Last time, we discussed how having a "Mafia Offer", an offer so good that (1) your customers can’t refuse it and (2) your competition can’t or won’t match it -- had the potential to dramatically increase sales. A Mafia Offer is another “technology” that is part of the...
You will possess a sustainable competitive advantage when you have value-creating products, processes, and services for your customers that cannot be duplicated or imitated by your competitors. Having a competitive advantage, even a sustainable one, does not...
When asked about what is unique and different about their company, most people reply with some of the following typical answers: We provide great customer service Our quality is outstanding We innovate and/or help our customers to innovate We have great employees We...
What are the problems associated with marketing and sales? The problems associated with marketing and sales are many, varying, and widespread. A few of the typical responses to marketing and sales problems include: To prospects, what you say sounds the same as your...
Up to this point, we have discussed how Drum-Buffer-Rope scheduling has the potential to double your capacity with little or no investment or expense. And Throughput Accounting has provided you visibility on the rate at which you make money. Both of these...
You can also perform a sensitivity analysis to determine the breakeven level of T/CU. In this example, it would be the Operating Expense level of $615,000 divided by 2,912 which is $211.20. Pricing with Throughput Accounting is much easier and potentially much more...
We are continuing our series based on The Goal by Eliyahu M Goldratt. Let’s apply this to your business. In order to do so, you’ll need to make some calculations. First, write down your annual sales. Second, subtract the Truly Variable Costs (these include raw...
Dr. Goldratt says it this way: “If a process of ongoing improvement is what we are after, which of the three avenues of Throughput, Inventory, or Operating Expense is more promising? If we just think for a minute the answer becomes crystal clear. Both Inventory and...
We have discussed some of the problems with Cost Accounting, yet only touched on the alternative, “Throughput Accounting”. We promised to explore Throughput Accounting in more depth, and explain how implementing its concepts will help you understand the rate at which...
Throughput is the rate at which the system generates money. It is similar to Gross Margin or Contribution Margin, but it is also different in that TOC (Theory of Constraints) does not consider direct labor as a variable cost, but rather as Operating Expense. The role...
