{"id":113386,"date":"2023-07-17t11:54:26","date_gmt":"2023-07-17t15:54:26","guid":{"rendered":"\/\/www.g005e.com\/?p=113386"},"modified":"2024-08-27t17:01:54","modified_gmt":"2024-08-27t21:01:54","slug":"use-constraints-to-make-improvements","status":"publish","type":"post","link":"\/\/www.g005e.com\/2023\/07\/17\/use-constraints-to-make-improvements\/","title":{"rendered":"use constraints to make improvements"},"content":{"rendered":"
<\/a>if you want different results, you must change the system.<\/strong><\/p>\n by ed mendlowitz<\/i> something is blocking the business from achieving its goal of making more money.<\/p>\n that something is what dr. eli m. goldratt, one of the world\u2019s most sought-after business leaders and authors, calls a constraint.<\/p>\n more: <\/b>ten strategies for smart collections<\/a> | be wary of discounting prices<\/a> | where is your firm in its lifecycle?<\/a> | six kinds of loan covenants<\/a> | what\u2019s more profitable, raising or lowering prices?<\/a> | insurance you might not know you need<\/a> | solos need plans for death, disability<\/a> | you don\u2019t need this, but your survivors do<\/a> a constraint is any element or factor that prevents a system from achieving a higher level of performance with respect to its goals. goldratt developed the theory of constraints (toc) to manage business systems better. it is a management philosophy of focusing on the system constraint. also note that existing systems are designed to give you the results you are currently getting. if you want different results, you must change the system.<\/p>\n to overcome organizational constraints, they must first be identified. an examination of what is preventing the organization from improving performance relative to its goal must occur. in other words, the organization must detect its weak link and strengthen it. the business must investigate its policies and procedures to make sure they are not negatively impacting the organization. if they infringe on the final product of the business, they need to be re-evaluated and changed. consideration must also be given to the company\u2019s resources. if a lack of resources is the cause of the constraint, the business must explore other options to obtaining this resource.<\/p>\n to manage different types of constraints, toc has tools in three different areas. the toc thinking processes, performance measurements, and planning and control systems (logistics) are the concentrations.<\/p>\n when the constraint is identified as a policy or procedure, there are certain questions the organization must ask itself. what needs to be changed? what should it be changed to? how to cause the change? by asking these questions, the organization is identifying the root of the problems, identifying and expanding win-win solutions, and developing implementation plans.<\/p>\n within performance measurement there is common dilemma: cost world versus throughput world. toc recognizes that many constraints are caused by traditional cost accounting. in other words, do you make decisions for your business based on your cost accounting systems or on your throughput (the rate at which the system generates money through sales)?<\/p>\n businesses usually use cost accounting to make decisions including product mix (which products should be made), product introduction (feasibility), product discontinuance (delete products), make versus buy, product pricing, bidding on an order, transfer pricing, and profit- and cost-center results.<\/p>\n throughput, inventory and operating expense relationships to conventional financial measures<\/strong><\/p>\n the organizational improvement occurs when throughput increases, while inventory and operating expenses decrease.<\/p>\n the “five focusing steps” for ongoing improvement<\/strong><\/p>\n given that toc measures are used, the process of ongoing improvement includes the five focusing steps. these five steps are taken from dr. goldratt\u2019s book, “the goal,” which was first published in 1992 and is still being sold. in the book he gives an in-depth explanation of the five focusing steps in relation to ongoing improvement.<\/p>\n they are as follows:<\/p>\n if you want different results, you must change the system.<\/strong>
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\ntoc can, in fact, be applied to any type of organization \u2013 for-profit, not-for-profit, small, large, service, manufacturing and government. it can also be applied to an individual team. accordingly, there are different types of constraints: physical, policy and paradigm. examples of these constraints include capacity, capability, rules, measures, assumptions and beliefs. to succeed, an institution must be able to overcome this wide array of constraints.<\/p>\n\n
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\n<\/a>
\nby ed mendlowitz<\/i>
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