Think of a production system and you’ll probably conjure up some kind of assembly line. Whether you imagine humans or machines doing the work, this mental model feels wedded to manufacturing. It needn’t be—production principles are universal.
An airline’s check-in desk is part of a production line. So is the hospital’s procedure for admitting patients. Running scripts in software development is production. As is the sales pipeline that gets software to market. Insurance claims and loan applications? Production systems. And the barista in the café offers a vivid everyday production system—so obvious we almost don’t see it as such.
The real cost of any decision is what you forego by making that choice. In economics, the cost of a decision based on the cost of the next best option is called the opportunity cost. At its most poetic, Henry David Thoreau put it thus: ‘the price of anything is the amount of life you pay for it’.
At first blush that may seem a little extreme, but it is a truth. We are all finite beings and will one day run out of life. Time really is the ultimate constraint. If we had an infinite amount of time, we could do everything we desired and have time left over to enjoy it all. (more…)
All improvement is change, but not all change is improvement. Organisations typically change because they want to improve their competitive advantage. How do we give ourselves the best possible chance of success?
Change resides in the domain of projects and project management. We most often think of the word project as a noun. But treat the word as a verb and we get a more accurate rendition of what projects are there to do—that is, to project a vision of an improvement into the future. (more…)
In Part One, I wrote about the kind of challenges we all face when trying to define the human, material, information and financial resources available to us. In small groups, we can estimate what is reasonable and possible simply by talking to people and seeing what they have on their plate. But as our projects get larger and more complex, if we can’t properly quantify our resources, we end up flying blind.
Most organisations vastly underestimate how wasteful they are with their resources. We need to get much better at thinking systemically and acting systematically in the planning and performance of our work. To aspire to achieve lofty goals, we must lift our ability to properly measure and deeply understand the immutable laws of the supply of, and demand for, the human, material, information and financial resources that power our intentions. (more…)
Whatever you think about the free enterprise system, making more money now and in the future is a cornerstone for those for-profit companies who participate in it. Let’s look at how TOC can fundamentally shift management thinking and achieve ever better returns on shareholder funds. By using the systems-based measurements of Constraint Accounting, you will be equipped with the means to make better decisions.
The reason we have financial measurements in the first place is to ensure that we make better financial judgements for our organisations. These judgements can fall into five basic categories:(more…)