get their book to #1, otherwise you’re not really practicing what you preach.  So after a little marketing campaign, Chapter 22 is still number 1.  During the campaign we reached #1 in two categories, but as of today July 29, 2010, here is the current ranking:

#1 in Kindle Store > Kindle Books > Business & Investing > Management & Leadership > Quality Control

Click here to get the BEST price for the Theory of Constraints Handbook!  (this is for the whole book)
 
Click here to get the BEST price for Chapter 22 on Mafia Offers!  (this is for the DIGITAL version of Chapter 22, there is not a printed version of just Chapter 22). 

————————————————–
Here are the 4 reviews for Chapter 22 that have been posted on Amazon so far:

5.0 out of 5 stars Business can now rise way above the Blah Blah Blah, July 17, 2010
By Casinero – See all my reviews
Amazon Verified Purchase(What’s this?)

This review is from: Mafia Offers: Dealing with a Market Constraint (Chapter 22 of Theory of Constraints Handbook) (Kindle Edition)

At last! Someone has written a superbly useful methodology for anyone in any situation to rise above the crowd. A must read for anyone who wants to sell “ANYTHING” including themselves, and hey! who doesn’t want to sell themselves.

Fabulous job Dr Lisa.
 
1 of 1 people found the following review helpful:

5.0 out of 5 stars Appreciating the Master: Dr Lisa, June 29, 2010
By Jeff ‘SKI’ Kinsey (Hilton Head Island SC) – See all my reviews
Amazon Verified Purchase(What’s this?)

This review is from: Mafia Offers: Dealing with a Market Constraint (Chapter 22 of Theory of Constraints Handbook) (Kindle Edition)

Dr Lisa once again brings real value to the market. There are about a thousand Constraints Management folks that know how the tools work at some level that brings value to their clients. Then, there are a small handful of true experts that have applied the tools so often as to become the de facto standard bearer. When it comes to unrefusable offers (UROs) also known as Mafia Offers, Dr Lisa is a group of one. Period. I am pleased to add this chapter to my iPod touch.

5.0 out of 5 stars Great chapter on Mafia Offers, July 3, 2010
By Mr. C. J. Ching (a kiwi in Scotland) – See all my reviews
Amazon Verified Purchase(What’s this?)

This review is from: Mafia Offers: Dealing with a Market Constraint (Chapter 22 of Theory of Constraints Handbook) (Kindle Edition)

This is a nice little read covering the essentials of what a mafia offer is, how it differs from other marketing approaches, and how to construct one.
Buy this chapter: it’s a very small bet which could have a huge financial payoff for your business.
 
 
5.0 out of 5 Summary of Unrefusable Offers, July 16, 2010
By Lane Kagey – See all my reviews
Amazon Verified Purchase(What’s this?)

This review is from: Mafia Offers: Dealing with a Market Constraint (Chapter 22 of Theory of Constraints Handbook) (Kindle Edition)

This is a good summary of unrefusable offers. It defines them and then gives some simple examples of what they look like and how to build them. It is a nice introduction to the topic.
————————————————–

Click here to get the BEST price for Chapter 22 on Mafia Offers! (I can’t believe I did all that work and shared by best stuff for this thing to sell for between $5.56 and about $9 depending on where you are in the world!)
 
Here’s to YOUR Mafia Offer,
 
Dr Lisa
 
P.S.  A special thanks to James Cox and John Schleier for the effort in making this project a reality.  And thanks to our publisher McGraw Hill.

Wed, 21 Jul 2010 22:19:00 -0500

FUNNY “Behind the Scenes” of the Overcoming Resistance to Change video. This was recorded at the TOCICO conference BEFORE the video was released. Watch Eli (Eliyahu M Goldratt) draw the mermaid!

Theory of Constraints Resistance to Change and Isn’t It Obvious book are worth investigating.

Wed, 21 Jul 2010 14:03:00 -0500

Here’s a couple of my TOCTips from Twitter.  Both are on the subject of overcoming resistance to change from the Theory of Constraints perspective.

[TOC Tip241] Want people 2 accept change? Present THEIR + – 2 change & their + – 2 not changing. Theory of Constraints #tocot

[TOC Tip240] People do NOT resist change, they judge it. Theory of Constraints #tocot

Now here is a video on how to do it.  This video was written by Eliyahu M Goldratt, author of The Goal to promote his NEW edition of his still relatively new book, Isn’t It Obvious.


Leave your comments (or questions) and let me know what you think about the video and/or about the content.  Do you agree with this video?

Here’s to Maximizing YOUR Profits,
Dr Lisa

P.S.  If you’d like to follow my daily TOCTips on Twitter, go here:  http://www.Twitter.com/TOCExpert

Tue, 06 Jul 2010 10:10:00 -0500

In Part 1 I covered the Theory of Constraints first Law of Leadership — “Don’t be a sissy!” And I have to admit I was holding my breath as I clicked the send button. I was direct (as I tend to be) and I wasn’t sure what your response would be.
 
It stirred up a lot of response. My heart rate increased as the first responses starting showing up within 10 minutes! Here are just a few of the first responses I received:
 

“Liked this one a lot!”
“I really love this – I talk to “just do it” all the time in my work (it’s in a frame on my desk). Adding “don’t be a sissy” is fantastic.”
“Amen”
“Great mail Lisa!”
“Agreed and amen!!“
So it seems that I have your permission to be direct (except for the few people who unsubscribed).  Now, I want to cover the second Theory of Constraints Law of Leadership – “Just do it!”

So now that you know how not to be a sissy and you’ve decided what you are going to go do. Just do it!

“Just do it” does NOT mean steam rolling your people (but at the same time don’t let THEM be sissies!), it means to focus and get it done NOW.

Use the Theory of Constraints buy-in and “yes, but …” processes to get agreement on what you want to do and why you want to do it. These processes also serve to clarify what exactly you’re going to go do and usually the solution improves in the process.

Then, if you have someone who just doesn’t want to do it — do it anyway. Ask them if they are willing to try (really try) it. If so, then get on with it. If not, it maybe it’s time to replace that person with someone who is.

Don’t make excuses as to why you can’t start now. If there are other things going on, and those things are NOT your biggest most important project (yes singular) – stop doing them. You can start them again if they become your biggest priority.

There are really only 2 Theory of Constraints “Just Do It” measures:

1) Reliability – did you do what you said, when you said you’d do it. Whatever the something was you decided to do that we talked about in Part 1 – did you do it on-time? If you are unreliable you didn’t. If you are reliable you did it and finished when you said you would. Due date performance is a type of reliability measure.

2) Effectiveness – you didn’t waste time being distracted on other things and/or doing things you shouldn’t have been done. Ineffectiveness is the biggest cause of unreliability and “not doing”. If you’re doing things you shouldn’t, typically you are making it very difficult to be reliable and get done what you should. Inventory is a type of ineffectiveness measure – if you have produced something ahead of when it was needed in order to be efficient or to save money.

Being ineffective is really a focusing issue – both not working on the right things and working on too many things at one time.

So get really clear on what you’re going to do and what you’re NOT going to do and then get it done.

And to me, that takes care of leadership. There are only 2 things you need to do:

1) Don’t be a sissy!

2) Just do it!

One of the best leaders I’ve interacted with recently was one of my Velocity Scheduling System clients – Tanya DiSalvo, President, Criterion Tool. Her team was struggling with buying into VSS but she held firm (definitely not a sissy) and then focused on doing it. And doing it right, not some watered down version of what the group was first willing to do.

Here’s the payoff she and her team got:

 
And I received this email update from Tanya on June 6, 2010:

“Welp it’s Criterion’s one year anniversary with the VSB (Velocity Scheduling System) and WE STILL love it!

A few major projects went thru our building: new product launch in Oct- Dec, another new product launch currently under way, reduction of staff thru attrition and increase in work, and in most cases we came thru with flying colors.

Attached is our score card. :)”

Wishing you unsissified success,

Dr Lisa

P.S. Make sure that you click on the links above. They link to additional information and some really good stuff.

P.P.S. If you run a custom job shop and are frustrated with scheduling — check out the Velocity Scheduling System Coaching Program  http://www.velocityschedulingsystem.com/

P.P.P.S Download the “9 Challenges to Scheduling Your Job Shop and Why Your Schedule is Dead on Arrival” special report here: http://www.velocityschedulingsystem.com/ebook/

Sat, 03 Jul 2010 18:01:00 -0500

July 4th makes me think of being patriotic and that makes me think of the military and the military makes me think of our great leaders. So I did a little internet surfing on leadership.

In a Google search there were 154,000,000 results for the word leadership. On the National Speakers Association’s website there are 650 speakers who are experts on Leadership.

I don’t know about you, but as an engineer and NOT a very touchy feely kind of person, I have trouble relating to all the discussion on leadership.

I don’t have anything against leadership or the people who speak on it or write about it (there are tons of those people and some of them are my friends), I just don’t see what the big deal is.

Theory of Constraints is about focus, so assuming you are focused.  There are only 2 things – guiding principles if you will — that a leader or manager needs to keep in mind.  I call them the Theory of Constraints 2 Laws of Leadership:

1) Don’t be a sissy!

2) Just do it!

Any leader, who is bold about what they want and goes after it without apology and with perseverance, has my attention. And if this direction is delivered in a respectful way, they have my respect. I will follow where they lead. (Am I alone here?)

Now that sounds easy, probably too easy. So let’s apply it. Don’t be a sissy means – don’t let old patterns, past ways of doing things, and failures stop you from finally getting 99+% on time all the time, reducing lead-time, and from dramatically reducing chaos or whatever your goals are.

Pick a technique, a philosophy, or anything that you think might get you closer to your goals. And realize that if you want improvement, you have to DO SOMETHING different. It is also true that not all change is improvement, so select carefully, but DO make a selection.

I once told a client who wanted to do an incentive program (which generally I’m against) that I didn’t care if they wanted to bring clowns in on Fridays – but to DO SOMETHING.

Now, I’m partial to my programs and Theory of Constraints for the “something to do” – but even if you don’t go with the changes I recommend, you will get some improvement simply by doing something and sticking with it.

For example GE chose Six Sigma as the horse they would ride. I can tell you why that may not be the best overriding philosophy, and how they could get better results by using Theory of Constraints to direct their Six Sigma efforts (see 2 articles below), but the reality is that they did improve by making the selection and sticking to it.

Don’t be a sissy also means don’t make excuses and don’t blame anyone but yourself for the results you get or don’t get.

It is our job as managers to put systems and processes in place that get the results we want. Our systems and processes comprise the policies, procedures and measures that direct our peoples’ actions. If you’re not getting the results you want, just look in the mirror.

Don’t listen to the voice in your head or to your employee’s who say:

  • “that will never work”
  • “we already tried that, and it doesn’t work here”
  • “you don’t understand …”

And one other thing that “don’t be a sissy” means is that if you make a mistake, chose wrong, or fail – then get over it and find what IS going to work.

This is NOT in conflict with my prior statement of “sticking with it”. I find that people either 1) don’t try something long enough to see if it’s going to work – they get distracted by the next new shiny thing; or 2) they stick with it forever despite the poor results.

I’m suggesting a rational balance between the two. And a good way to do that is to decide ahead of time what success and failure look like, then do everything to can to make whatever you decided to do a success.

If you want better results you are going to have to do things differently. Simply decide WHAT you’re going to do and just do it.

Next time, I’ll dive into the Theory of Constraints second Law of Leadership — “Just do it!”

Wishing you unsissified success and a happy July 4th,   (Please post your thoughts and comments to this post.)
 
Dr Lisa

P.S. Here are links to 2 articles on the subject of Theory of Constraints and Six Sigma: /files/SixSigma2.pdf and /files/2006MayTLSArticle.pdf (this one includes Lean)

P.P.S Check out http://www.velocityschedulingsystem.com/ if you have a custom job shop and need to reduce time through your shop, get on-time and reduce chaos.  This is a coaching program to help implement what you read in the Theory of Constraints book The Goal by Eliyahu M Goldratt.  WARNING:  This is NOT training, this is a go and do program. 

P.P.P.S Download the “9 Challenges to Scheduling Your Job Shop and Why Your Schedule is Dead on Arrival” special report here:  http://www.velocityschedulingsystem.com/ebook/

(c)Copyright 2010, Dr Lisa, Inc. All rights reserved.

Sat, 03 Jul 2010 15:47:00 -0500

This is Part 3 of a multi-part series that will be posted on the Velocity Scheduling System Coaching Program blog. We covered the biggest constraints we find as Theory of Constraints consultants.

Read Part 3 here: http://velocityschedulingsystem.wordpress.com/2010/05/10/the-biggest-constraint-we-theory-of-constraints-consultants-find-is-%e2%80%a6-part-3/
 
The Velocity Scheduling System Coaching Program is a guided implementation of the Theory of Constraints Drum Buffer Rope. 

Fri, 02 Jul 2010 15:46:00 -0500

This is Part 2 of a multi-part series that will be posted on the Velocity Scheduling System Coaching Program blog. We covered the biggest constraints and most common constraints we find as Theory of Constraints consultants.

Read Part 2 here: http://velocityschedulingsystem.wordpress.com/2010/04/14/the-biggest-constraint-we-theory-of-constraints-consultants-find-is-part-2/

Fri, 21 May 2010 07:56:00 -0500

http://www.TOCHandbook.com NEW Theory of Constraints Handbook best price and special offer for Chapter 22 on Mafia Offers.  43 Theory of Constraints Experts from around the world have contributed to this new TOC Handbook including, of course, Dr Eliyahu M Goldratt.  This book is published by McGraw-Hill ISBN 9780071665544 and is edited by James Cox and John Schleier.

McGraw-Hill is offer the hard bound handbook and each chapter can also be purchased as a separate book. 

Check out this video to get more information on how to get the best price for the hardbound handbook and how you can get over $500 in bonuses if you purchase Dr Lisa Langs ebook Chapter 22. 

 

Thu, 01 Apr 2010 23:21:00 -0500

This is Part 1 of a multi-part series that will be posted on the Velocity Scheduling System Coaching Program blog.  We covered the biggest constraints we find as Theory of Constraints consultants. 

Read Part 1 here:  http://velocityschedulingsystem.wordpress.com/2010/03/30/the-biggest-constraint-we-theory-of-constraints-consultants-find-is-%e2%80%a6-part-1/

Wed, 24 Mar 2010 11:20:00 -0500

We are continuing our series based on The Goal by Eliyahu M Goldratt and the Theory of Constraints. {This series was co-written with Brad Stillahn}

Dr. Lisa: So business owners cope with the issue in several ways. Many let the problem happen to them. They have long-standing vacation policies that dictate how much time off people get, most often dictated by length of service. Many times, the employees get to choose when they would like off, with no limit as to how many people can be off at a time. But, some business owners do manage this, placing a limit on how many people can be off at the same time, and from the same department.

Brad: In my experience, once employees make enough money, time off becomes a high priority. And, that is in conflict with the needs of the business and business owner. I want a secure, satisfied work force to keep turnover down, but the more secure and satisfied they are, the more time off they desire.

Dr. Lisa: Interesting dilemma to have with your best and longest term employees. And, I would guess that you also have employees who constantly need last minute time off to deal with the crisis of the moment.
Brad: Yes, of course.
Dr Lisa: Unplanned time off can be very disruptive. Sometimes, it is the same people who need or take unplanned time off over and over again. That requires enough people in total to cover for the lost productivity. It may be additional “protective capacity” in the department, or in other departments that pitch in to help. Sometimes, the work just sits and waits for the employee to return, especially when no one else has that skill set. That interrupts flow, and flow is the most important thing a business needs to maintain.
Brad: Again, these problems hit small businesses especially hard. There is no one else with the needed skill set and/or there aren’t enough people to get the job done in the first place.

Dr. Lisa: How did you handle it as an owner of a label printing business?
Brad: By installing a system that wasn’t popular, but was very effective. For all non-exempt employees, I raised pay rates and the vacation that was possible to earn. That was the good news, and provided me the opportunity to put in a system that had some teeth to it. Everyone earned vacation by working a full work week. Any unplanned absences during regular hours (being late, sick, etc.) resulting in earning less vacation, and required using existing vacation time for the time off. No longer was vacation an entitlement that was just given, and we actually had a system for “earning” it. We coordinated employees’ vacation such that two weeks of vacation were taken by employees in blocks, one week in December and another in July. Otherwise, two weeks notice was required, and we quoted two weeks lead-time, so we could predict available resources accurately.
Dr. Lisa: Would you recommend something like that for other business owners.
Brad: Only if they have a problem with availability of people.
Dr Lisa: Nice answer and as you know, I agree. We should only do those things that are necessary and sufficient to achieve the results we’re after. So my recommendation is to do the Velocity Scheduling System Coaching Program first (or Project Velocity System for service companies). Then, if you have this issue, it will show up in the red zone of the buffer and you now know what to do about it.

Here’s to maximizing YOUR profits!

Dr Lisa

(c)Copyright 2010, Dr Lisa, Inc. All rights reserved.

Hello? Is anyone reading? Please add your comments (just click the comments hyper link at the bottom of the post)

Wed, 17 Mar 2010 11:20:00 -0500

We are continuing our series based on The Goal by Eliyahu M Goldratt and the Theory of Constraints. {This series was co-written with Brad Stillahn}

Dr. Lisa: Each employee has a life outside his or her job in a business. They have family, financial and other pressures. Time off is sometimes needed.

Brad: Of course, but business owners have to run the business to satisfy their customers, as well as make enough profit to stay in business. Time off can be a real issue. In some businesses, it is the main issue.

Dr. Lisa: In many businesses, employees have holidays and earned vacation. Normally there are paid breaks for non-exempt employees. In addition, depending on the company, they might also have paid sick leave and/or unpaid time off.

Brad: Often times, the more senior the employee, the more earned vacation they have. And senior employees are frequently the most skilled. When they are off, it’s tough to maintain productivity. Early in my career, I supervised a small department of highly skilled employees. We were responsible for the production of a large group of paper mills. It didn’t take me long to realize that on average, one person would be off on vacation every day. And of course, it didn’t work out that way. Half the department would be gone the whole month of December. Most small businesses have this problem, although they cope with it in different ways.

Dr. Lisa: Yes, I’ve seen all kinds of different ways business owners cope with this, including NOT dealing with it at all. But, to maintain due date performance, there needs to be some predictability and consistency of resource availability. In the Velocity Scheduling System (based on Theory of Constraints drum buffer rope), machine shops are comparing load to capacity for several weeks into the future. Often the company policy requires less notice for vacation than the scheduling horizon, meaning that significant variability is added from even planned time off, not to speak of unplanned time off that happens with no notice. Due date performance is jeopardized.
Dr. Lisa: Then there is the impact on profitability. Paid time off is an operating expense. Throughput (Throughput equals Sales dollars minus Truly Variable Costs in Theory of Constraints Throughput Accounting) dollars must exceed Operating Expense to make a Profit. During some weeks and months of the year, there isn’t enough productive time available to produce enough Throughput to make money. This puts the business owner in the position of having to make enough more money in the more productive months to make up for the loss months.
Brad: And, customers don’t care about the people scheduling issues the supplier has. They expect what they want when they want it (or at least when it was promised). For sure, the demands placed on a supplier by a customer do not neatly fit into the preferences of when employees would like to work.

… to be continued in Part 67
Hello? Is anyone reading? Please add your comments (just click the comments hyper link at the bottom of the post)

Here’s to maximizing YOUR profits!

Dr Lisa

(c)Copyright 2010, Dr Lisa, Inc. All rights reserved.

Mon, 15 Mar 2010 01:57:00 -0500

http://www.ProjectVelocitySystem.com Critical Chain Project Management based on Goldratt Theory of Constraints.   This Theory of Constraints video on Goldratts Critical Chain Project Management CCPM explains how to get MORE projects DONE faster. This video covers 1) why it’s so difficult to get projects done on-time; 2) how to select the right projects (or prioritize jobs); and 3) how to get MORE projects DONE faster with Project Velocity System for project based companies including service companies.