Up to this point, we provided an overview of Goldratt’s TOC (Theory of Constraints), the business improvement process methodology described in the popular business novel The Goal. Perhaps you’ve had the opportunity to take our recommendation from last month and read or re-read it.
The Goal refers to the goal of most for-profit organizations, which is to make more money now and in the future. If an organization is not making an infinite net profit, and of course no organization does, then something is limiting the system. TOC calls this the “system constraint”. If the constraint is external, the company does not have enough sales to fully utilize its available resources. If the constraint is internal, the company cannot sell all that is demanded from the company. Let’s consider the case when the constraint is internal.
We claimed that if a company implemented the scheduling methodology described in The Goal, that it just might be possible to double available capacity with little or no investment or added expense. The scheduling methodology is known as “Drum-Buffer-Rope” and we will discuss it in more detail this month.
…to be continued.
Here’s to maximizing YOUR profits!