Eliyahu M Goldratts new book Isn't It Obvious on Theory of Constraints Replenishment

Eliyahu Goldratt has a new book coming out shortly. It's called Isn't it Obvious and it covers the Theory of Constraints replenishment solution for a retail store.

If you want to pre-order it, click here: Isn't It Obvious by Eliyahu M Goldratt

You can also read Chapter 4 of Eli's new book.

Theory of Constraints POOGI - Part 48

We are continuing our series based on The Goal by Eliyahu M Goldratt and the Theory of Constraints. {This series was co-written with Brad Stillahn.}

Do-it- yourself 'Viable Vision'

Brad: "If a business owner wanted to grow the bottom-line of their company at the fastest rate possible, what would he or she have to do?"

Dr. Lisa: "Get operations 'perfect', and increase sales without a proportionate increase in fixed costs."

Brad: "And what kind of improvement is possible, say for a machine shop?"

Dr. Lisa: "We call what is possible 'Viable Vision'. It varies for different types of businesses, but the results that are possible are bigger than most business owners dare imagine. One definition of Viable Vision is to 'turn your sales level into your profit level in four years or less'."

Dr. Lisa: "Another definition is to increase the percent return-on-sales to a level that the owner, at the outset, would definitely agree is unrealistic. For example, a business that has hovered around breakeven can easily have a 20% return-on-sales, but the owner probably thinks this is unbelievable. And it doesn't matter how small or large the company is; it's possible. The amount of TVCs a company has, as a percent of sales, will have an impact on how long it will take. But it is possible."

Brad: "So what you're saying is a business with $2 million in sales could have $2 million profit by the middle of 2013. Or $10 million sales into $10 million profit. Have you forgotten about the recession?"

Dr. Lisa: "The recession just highlights the importance of sales. A business with an offer 'too good to refuse', what I call a 'Mafia Offer', will grow sales in any economic conditions. We have experience with companies that traditionally had a 'hit rate' of less than five percent, increasing that to well over 50%, while reducing their sales cycle time."

Brad: "What do you mean by 'perfect' operations?"

Dr. Lisa: "When we develop a Mafia Offer, there is a need for operations to be very reliable. By 'perfect', I mean it must be a rare occurrence for the company to miss a due-date commitment or whatever the offer promises. A Mafia Offer is backed up with a solid guarantee, in the form of a self-imposed penalty for non-performance of the offer, so if we're late, for example, we might be giving the customer the order for free."

Dr. Lisa: "No matter how unreliable a machine shop might be now, they can become 100% on-time in a very short period of time, like two months."

... to be continued.

Here's to maximizing YOUR profits!

Dr Lisa Lang

P.S. If you have an internal constraint (not 100% on time), check out www.VelocitySchedulingSystem.com (based on Golratt Drum Buffer Rope) Group 5 starts November 23, 2009! (for job shops only)

P.P.S. If you have an external constraint, check our our ON-LINE at www.MafiaOfferBootCamp.com ; GROUP and PRIVATE Mafia Offer Boot Camps at www.MafiaOffers.com

P.P.P.S. If you have a cash constraint ACT NOW! Free cash video, click here --> The Fastest Way to Increase Cash Flow.

(c)Copyright 2009, Dr Lisa, Inc. All rights reserved.

Theory of Constraints POOGI - Part 47

We are continuing our series based on The Goal by Eliyahu M Goldratt and the Theory of Constraints. {This series was co-written with Brad Stillahn.}

Do you really think you can do it all yourself? continued

Brad: "So, we agree on the problem. What's the direction of the solution? How can a small business owner get the talent they need to grow profitably?"

Dr. Lisa: "Well, that depends. It is ultimately the business owner's decision. I think it comes down to two choices that are not mutually exclusive:
1. Build an effective management team, and/or
2. Get outside help."

Dr. Lisa: "When small business owners think about getting outside help, they generally think about solving specific problems, not about running the overall business better. They'll get one consultant for one type of improvement, and a different consultant for another type of problem."

Brad: "We're back to affordability. Outside help costs a lot of money. If I have a problem I can't fix myself, I'll get the help I need to fix the problem. Like a plumber, electrician, or a 6S Lean consultant."

Dr. Lisa: "Think bigger. A business should be a money-making machine. There is one overall process that needs to be defined and improved."

Brad: "Well, I can think of a couple of examples of ways to get outside help. One is to belong to and be active in an industry association like NTMA. That's a way to learn from successful peers. Another is to join a CEO membership organization like Vistage. I've been a member for six years and it has provided me value."

Dr. Lisa: "Absolutely, both are important. But I have a recommendation. Get help to specifically improve your business, your money-making machine."

Brad: "I did that. I paid for the best TOC consultants available for four years before I felt I was self-sufficient. But that was expensive. The day-rates were sky-high. We're back to affordability."

Dr. Lisa: "Any good consultant should be willing to get paid if and only if they produce bottom-line results."

Brad: "But we've made the case that a business owner can't know everything. Can a consultant know it all?"

Dr. Lisa: "Well, we like to think so! I recommend a business process improvement team that is involved over a period of time to help the business owner achieve his or her goals. To help them think big, we recommend 'Viable Vision'. Viable Vision is defined as turning your sales level into your profit level in four years or less. It's aggressive but doable. And the value of the business soars with such increased profitability."
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If you are a business owner that would like to turn your company's sales level into its profit level in four years or less, please contact Brad Stillahn at Brad@ScienceofBusiness.com with an email that says "I'm interested". We'll follow up to discuss how it just might be possible for you, and share with you our 100% results-based option where you pay if and only if your bottom-line increases."

Here's to maximizing YOUR profits!

Dr Lisa Lang

P.S. If you have an internal constraint, check out http://rs6.net/tn.jsp?t=ejsoxadab.0.0.vsi4mocab.0&p=http%3A%2F%2Fwww.velocityschedulingsystem.com%2F&id=preview Group 5 starts November 23, 2009! (for job shops only)

P.P.S. If you have an external constraint, check our our ON-LINE at http://rs6.net/tn.jsp?t=ejsoxadab.0.0.vsi4mocab.0&p=http%3A%2F%2Fwww.mafiaofferbootcamp.com%2F&id=preview; GROUP and PRIVATE Mafia Offer Boot Camps at http://rs6.net/tn.jsp?t=ejsoxadab.0.0.vsi4mocab.0&p=http%3A%2F%2Fwww.mafiaoffers.com%2F&id=preview

P.P.P.S. If you have a cash constraint ACT NOW! Free cash video, click here --> The Fastest Way to Increase Cash Flow.

(c)Copyright 2009, Dr Lisa, Inc. All rights reserved.

Theory of Constraints POOGI - Part 46

We are continuing our series based on The Goal by Eliyahu M Goldratt and the Theory of Constraints. {This series was co-written with Brad Stillahn.}

Do you really think you can do it all yourself?

Dr. Lisa: "Why do many small business owners try to do it all?"

Brad: "Well, we have a lot of reasons. And some good excuses. For some owners, it is affordability. Building a high quality management team is expensive. You have to have enough sales to be able to afford good people."

Dr. Lisa: "Just because you hire a person, doesn't mean he or she will be effective. Making a hiring mistake is very costly."

Brad: "That reminds me of a painful lesson I learned way back in the mid-1990's when my company was smaller. I was complaining to a couple of other business owners about the ineffectiveness of my General Manager. One of them asked me how much I paid the GM. I replied that I paid him $60,000 a year. He told me not to expect the performance of a $120,000 a year GM for half the price."

Dr. Lisa: "Of course, he was right. Too often we fill a key position with a body. Even a small company needs to run sales, operations, and accounting effectively. That requires good processes as well as good people."

Brad: "Let's talk about one of the most devastating reasons a small business owner tries to do it all: ego. I've been there, too. Too often being in charge is about always being right. But it's impossible for any one person to know it all."

Dr. Lisa: "Oh that reminds me of one of my favorite expressions: 'would your rather be right, or rich'?"

...to be continued.

Here's to maximizing YOUR profits!

Dr Lisa Lang

(c)Copyright 2009, Dr Lisa, Inc. All rights reserved.