Theory of Constraints and TOC Thinking Processes applied to YOUR Life

I have a huge opportunity for you to learn more about the Theory of Constraints and the TOC Thinking Processes.

The Odyssey Program is coming up this July 18 to 25 in San Jose, CA. It's short notice, but it's a great deal. You can attend both the regular session (first 5 days) and the alumni session (last 3 days) which are normally $3500 together for only $1600 for both. And that's all inclusive (ALL meals, accomodations, materials are included).

Why? We are short on attendees due to dealing with Dr Goldratt's passing and we have not had time to market.  We need to cover our costs. This price will NOT be available again!

This offer is limited to the first 10 people who respond and mention the Science of Business. I don't make a commission on this, I just really believe in this program and I promised Eli I would help to market TOC the last time I talked to him. The program is 100% run by volunteers and 100% non-profit. It's a must do for EVERYONE!

If you are interested in learning more about the TOC Thinking Processes and in critical thinking -- this is a great opportunity. This is a life opportunity. Read on for the details:

-----------------------------------------------------------------------------------------

  The Odyssey Program is a 5-day program that allows participants to apply the powerful insights and thinking processes of Theory of Constraints’s (TOC) to their own life journey. The program is open to everyone wanting to invest time to discover what really blocks them to set and achieve ambitious goals or make important decisions and how to practically challenge assumptions or overcome obstacles that hold us back from achieving more “goal units” or leading more fulfilling lives.

This program is aimed at helping attendees develop and apply critical thinking skills to discover the cause-effect patterns, generic conflicts and assumptions that limit success in the various aspects of their life (e.g. wealth, health and happiness) and discover how to practically break these conflicts in ways that do not have any major negatives and or major implementation obstacles.

Attendees can apply these TOC Thinking processes to any personal subject or circumstance (e.g. what to do with the rest of my life, how to live a full life, how to make an important decision).

• Odyssey 2011 Information Brochure - All the latest information about the 2011 program.
• Get to know the Odyssey Facilitator - Dr. Alan Barnard (Freshman and Alumni program facilitator).
• Read all about this years venue – San Jose State University.

The 5 day Odyssey Freshman program is open to anyone from the ages of 15 upwards that want to invest time in using the powerful thinking processes of Theory of Constraints to analyze their own lives.

Starting points for this analysis can include:

1. How to set a life goal and discover which current assumptions can block you from achieving this life goal and how to overcome these obstacles in a systematic and logical way OR

2. How to make Important decision(s) you've been procrastinating on (such as "what to do with the rest of my life", "Why can't I sustainably quit a bad habit" ) and discovering what underlying conflict(s) blocks them from making these decisions and how to identify and challenge limiting assumptions in a holistic and logical way OR

3. Identifying stressful expectation gaps (gaps between what you really want /where you want to be vs. what you have now/where you are) from three different aspects of your life (e.g health, wealth and happiness) and discovering the common underlying conflict and limiting assumptions that block you from closing these gaps and how to overcome implementation obstacles in a holistic and logical way.

The 3 day Odyssey Alumni program (which follows immediately after the 5 day Freshman) is open to anyone that have previously attended a Odyssey Freshman program (including Odyssey Freshman class of 2011). In this program, Dr Alan Barnard will lead the group, following an exciting discovery process (developed by Dr Goldratt specficcally for the Alumni), to experience a real scientific breakthrough using the thinking processes and principles of the hard sciences's "scientific method" to make a real breakthrough in a topic that is important to both our professional and personal lives. Past Alumni topics included "How to find the essence of something we study/read", "How to really focus on what is important/not get distracted by unimportant stuff", "How to prepare properly when we want to sell a new idea/change".

I have personal experience of the impact of the tools taught at the Odyssey Freshman and Alumni programs and can testify the value it has brought to my life and to our organization.

If you are interested in getting more information or to register for the program can visit http://www.theodysseyprogram.org/. Please note that those interested should register asap by clicking on the "Register" tab, as the program is limited to only 60 participants each year and only the first 10 referrals from the Science of Business will get the discount described above.

To get the discount:  simply select the "Young Adult Sharing" option for the Freshman ($1000) and Young Adult Sharing" option for Alumni ($600) on the "Register" tab.  Now that price is for SHARING A ROOM ($1600).  If you don't want to share select the options immediatly to the right of the yellow hightlights which is a total of $300 more.  Then forward your registration to me so that I can okay the special rate.  See yellow highlights below:

If you have any questions regarding the program, you may contact us at: info@theodysseyprogram.org.  And don't forget to forward your receipt/registration to me so that your discount rate will be accepted. 

Remember the Odyssey Program is 100% volunteer and 100% non-profit. We welcome sponsors to support participants from all over the world. Contributions of all levels will be applied to enable someone to achieve their ambitious life goal. We would greatly appreciate donations of frequent flyer miles. Go to the Donate page to donate now, or send an email to info@theodysseyprogram.org if you would like to understand more about sponsoring someone to the Odyssey Program.

Wishing you success,
Dr Lisa
President, Science of Business

Dr Eliyahu M Goldratt, 1947 - 2011

Dear TOC Enthusiast,

A litte over 1 month ago Dr Eliyahu M Goldratt (father of Theory of Constraints and one of my mentors) was diagnosed with lung cancer. It quickly spread and Eli passed on June 11, 2011.

I was fortunate to spend time with him in Israel before his passing. His last days were spent transferring knowledge and getting a small team ready to present and facilitate on his behalf at the TOCICO conference.

We completed that mission yesterday. And I believe it was a big success. We focused on tranferring a process to "Stand on the Shoulders of Giants". This process will ensure that the TOC community continues to thrive.

To give you an idea of how to stand of the shoulders of those that came before, check out this article: Standing on the Shoulders of Giants by Dr Eliyahu M Goldratt (big file with some hand written notes, so be patient while it downloads)

Sincerely,
Dr Lisa
President, Science of Business

Theory of Constraints Cloud Thinking Process Tool 4 Conflict Resolution

I just completed my first Stompernet faculty office hour where I covered the Theory of Constraints Thinking Process tool called the Cloud or the Evaporating Cloud.  The cloud is used to understand the root cause of undesirable effects and/or conflicts.

While the cloud is part of the complete Theory of Constraints Thinking Processes, it is also a very useful stand alone tool.  You can use this quick reference guide to get you started. 

Here is the one page overview I created for quick reference:  http://budurl.com/cloudsum

If you want a book on the subject, here's a couple that I recommend:
Thinking for a Change by Lisa J. Scheinkopf.
The Logical Thinking Process by H. William Dettmer (Bill Dettmer)

And in this one, Dr Goldratt talks about how to think and why clear thinking is so important:
The Choice by Eliyahu M Goldratt  (it's a novel)

If you want to be notified when the video is ready, sign up for the Theory of Constraints Ask Dr Lisa newsletter, here:  http://www.scienceofbusiness.com/free-stuff/free-newsletter.aspx

Here's to Maximizing Your Profits!

Dr Lisa
(c)Copyright 2010, Dr Lisa, Inc. All rights reserved.

Theory of Constraints Tips

Follow Dr Lisa on Twitter and get daily Goldratt Theory of Constraints (TOC) Tips.

http://twitter.com/TOCExpert

A Process Of On-Going Improvement (POOGI) - Part 41

Use Internet Marketing to Increase Leads

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.}

The focus, priorities, and actions your company takes should be different depending on whether your company is internally or externally constrained. If your company can produce and ship 20 to 30% more sales with existing resources, it is externally constrained.

If you’ve determined that your company is externally constrained, you need a lot more sales and fast. That’s the focusing mechanism of Theory of Constraints (TOC). Your attention should be on getting more sales.

Let’s make some assumptions:
1. Your operations are 100% on-time (after all, you’re externally constrained, so you should have capacity to be on-time), and
2. You have determined your target market, and
3. Your conventional marketing and sales efforts are getting the results they are getting and you believe that won’t change much in the short-term, and
4. Your company’s products and capabilities are desirable to prospects if they just knew about them (you need more qualified leads), and
5. Your company has developed an un-refusable offer backed up by a guarantee (what we call a “Mafia Offer”), and
6. You can’t to afford to spend much.

What’s the one thing you could focus on doing that would bring the biggest increase in sales? These days, it might be effective Internet Marketing.

Start with free or low-cost approaches to get prospects calling you.

First, your website needs to be more that a picture of your building or an on-line brochure, and should be built around communicating your Offer.

Second, use Search Engine Optimization (SEO). Select keywords that prospects are likely to search on when looking for what your company does. Your goal is to be on the first page of search engine results for those keywords.

Third, commit to a consistent small monthly budget (for example, $500) for Pay-Per-Click advertising.

Consider the following case of a client of ours. The starting condition was that their website was just a picture of their building. They were nowhere to be found on the search engines. That is, if you didn’t know their website address, it wouldn’t show up on a keyword search. They had no database of prospects. They had no marketing or sales representatives. In summary, their basic approach was to let prospects somehow find them, which wasn’t working very well.

The first thing we did was change the front page of their website to communicate their Mafia Offer. Rather than depending on outside programmers, we used an easy-to-change website technology (for just $25 per month) that gave the client the ability to make changes and update the website themselves. Next, we recorded a brief video of the client describing their Offer with an inexpensive webcam. Then we sent the video, imbedded with the keywords we had chosen (in this case, one was “custom metal fabricated parts”), to all of the social networking sites. Literally within minutes, the client was on the first page of the search results! Why? …because the Search Engines love video.

In addition, the client began to systematically use Pay-Per-Click advertising for the same keywords.

With the combination of Search Engine Optimization and Pay-Per-Click, our client started getting between 10 and 20 visitors per day to their website.

When a prospect finds you, it doesn’t stop there. You have to provide value. Perhaps it is a white paper on a subject that your company is an expert. Offer the white paper in return for the prospect’s name and email address. Our client began building their prospect list, and then began sending everyone an email every other week on a relevant topic related to what they do.

What were the results? After spending only $110, the client landed an account worth $80,000 per month. For a small company of $2 million annual sales, that was cause for celebration! The prospect had found our client by searching on-line for the keywords, and had really studied the client’s site on several occasions to understand the Offer before they called to follow-up. When the prospect called the owner, they were ready to buy!

Once your company is successfully using Internet Marketing, there is more to do. Upgrading your website and videos is important. Relevant content for your prospect list is crucial. Emails, blogging and podcasting may be appropriate. We also recommend your company get a Facebook account.

Want more information? Please email and we will send you a brief paper with more detailed recommendations on how you can manage Internet Marketing yourself, along with some example videos.

...to be continued.

Here's to maximizing YOUR profits!

Dr Lisa Lang

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

Job Shop Scheduling / Machine Shop Scheduling

We are getting ready to start our 4th Velocity Scheduling System Coaching Progam. Three groups of machine shops and jobs shops have already seen big results.

The Velocity Scheduling System is based on Goldratt's Theory of Constraints (TOC) and drum buffer rope. We modified the "off the shelf" TOC for highly custom job shops and machine shops.

To find out more, check out this special report on "The 9 Challenges to Scheduling a Job Shop and Why Your Schedule is Dead on Arrival".

Our 4th Velocity Scheduling System Coaching Program starts on July 14, 2009. For more information, testimonials, and to sign up please visit Job Shop Scheduling. This program is limited to the first 10 companies, so don't delay!

Here's to maximizing YOUR profits!
Dr Lisa Lang
(c)Copyright 2009, Dr Lisa, Inc. All rights reserved.

A Process Of On-Going Improvement (POOGI) - Part 38

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.}

Recent economic events have changed the relationship many companies have with their markets.

Not recognizing this change is dangerous. You may need the change the way you are managing, and quickly.

Goldratt's Theory of Constraints (TOC) asks four fundamental questions related to the process of ongoing improvement:
1. Why Change?
2. What to Change?
3. What to Change to?
4. How to Cause the Change?

Let’s approach this at global level: your total company in relationship to its markets. Let’s ask some basic questions to determine quickly what global problem your company needs to address. This self-diagnosis will help you understand “What to Change?”

Are you internally constrained? Yes or no?

You company is internally constrained when it cannot meet market demands placed on it. Symptoms of being internally constrained include:
1. Less than 100% due date performance, and/or
2. Lead times in excess of your competitors, the industry standard, or what the customer should reasonably expect (evidenced by your large backlog).

Sometimes, you are not internally constrained even when these symptoms exist because you know the company is not as productive as it could or should be. A quick check is to ask whether the company could now sell an additional 20 to 30% more, and meet the commitment within normal delivery lead time. If you cannot, your company is internally constrained.

Very recently, many companies were internally constrained.

...to be continued.

Here's to maximizing YOUR profits!

Dr Lisa Lang

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

A Process Of On-Going Improvement (POOGI) - Part 33

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.}

If we can compute the impact of any action using T, I, and OE, which are global measures (and part of Throughput Accounting), then we can compute the bottom line financial impact quite easily:
· Throughput minus Operating Expense equals Net Profit (T-OE=NP).
· Throughput divided by Operating Expense is Productivity (T/OE=Productivity).
· Net Profit divided by Inventory is Return on Investment (NP/I=ROI).

We recommend measuring frequently enough to continuously improve. To improve, the causes of the effects must be managed:
· Sales Dollar Days and Inventory Dollar Days should be measured daily.
· Sales, Throughput, Operating Expense, Productivity, and Return on Investment each should be measured daily, weekly, and cumulatively month-to-date and year-to-date. It’s also helpful to track each with a 13 week and/or 12 month trailing average graphically.

For additional reading on measurements, reread “The Goal” and “The Haystack Syndrome” by Dr. Goldratt. And feel free to contact us if you have questions about measurements in your organization.

We’ll discuss why incentive systems don’t work as well as measurements in an upcoming post.

...to be continued.

Here's to maximizing YOUR profits!
Dr Lisa Lang
(c)Copyright 2008, Dr Lisa, Inc. All rights reserved.

A Process Of On-Going Improvement (POOGI) - Part 27

We are continuing our series based on The Goal by Eliyahu M Goldratt and the Theory of Constraints.

The detailed buy-in process is:
1. Agree on the problem(s)
2. Agree on the direction of the solution
3. Agree that the solution solves the problem and brings the benefits
4. Agree on predicted negative side effects and prevent them
5. Agree on implementation obstacles and objectives to overcome them
6. Agree to implement the solution.

The step most often missed in the buy-in process is step one, agreeing on the problem.

Let’s use an example from a machine shop. See if you can apply the process. First, the background story:

This machine shop has sales of about $300,000 per month. Sales and the backlog have been declining slightly over the past three months, although a new large order of about $1 million is expected at any time.

This new order is on top of normal orders, so it represents growth. Morale of the workforce has been low recently, following the end of a quarter when no profit incentive was paid out and a new no-overtime policy was announced. Pay rates for the most skilled workers have been frozen for some time.

Supervisors in the plant are trying to implement a change in the work process to cope with the increased sales without adding additional people and have been getting resistance. In fact, productivity has decreased.

What is the problem?

...to be continued.

Here's to maximizing YOUR profits!

Dr Lisa Lang
(c)Copyright 2008, Dr Lisa, Inc. All rights reserved.

NEXT Group Mafia Offer Boot Camp: September 24, 25, 26 2008 in Denver. More information at http://www.mafiaoffers.com/. There are also PRIVATE and On-line Mafia Offer Boot Camps. The July boot camp SOLD OUT and there is no group boot camp in August. Don't miss September!

Are you a Vistage/TEC member who would like your team to hear my speech? Here it is: NEXT Maximizing Profitability Event (no charge): September 23, 2008 in Denver from 1:00 to 5:00 pm at the Science of Business Training Center. More information at http://www.viable-vision.com/. You can register by fax or on-line.

A Process Of On-Going Improvement (POOGI) - Part 11

Conventional cost accounting assumes that incremental and isolated cost improvements are productive and in support of an organization’s goals, and that global improvement equals the sum of local improvements.

Since a conventional cost accounting system relies on transaction data—each transaction is a separate event—it is incapable of a holistic or systems thinking perspective except when closing the books. In addition, conventional cost accounting is not capable of giving good information because it assumes that all the company’s resources are equally important.

So, how would cost accounting block you from implementing the Drum-Buffer-Rope scheduling methodology? In at least two ways:

• because of the way inventory is valued, and
• because of the impact on efficiency measurements.

Remember from the discussion of Drum-Buffer-Rope last month that we expected a reduction in Work-in-Process inventory to about half of its initial level. What is the effect on the monthly Profit and Loss statement from this?

...to be continued.

Here's to maximizing YOUR profits!
Dr Lisa Lang
(c)Copyright 2008, Dr Lisa, Inc. All rights reserved.

_____________________________________________
About the authors:
Brad Stillahn is a business owner that has successfully implemented Goldratt's Theory of Constraints (TOC) methods in his own business and is now helping other business owners do the same. His consulting company, TOC Professionals engages in long-term relationships with companies implementing TOC. His business and personal partner is Dr. Lisa Lang. Brad can be reached at Brad@ScienceofBusiness.com or 303-886-9939.

“Dr. Lisa” Lang is President of the Science of Business. Her speech “Maximizing Profitability” is popular with Vistage groups and as a keynote speech. Recently Dr. Goldratt’s Global Marketing Director, she offers the “Mafia Offer Boot Camp” for companies wanting to develop and implement a Mafia Offer. She can be reached at DrLisa@ScienceofBusiness.com or 303-909-3343.

Maximize the System - Theory of Constraints

Tom Foster of ManagementBlog.org interviewed me. Here is the second installment:

--- Start interview
TF: Intuitively, we try to maximize efficiency (profitability) of the entire company by working in each functional area to maximize its efficiency. We are thinking if every area is absolutely efficient, then by default, the entire company will be profitable. You disagree.

Dr. Lisa: Take an extreme case where a company may break itself into separate P&Ls. The logic is that if we maximize each P&L then we will maximize the P&L of the company as a whole. (And of course it’s much easier to hold each manager accountable only for their own P&L.)

I have a client, a not for profit, who collects donations that they sell in 14 retail stores. Each store has its own P&L and each store manager is measured and rewarded accordingly. The average selling price of an item is $2.25.

Imagine you are one of the underperforming stores in this company. To improve your profit, you need to sell a lot of volume at $2.25.

There are, however, some donated items that fetch $100 or more and sell very quickly. All the store managers love these items. Yet, there is one item that sells for $100 in 13 of the 14 stores, yet, sells for $200 in one of the stores, because of its location. It’s a cowboy item and this store is located near cowboys.

If I hold this item up in front of the group of 14 store managers, which store manager wants it for THEIR store? Of course, they all want the item, but, who should get the item to sell? The cowboy store can sell it for double.

So, if one of the other stores (not the cowboy store) gets a walk-in donation of one of these cowboy items, what should that store manager do?

Most store managers would keep quiet and sell the item quickly for $100 to improve their own P&L. This maximizes their own silo, but steals valuable profit from the company as a whole. This story illustrates how maximizing each silo does not necessarily benefit the system as a whole.
When management teams attack a problem, most often they try to fix a small segment of the company without even seeing the larger system problem.
---End interview

...to be continued.

Here's to maximizing YOUR profits!
Dr Lisa Lang
(c)Copyright 2008, Dr Lisa, Inc. All rights reserved.

Theory of Constraints - Systems Problems

Tom Foster of ManagementBlog.org interviewed me. Here is the first installment:

--- Start interview
A couple of weeks ago, I got to spend some time with Dr. Lisa Lang about one of my favorite subjects, Theory of Constraints. Like many of my favorite subjects, Theory of Constraints is a mindset that leads you to take action (make the right move) that is counterintuitive. In other words, left to your own devices, you would intuitively do exactly the wrong thing.

Theory of Constraints helps us to do the opposite. Theory of Constraints has been around for quite a while, but was most coherently explained by Eli Goldratt in a series of books starting with The Goal. Lisa Lang (Dr. Lisa) spent three years as the Marketing Director for Goldratt Consulting. During the past two decades she has used Theory of Constraints (TOC) to help companies solve their most serious problems. This week, I will share with you some of our conversations.

TF: When a management team realizes it has a system problem, what mistakes does it make trying to attack the situation?

Dr. Lisa: Most often, the team doesn't realize it’s a system problem. Because we are taught to manage in silos, or departments, or teams, most often, we attack the problem inside the silo, and don’t impact the system much, if at all.

By silos, I mean, we tackle sales problems separate from operations problems separate from admin problems. This happens, in part, because we have been trained to work inside our own area, indeed, not to meddle in other areas.

If you look at your organizational chart, you know the silos that exist in your company. Silos, in and of themselves are not bad. It’s that we measure each silo thinking that if we maximize each silo then we will maximize the system or the company as a whole and that’s just not what happens.
---End interview

...to be continued.

Here's to maximizing YOUR profits!
Dr Lisa Lang
(c)Copyright 2008, Dr Lisa, Inc. All rights reserved.

A Process Of On-Going Improvement (POOGI) - Part 9

Normally, Lean and Six Sigma tools provide additional benefits very quickly. For example, it is common that the constraint resource could benefit from set-up reduction. Focusing Lean tools—which cost little to implement—results in additional capacity where it is needed and that has an immediate bottom-line result.

Due-date performance improves because of the reduction in lead-time, the increased capacity, the predictability of the time to process an order has improved, and jobs are prioritized according to due date.

The “Drum” is the schedule for the constraint resource. It sets the pace for the entire operation. In Goldratt's Theory of Constraints, we assume there is one system constraint that is limiting the throughput of the entire business. The drum is the only resource that needs to be scheduled. All other operations have relative excess capacity, meaning that orders can flow through the plant until reaching the constraint resource, and after it.

The “Buffer” is what protects the constraint from going idle from lack of material to process. The buffer needs to be large enough to prevent starvation on the constraint resource. It is really a time buffer, not physical materials, but we’ll explain that at another time.

The “Rope” is the mechanism for release of new material into the operations.

There are conventional cost accounting assumptions that may block you from implementing Drum-Buffer-Rope. Next time, we’ll address those issues, and describe how TOC’s Throughput Accounting concepts will free you to take the needed actions.

...to be continued.

Here's to maximizing YOUR profits!
Dr Lisa Lang(
c)Copyright 2008, Dr Lisa, Inc. All rights reserved.

______________________________________________________________________ About About the co-authors:

Brad Stillahn is a business owner that has successfully implemented TOC methods in his own business and is now helping other business owners do the same. His consulting company, TOC Professionals engages in long-term relationships with companies implementing TOC. His business and personal partner is Dr. Lisa Lang. Brad can be reached at Brad@ScienceofBusiness.com or 303-886-9939.

“Dr. Lisa” Lang is President of the Science of Business. Her speech “Maximizing Profitability” is popular with Vistage groups and as a keynote speech. Recently Dr. Goldratt’s Global Marketing Director, she offers the “Mafia Offer Boot Camp” for companies wanting to develop and implement a Mafia Offer. She can be reached at DrLisa@ScienceofBusiness.com or 303-909-3343.

A Process Of On-Going Improvement (POOGI) - Part 8

Once the lower level of WIP is achieved (using Theory of Constraints) which takes about two weeks, as a job is processed through milling, this triggers the release of another job to the floor to begin processing.

What is the effect?

Do you realize that the amount of work-in-process on the shop floor is directly related to production lead-time? In this example, within just a couple of weeks, lead-time dropped in half, from 4 to 2 weeks. WIP inventory dropped in half as well.

Of course, in this simple example and in the real world, dropping WIP levels will cause some work centers to go idle from time-to-time. Before, with higher WIP levels, we were just masking the reality that different work centers had different capacities. With lower WIP levels, that reality is now exposed and there is an opportunity for further process improvement.

We still haven’t addressed how Goldratt's Drum-Buffer-Rope yields additional available capacity. It does so by revealing hidden capacity on the constraint. The time a job spends waiting is reduced. With focus on the constraint resource, actions are taken that cause better utilization. When everyone knows that the constraint is what limits the net profit of the company as a whole, focus is provided that is unavailable when the shop floor is flooded with work and everything is a priority.

...to be continued.

Here's to maximizing YOUR profits!
Dr Lisa Lang
(c)Copyright 2008, Dr Lisa, Inc. All rights reserved.

A Process Of On-Going Improvement (POOGI) - Part 2

The subtitle of The Goal is “A process of ongoing improvement”. Over the last 25 years, Dr. Goldratt has further developed the Theory of Constraints (TOC) as a holistic process to quickly and substantially improve business results. It is very compatible with Lean and Six Sigma, the two other widely known business improvement processes, where TOC is used to determine where to focus Lean (reduce waste) and Six Sigma (reduce variation) tools.

So why is TOC not more well-known and practiced if The Goal is so well read and results from implementing its methods are so effective? And why are Lean and Six Sigma much more popular business improvement processes? This is a hot topic amongst TOC experts, and probably has to do with the fact that TOC challenges most conventional practices.

For example, TOC contends that Cost Accounting is invalid. Are you prepared to consider for even a moment that the concepts of Economic Order Quantity (EOQ) and set-up cost are incorrect? And if you are, are you prepared to learn the concepts of the alternative, Throughput Accounting? For the few people that are willing to, the rewards are enormous, but most people will resist that change.

...to be continued.

Here's to maximizing YOUR profits!

Dr Lisa Lang

The Goal by Eliyahu Goldratt MOVIE is on sale!

The best selling business book in the world was made into a movie. The DVD typically sells for $895. However, until February 29 you can purchase it for $447.50. The video is a great way to introduce the concepts in The Goal to your entire staff in just 55 minutes.

This video takes The Goal book and shows you how to put the theories to work in your company.
Based on the best-selling book by Eli Goldratt, The Goal tells the story of Alex Rogo, a plant manager facing the threat of his plant's closure. The video follows Alex and his team as they use the Theory of Constraints to transform their mediocre division.

The first obstacle standing in the way of implementing a major change is reaching a wall-to-wall agreement on the direction of change. A powerful tool that can be used to create such agreement is "The Goal: The How-To Version” video. The use of this video is not limited just to the beginning of the implementation process. Reaching agreement on the change in direction is not a one-time effort. As the company moves in a new direction there will be some unavoidable diffusion. To prevent too much diffusion there is the need to repeatedly realign interpretations and periodically use the movie.

If you're interested in purchasing send me an email. The video also comes in Spanish and in PAL format which may be of interest if you're outside the US.

If you're looking for Goal!, the soccer movie, click here.

Here's to maximizing YOUR profits!
Dr Lisa Lang
P.S. The next Group Mafia Offer Boot Camp is in Denver March 25, 26, 27 in Denver.
(c)Copyright 2008, Dr Lisa, Inc. All rights reserved.

How to Sell Your Mafia Offer - Part 7

I will answer my own questions from Part 6 with the typical answers. Remember, that only those of you (30%) who are having trouble getting in will have similar (or any) answers.

So why is it so hard to get in, at the right level, to present your offer? What are the blockades you face?
Voicemail, caller ID, and assistants have made it easier to avoid contact. It seems that with all this technology it has gotten harder to get in.

What is the effect of all this? Longer sales cycles? Slower growth? Lower ROI on your sales/marketing investments?
Yes all of that, not to mention poor cash flow.

Do you have a solution to these challenges? Is there one? What do you do today -- what is your process to get in? Research -- letter -- call? What is the TOC solution?
We do the research -- letter -- call or just research -- call. Goldratt's Theory of Constraints doesn't really cover how to get in.

The assumption was that if you have a good, relevant market offer (mafia offer), then surely you can get it to present it. Right?

Who do you target -- what is the title of that person?
It depends on the particular client, but a common title is VP of Operations.

OK. So my next questions is -- Do people make decisions alone or in groups? What do you think? What's your experience?

.... stay tuned for Part 8

Next Mafia Offer Boot Camp in the US is January 30, 31, February 1, 2008 in Denver. Sign up today, registration is limited to 5 companies. $10,000 per company.

Next Executive Access Boot Camp is February 28, 29, March 1, 2008 in Denver. $1,875 per person for all 3 days.

Here's to Maximizing YOUR Profits!
Dr Lisa Lang
(c)Copyright 2007, Dr Lisa, Inc. All rights reserved.

How to Sell Your Mafia Offer - Part 6

Up to this point, let's say that 1) you have a great mafia offer based on Goldratt's Theory of Constraints ; and 2) you have a can't miss Solutions for Sales presentation. But in about 30% of the cases that is still not enough. Can you get in to make your presentation? And, can you get in at a high enough level for your business deal?

Have you ever had the experience where you established a relationship with the buyer or whoever your contact is and you get to the point where you get to make your presentation, but then you have to come back and do it again (and again) because the people in the room weren't the decision makers? Is there anything more frustrating when you have a market constraint?

So why is it so hard to get in, at the right level, to present your offer? What are the blockades you face?

What is the effect of all this? Longer sales cycles? Slower growth? Lower ROI on your sales/marketing investments?

Do you have a solution to these challenges? Is there one? What do you do today -- what is your process to get in? Research -- letter -- call? Who do you target -- what is the title of that person?

Think about your answers to these questions before I give you our solution -- the Executive Access Boot Camp.

... stay tuned for Part 7

Next Mafia Offer Boot Camp in the US is January 30, 31, February 1, 2008 in Denver. Sign up today, registration is limited to 5 companies. $10,000 per company.

Next Executive Access Boot Camp is February 28, 29, March 1, 2008 in Denver. $1,875 per person for all 3 days.

Here's to Maximizing YOUR Profits!
Dr Lisa Lang
(c)Copyright 2007, Dr Lisa, Inc. All rights reserved.

Increasing Throughput -- Other Considerations

Continuing our cash velocity discussion started on March 16, 2007

Increasing Throughput -- Other Considerations

In previous sections we have covered raw materials and how to reduce them. We also need to cover WIP (Work In Process) and finished goods inventory. DBR Scheduling* reduces WIP by releasing raw materials at the rate at which the constraint can consume the raw materials. Demand Pull* can also be used to reduce finished goods inventory. If we make to stock, or use a replenishment system to supply our customers, then we can minimize the amount of finished goods we carry while at the same time increasing the probability that we will have on hand what is needed. When DBR Scheduling and Demand Pull are implemented, we see a mean reduction in all inventories of about 50%. All of this, of course, helps us to further reduce cash-to-cash cycle time.

* DBR Scheduling and Demand Pull as defined in Goldratt's Theory of Constraints

... to be continued ...

Here's to maximizing YOUR profits!
"Dr Lisa" Lang
(c)Copyright 2007, Dr Lisa, Inc. All rights reserved.

Increase Throughput to Increase Cash Velocity

Continuing our cash velocity discussion started on March 16, 2007

Increasing Throughput

Throughput (as defined in Goldratt's Theory of Constraints Throughput Accounting) is sales revenue minus truly variable costs. Therefore we can increase your throughput by either 1) increasing sales, 2) increasing our selling prices, or 3) decreasing our truly variable costs.

Let’s start with the last one, first. To decrease our truly variable costs we can:

• Negotiate a lower price with raw material suppliers
  
• Negotiate a lower price with outside services, freight suppliers, or with any other truly variable cost vendors that we have
  
• Decrease the sales commission we pay to our sales people

There is a limit to how much we can reduce our costs. If our costs go to zero, then we are no longer in business. Therefore, we want these costs to be in line, but this is not where we want our focus.

... to be continued ...

Here's to maximizing YOUR profits!
"Dr Lisa" Lang
(c)Copyright 2007, Dr Lisa, Inc. All rights reserved.