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Breaking the Bottleneck!
10 profitable ways to use the
'Theory of Constraints' in Services
Buy Now!
New lower price for the online version!
Ask yourself this... At the next budget/project/investment/ cost-cutting round, are you going to solve your biggest problem? Or spread the money around all parts of the business? Why?
Many companies have exploited technologies never dreamt of twenty years ago. However, company management techniques continue to be based on theories applicable to an earlier era. Why?
The concepts behind Goldratt’s “Theory of Constraints” (ToC), even when applied to services, can really add profits to your business. Are you part of the bottleneck, or part of the solution? If you want to make a difference, read on!
If you haven't heard about it, the “Theory of Constraints” or ToC for short, devised by E.M. Goldratt and J. Cox, and popularised through the business novel “The Goal”, reprioritises what managers should be concentrating on.
The key drivers - in priority order - are:
Throughput
Inventory and
Operating Expense
For manufacturers, analysis of available data suggests impressive results:
And this sort of improvement is available to the service sector too, and YOU! |
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The metaphor of the bottleneck - hence the graphic - is used to convey the premise that only by altering the bottleneck does a company increase Throughput, and ultimately deliver superior shareholder value.
Now, all theories should be repeatable and transferable. “The Goal” was set in a fictitious U.S. manufacturing branch plant. Available research shows that almost without exception, companies who have applied the Theory have significantly improved profits. And this book reveals 10 secret solutions to making it work in services!
Want to know more?
To realise this though, it is important for leaders - that’s YOU - to identify the KEY constraint and work top-down to elevate it. Incremental improvements across the board will not deliver. In challenging convention, Goldratt’s “Theory of Constraints” offers competitive advantage, and as such is a valuable management tool.
Do you want to have a competitive advantage?
This action orientated book stems from the original research carried out as part of my top-in-class dissertation in 2000/2001. So its more than just some nice words... it based on proper academic study, analysis and research.
Since the MBA I have taken the basics and used them to solve diverse business issues such as teams with backlogs and how to get value out of IT systems. Whilst the research was on a U.K. based financial services company, the more I read, and as my career developed, I kept realising that ToC would work in almost any situation.
Interested?
And in realising this, the more valuable it seemed to revisit the research and adapt it to share how you can use the Theory to work more effectively, and make more money. Now I hope that, like me, you are inquisitive and prepared to question the way we do things.
I realise that some of you want certainty that this stuff really works - so as a bonus I am giving away both Chapter 1 and the entire bibilography I used!
This ebook is in .pdf format and is set to work with Acrobat 5.0 or higher. If you cannot view this format (eg you are a webTV user) please contact us directly.
If you do not have Adobe Acrobat reader, please download and install this first:
Wouldn't it be great if as you read, you learn, think, write ideas down and decide to use – at the very least – the basic concepts set out in the book? Applying any one of the ideas will pay back far more than your investment.
To that end, I have worked on making it as simple as possible to follow the arguments, even though we are looking here at the less clear-cut world of “services”. I have also laid it out in a way that makes it easy to read on-screen.
As with the rest of life, your commitment to it will be reflected in what you get out of it. I have scattered choice questions throughout. I want you to stop. I want you to think, and then act. The “goal” is not to race through, or skim read; it is to get you thinking, and to take action. Oh, and have fun!
You want solutions to your problems, and this book offers over 80 practical solutions to service-orientated issues, based on the findings of academics and practical application. You will learn about:
PThe basic concepts behind the Theory!
PWhy I like the simple ToC concepts so much!
PHow valuable companies have found it!
PHow Services work the same as Manufacturing
and vice versa!
PWhat to change, what to change to and how to!
PHow to use the key measures in services!
PHow a financial services business worked with old-style mananagement think! And so does yours!
PHow to better manage email!
PHow to hit more deadlines!
PHow to make worklife less stressful!
PHow to manage time better, and why!
PUnderstand the real value of accuracy!
PWhy employing temps treats the symptom not the cause!
PHow to add massive value by focussing on the key issue!
PWhy you should have an egg-timer on your desk!
PWhy you should have nothing to do for half a day a week!
PWhy your staff should have half a day spare too!
PWhy you should send someone else to get your coffee!
PHow to look at your costs in a new light!
PHow to evaluate which parts of your business add value!
"I heartily recommend it, to novice and Vicky Mabin PhD FORS, |
Along the way you will also realise why you are often so frustrated with the service you get from a service orientated company! And that it is not unique to services.
So lets back this up with some real research findings to help answer what value the Theory has to business. For example, how do I know that the companies claiming to have made more money weren't just badly run to start with.
So lets look at G.E. You can presume that the more high profile/respected the company, the more likely that rigorous management was already being undertaken (using the proxy of share price to reflect a well-run company). Thus the fact that G.E., one fo the world's largest and most profitable used the ToC may indicate that the theory was worth pursuing and added value above that available through other routes. However, in the case study it was only part of the company that applied the theory and one can only infer that the theory worked in one set of circumstances.
Similarly, Boeing and Lucent provide results from what are perceived to be well run world-class companies.
In the Boeing example, it was the Printed Circuit Board Centre based in Kent, Washington, U.S.A. that moved to the Throughput world. Whilst not the whole company, it is an achievement to move a branch-plant alone, given that it must report upwards using the old metrics. Time and again, the constraints were identified as policy constraints and revised. The results are a “35% increase in throughput and an on-time delivery performance greater than 95%”.
The Lucent case study was on a fibre optic production line in Reading, Pennsylvania, U.S.A.. More common methods such as JIT and MRP systems had doubled throughput. Adding ToC produced another trebling of Throughput. This cumulative 600% improvement in shipping volume was over just one year. As fixed costs were a high proportion of the costs, this increase in shipping halved the cost per device. Further “reduced intervals and strategic buffering also enable the line to continually achieve 100% on-time shipments to customer despite the large increase in demand”.
When looking at examples in smaller companies, it is harder to confirm that they were already managing effectively.
Draman & Salhus discuss progress in an unnamed paint plant. Statements such as “the situation had become quite chaotic” with 20-day turnarounds instead of 10 suggest a poorly run organisation. Doing anything may improve the situation. According to Bohn,
“Serious problem-solving efforts degenerate into quick-and-dirty patching. Productivity suffers. Managing becomes a constant juggling act of deciding where to allocate overworked people and which incipient crisis to ignore for the moment”
Against this, Draman’s paint plant may be fairly well run. The plant appears to have been operating as per industry standards (prioritising, expediting and producing in advance for their best customers) and was merely suffering from problems of “inventories going through the roof…shipping late”, which in Goldratt’s theory are due to incorrect processes and measurements.
Post Theory of Constraints, the paint plant had:
-
fewer breakdowns
-
no expediting
-
98% on-time delivery
-
virtually no overtime
-
sales rose by almost 400%
-
turnaround in orders moved from 20 days to 8 to 36 hours
And my research shows that the Theory works for services too!
You will also learn:
PWhy bespoke work has to cost so much more!
PHow to spot a wandering bottleneck!
PWhy the morning rush hour mentality persists!
PHow problems can be solved by changing simple things
"I really enjoyed reading this...It conveys your very fine mind, providing practical solutions from your own experience in this field" Phil Bowers, Former MBA Director, |
This ebook is in .pdf format and is set to work with Acrobat 5.0 or higher. If you cannot view this format (eg you are a webTV user) please contact us directly.
If you do not have Adobe Acrobat reader, please download and install this first:
New lower price for the online version!
GBP 4, USD 8, EURO 6
Available from Amazon.com
Or available from Amazon.co.uk
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