Compare the minimum T/CU to the T/CU for each product. You will find current prices that are too low and too high relative to the min T/CU. Now look at your quotes and calculate the T/CU for all your quotes. What is the T/CU for the ones your winning versus the ones...
Now that we have our current T/CU for each product/service we calculate the minimum T/CU we need to cover all of our Operating Expenses plus make the profit we want. Here's how we do that: Min T/CU = (annual OE + annual profit) divided by annual available constraint...
Deciding on pricing for your products or services tends to consume a lot of time and can even be stressful. Typically we are looking for a price that 1) will help us to achieve our financial goals; 2) meet or exceed the value perceived by the market place (will...
We recently updated OUR mafia offer to include free consulting for up to 3 months after you participate in a Mafia Offer Boot Camp. Recently someone asked me, why? I thought that the reasons would be obvious, but that's why assumptions can be dangerous. We offer free...
Question: How much excess capacity do you need to have to make a Viable Vision viable? Answer: It depends. Squeezing more capacity out of your existing operation without investment is relatively easy (you read about it in The Goal, Its Not Luck, and Critical Chain)....
Question: You mention in your speech that TOC (Goldratt's Theory of Constraints) is about the 99/1 Rule, not the 80/20 Rule. Can you explain that? Answer: Let’s start by talking about the 80/20 Rule. The 80/20 Rule, also called the Pareto Principle was made universal...
Question: Should I factor (sell) my receivables? I could use the cash, but the cost seems too high. How do I make this decision? Answer: This question is hard to answer without more information, so let’s look at an example: Let’s say it costs you $40 to make a...
Cash Velocity Summary There are two cash velocity rules: ● Make sure that the amount and rate of cash flowing in is enough to cover all your business and personal needs ● Be paranoid. Unfortunately, stuff happens. And unless you’re willing to risk losing your passion,...
Increasing Throughput -- Other Considerations In previous sections we have covered raw materials and how to reduce them. We also need to cover WIP (Work In Process) and finished goods inventory. DBR Scheduling* reduces WIP by releasing raw materials at the rate at...
Increase Sales cont. Last time we ended our discussion with this question: So how do you increase your throughput without going into cash trouble? The first step is to examine your product mix. Calculate the T/CU for each product. With this information you can devise...
