In my last post in this series on my new book, The Secret to Maximizing Profitability - A Business Novel on How to Successfully Combine the Theory of Constraints, Lean, and Six Sigma to Drive Profit Margins to New Levels, I discussed Chapters 7 through 11. In this post I will discuss Chapters 12 through 16.
In Chapter 12, I introduce the reader to another side of the Theory of Constraints known as Logical Thinking Processes (LTPs). I explain that the Theory of Constraints is systemic in nature and strives to identify those few constraints that limit the organization’s success in terms of moving in the direction of its goal. I also let the audience know that it’s very important to keep in mind that most organizations function as systems, rather than as a collection of processes. Tires for All is then presented the methodology used to create several of the LTPs.
In Chapter 13, I present a relatively new tool known as the Goal Tree. The Goal Tree is used to assess your organization’s current state and then used to develop a strategic improvement plan. Tires for All learns about this new tool, which is used to create their own strategic improvement plan. This tool, above all others they have learned so far, is a true game changer for Tires for All because it lays the foundation for significant improvements to all areas of the company.
In Chapter 14, I explain the details of how to use the Goal Tree and then present how Tires for All creates their own Goal Tree and how they use it to assess their organization for strengths and weaknesses. This effort, which takes very little time, lays the foundation for the development of their very own strategic improvement plan.
In Chapter 15, the key learning is why the performance metric efficiency, if measured in non-constraints, will tie up cash needlessly and seriously erode on-time delivery, Mark is instructed to come to the Corporate Office to explain why his company’s efficiency had declined so rapidly. Because, for the most part, Tom has led Tires for All’s improvement effort, Mark convinces Tom to go with him and make a presentation to the Board. Tom had prepared a series of graphs that demonstrate what has happened to Tires for All’s key performance metrics, including things like on-time delivery, efficiency, and profit margins. Tom does an excellent job of convincing the board that the direction and pathway Tires for All has taken is the right one. The Board is so impressed with what Tom has presented that the Chairman of the Board offers Tom a new role, which is to work directly for the Board of Directors and teach the rest of the other companies in their portfolio what he had done at Tires for All. Tom accepts the offer, but with one significant caveat.
In Chapter 16, Tom begins his new role, responsible for improvement efforts at all the portfolio of companies and he is very successful. The remainder of the book, Chapters 17 through 20, summarizes all the actions taken at the other companies in the Board’s portfolio. Part of the agreement Tom made with the board had to do with how he would be compensated, and if you’re a fan of the TV show, Shark Tank, you will relate to his deal, especially if you are a fan of Kevin O’Leary.
The genesis behind the Ultimate Improvement Cycle is based upon my many years of analysis of both failures and successes using Lean, Six Sigma, and the Theory of Constraints as stand-alone improvement initiatives. My analysis revealed a common thread between successful initiatives no matter whether they were based on Lean, Six Sigma, or TOC models. The key to success is the leverage point or where the improvement efforts were focused. While eliminating waste, using Lean, and reducing variation using Six Sigma are both critical components of all successful improvement initiatives, where these efforts are focused will determine the ultimate impact on a company’s bottom line. By integrating Lean, Six Sigma, and the Theory of Constraints into a single improvement cycle, I have developed a recipe that will maximize your return on investment, cash flow, and net profit.
I think you will find The Secret to Maximizing Profitability to be both stimulating and thought provoking, but more importantly, it will provide your organization with a road map for maximizing the use of your resources to achieve more bottom-line improvement than you ever imagined possible. I’m convinced that this book lays out the definitive improvement strategy going forward and I’m confident that, if you follow the guidelines I’ve developed, your company will not only survive in this new global economy, it will flourish, just like Tires for All did.
And as I finish all of my books, I wish you much luck in your improvement journey. But my definition of luck is Laboring Under Correct Knowledge … you make your own LUCK! In my next post, I will begin a new series of posts on a new subject.
Bob Sproull
In my next post I will begin a new series of posts on a new subject.
Bob Sproull
No comments:
Post a Comment