Throughput Operating Strategy
The Throughput Operating
Strategy (TOS) aligns the
efforts of every part of the business with the company strategy. Instead
of each local area driving toward its own local optimum, the TOS insures
that everyone understands the role they must play for the organization to
succeed.
Executives expecting
breakthrough results from
their strategies need the power of TOC's global perspective coupled with
the power of the TOS to align efforts behind the strategy.
Learning all there is to know about TOC is not sufficient. All the different
aspects need to be integrated into a cohesive operating strategy. We have refined
the implementation of our Throughput Operating Strategy (TOS) so well that large
Fortune 500 companies that have used it, recommended our approach to their
peers. Great praise indeed!
The Throughput Operating Strategy delivers the following tangible
benefits:
-
Substantial throughput increases (25% or more is not uncommon)
-
Shorter cycle times (up to 50% reduction)
-
Reduced inventory
-
On-time delivery (>98% is not unheard of)
All of this with no or negligible increase in operating expense. The TOS
involves every person and department in the organization. This is not another
"management thing" aimed at foisting the latest fad onto the troops. It
is a robust, common-sense way of involving everyone in genuine productivity
improvement.
Taking the current operating practices into consideration, a TOS is
developed to establish a cost-effective, detailed way to introduce the right mix
of education, implementation assistance and software support to generate the
greatest benefit for our clients. It might include Jonah education,
EDM workshops, hands-on simulation training and active implementation
support.
We spend a lot of time with top management to define "what good looks
like". This is NOT simply a restatement of company objectives, but focuses
and co-ordinates the entire organization around strategic constraints or
"control points". The strategic constraint is the key
capability that justifies the company's existence in the face of competition.
All other company activities are geared to maximize the ability of the strategic
constraint to create value. The TOS provides stability of focus and lasts for a number of years, irrespective of changes in the business
environment.
What makes a TOS so much different from other
strategies? It is the only approach that links the ENTIRE system, at plant
level or at divisional level, to the performance of the constraint or control
point. This ensures that every action is geared to support the maximization of
Throughput at the control point, without some local priority distracting from
this system-wide goal of consistently making as much money as possible.
Traditional strategy formulation excels at setting the strategic objectives,
but FAILS to acknowledge that the company is only as capable as the constraints
that exist within it. How many times have you attended strategy
formulation exercises where the same issues are discussed year after year?
There seems to be no movement on any of them!
The TOS
provides a meaningful frame for restructuring organizations. It places the
activities of every division in the context of its contribution to maximizing
the throughput of the ENTIRE organization. No more prima donna behavior
from some divisions trying to outdo their sister divisions within the company. No more striving to achieve departmental goals to the detriment of the
organization as a whole. Focus, Focus, Focus is the rallying cry.
Key Benefits
The TOS is a radically different approach to the way organizations set
priorities, structure their behavior and interact with the environment. It
provides for cohesion and commonality of purpose unrivalled by any other
approach to maximizing organizational performance. The TOS delivers:
-
The only logical way to configure the performance of the entire system
-
Maximum throughput consistently and dependably
-
Long-term stability of focus.
Since the constraints or control points dictate the performance of the entire
system, simply removing the constraints is not sufficient. In actual fact,
it will make the situation worse. Since all the facets of the organization have
found their own way to co-exist with the constraint, removing the constraint
leaves many of them in a new, undefined role. With the main point of reference
no longer there, new models of behavior are required. Many times, these models
are re-defined in a vacuum, which lead to unpredictable behavior.
To pre-empt this, it necessary to develop the TOS for the entire system, and
to educate everyone in the expected new behavior, before the constraint
is removed. We have seen the TOS succeed where repeated efforts at
restructuring organizations have failed miserably.
Instead of causing more confusion, demoralization and the illusion of
progress, it provides lighthouse-like stability in a turbulent
environment.
The benefit of the Throughput Operating Strategy is best summarized in a
comment from a satisfied client to a prospective client, who tried to defend his existing cost-world operating
strategy. He simply said:
"Who gave you the right to continue throwing away shareholder's
money?"
To
see The TOC Center white paper
just go to the request form and choose,
"Throughput Operating Strategy"
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