In my first 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 the contents of Chapters 1 and 2. In this post, I will continue with Chapters 3, 4, 5, and 6.
In Chapter 3, I lay out the basics of Lean Manufacturing, again in simple terms. Mark is very excited about pursuing this as a way to realize much better improvements to his bottom line. He orders books, reads them, and then sends his Six Sigma Master Black Belt to a week-long training session on Lean. He also has Lean taught to all the employees at his plant. He’s excited because he learned that Lean is all about identifying and removing excessive waste within his processes and he is convinced that this is the method that will significantly improve his bottom line. And again, as with Six Sigma, bottom-line improvements are realized using Lean, but they’re not at the level he wanted to see. At the end of this chapter, Mark is at a restaurant and overhears a group celebrating their recent success using a different improvement initiative which took their profit levels very high. Upon discussions with them, he is given the name and a business card of the consultant that helped the company make their improvements.
Chapter 4 begins with a call to the consultant he learned about from the group celebrating their achievements. After a brief discussion with Bob Nelson, the improvement consultant, Mark invites him to come to Tires for All to have a discussion with him about his apparently different improvement methodology. Mark looked online and found Bob’s website, Focus and Leverage Consulting, which stated, I fix broken companies and make good companies great! Mark continued reading and another comment caught his eye which read, I change the way you think, so you can change the way you operate… In this chapter, the concept of focus and leverage is learned and grasped by Mark as he learns about the Theory of Constraints. In any improvement initiative, knowing where to focus improvements is critical, and in this chapter, I will present the “how to” of
this approach.
In Chapter 5, Mark learns about the Theory of Constraint’s Five Focusing Steps and how they can be used to make dramatic improvements to manufacturing systems. In this chapter, Mark also becomes familiar with the various types of constraints that can exist within companies and within their systems. For those not familiar with the different types of constraints that can exist, this chapter provides a basic description of each type. After all that Bob Nelson taught Mark, Bob is offered a contract to come consult at Tires for All, which he accepts. And with this, Tires for All’s improvement effort kicks off.
In Chapter 6, I present how by combining TOC with Lean and Six Sigma, major improvements will be achieved. This is the beginning of Tires for All’s improvement journey where they learn about the absolute power of combining the Theory of Constraints with their already learned Six Sigma and Lean Manufacturing knowledge and experience. Tires for All also learns about a different type of Accounting that will change their course of history going forward. Their Director of Finance, Tom Mahanan, is one of the first to fully grasp and understand the potential future benefits of using Throughput Accounting to make real-time financial decisions. In this chapter, I will demonstrate how Throughput Accounting differs from traditional Cost Accounting and why it is the best method for making financial decisions.
As a result of his learning, Tom Mahanan becomes deeply involved in Tires for All’s improvement journey. Tom realizes the problems associated with making financial decisions using traditional Cost Accounting as the basis for these decisions. Perhaps the most important learning in this chapter is that the real key to profitability should be based on how much money can be made, rather than how much money can be saved, and as you will see in this chapter, the methodology for these two approaches are vastly different.
In my next post I will continue on with more chapter descriptions.
Bob Sproull
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