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In our last post, we provided a book review on the business classic, “The Goal”. “The Goal” shares a fascinating story describing the power results utilizing the Theory of Constraints. Discovering bottlenecks. Road bumps. In other words, identifying exactly where the constraints live within a business that prevents the flow of production and positive cash flow.

Consequently, the Theory of Constraints can be applied to any business or industry. For example, companies that make a product or provide a service all suffer constraints and bottlenecks of some type.

Especially with manufacturing.  Yet, the theory of constraints is also applicable to the service sector such as the medical field, doctor’s offices, restaurants, and entertainment.

Below offers an excellent explanation of the Theory of Constraints: 

Self Inflicted Wounds 

The key is identifying those dreaded constraints. In other words, the negative activities or processes within an organization that prevents a company goal from being met. Yet, discovering the sources of roadblocks and hurdles can be extremely challenging. 

In many cases, inefficiencies and constraints are self inflicted. 

In particular, when the constraint is a sacred cow. You know the type, “this is how we have always done it”.

Profit and cash flow are absolutely essential to achieving sustainability and company success. Therefore this is my “Captain Obvious” comment of the day.

Yet, many companies fail to achieve these goals. What gets in the way?

Lack of knowledge, lack of understanding, incompetence, fear of change or ego?

Could it be a deeper commitment to “this is how we have always done it” versus a relentless commitment to finding a better way?

The authors use “The Goal” to describe how to “explain their understanding of manufacturing” and why maximizing throughput is essential. 

“The Goal” is about new global principles of manufacturing. However, even though the book was written 34 years ago, this concept is still new for many people.

Theory of Constraints Five Focusing Steps 

Theory of Constraints

Theory of Constraints offers practical and highly effective solutions to systematic problems.

Five Focusing Steps = POOGI = Process of On-Going Improvement:

  1. Identify the Constraint
  2. Exploit the Constraint
  3. Subordinate Everything to the Constraint
  4. Elevate the Constraint
  5. Prevent Inertia from Becoming the Constraint

Applying Theory of Constraints to Your Marketing Strategy

Let’s look at Theory of Constraints from a marketing stand point. 

In particular, think about your sales lead process. Your web presence. Your internet marketing strategy.

Are there constraints that prevent you from maximizing your business opportunities?

What hurdles and road blocks do you and your company face with attracting new business?

If you are a digital immigrant (born before 1980), your constraint may simply being completely overwhelmed by the whole process.

Questions to ask yourself to identify constraints when it comes to marketing:

  • Do you lack knowledge?
  • Most likely you lack the experience?
  • Where do you turn? Who do you trust?
  • Aren’t Web designers and digital marketers extremely expensive? 
  • How can they possibly guarantee results?
  • Do you make it easy as possible for customers to purchase from you?
  • Do you offer easy access? Phone? Email? Social media? Are you hanging out online where your buyers are hanging out?
  • Can a client easily submit a drawing or RFQ?
  • Do you offer finished goods that can easily be purchased through an efficient eCommerce store?

If you do not have a proprietary product, can you turn your proprietary process into a proprietary product?

Make a commitment to enable your customer to engage with you as easily as possible.

Applying Theory of Constraints to Your Website 

The Theory of Constraints can be applied to your website as well.

Hence, do you make it easy for a customer to navigate your website? 

In addition, do you provide relevant and necessary information for a buyer? 

In other words, does your website provide enough information that a customer could make a buying decision at midnight on a Friday night? Especially those obsessed entrepreneurs that just will not wait until Monday morning when you open. They need a decision NOW! They are trying to solve a problem and are looking for a partner at that moment.

Instead of trying to be everything to everyone, can you exploit your greatest strength?

Can you focus on what you do best instead of drifting into uncharted territory?

What if you attract more customers to buy what you do best?

For example, we had a customer who landed a brand new account. This new customer discovered her through her website.

The client lives in Europe. He was sitting with his spouse, pretending to be interested in the romantic comedy that she had selected for that evenings entertainment. He started searching for a new vendor while on his phone. Stumbled on our customer’s website that she had recently launched. A $400,000 order followed by being available on a late Friday night.

Eliminate those dreaded constraints that make it difficult to do business with you. 

Wrapping It Up

Thank you for reading our post. 

To learn more about Falconer Electronics, check out these helpful links below:

The Goal

What on earth took me so long to read “The Goal” by Eliyahu M. Goldratt and Jeff Cox? The first edition came out in 1984.

Several years ago a close friend, Max Krug, introduced the book “The Goal” as well as the Theory of Constraints. Consequently, Max is a Theory of Constraints (TOC) expert and consultant. Max preaches maximizing efficiency and throughput. He is an operational excellence guru and thank goodness he recommended this outstanding resource. To learn more about Max, click here

Anyway, “The Goal” is the rare business book that demonstrates a game-changing philosophy and strategy described in a fictional story. A story that flows as a well written & page-turning novel.

This business classic is truly a must read for any entrepreneur or business manager. Especially for those in manufacturing. Minimizing constraints while maximizing efficiency and profits is the name of the game. 

The Goal: A Process of Ongoing Improvement

The Goal

Instead of a book just based on theories with boring calculations and models, the authors tell a fictional story of a plant manager who is obsessed with his work.

The book opens with the protagonist, Alex Rogo, plant manager of UniCo pulling into the company parking lot. Only to find his parking space occupied by a crimson Mercedes. Even though the parking lot is nearly empty.

The Mercedes occupying his parking space belongs Bill Peach, division vice president. Bill Peach visits Alex’s plant to address order #41427 that is not only 7 weeks late but also belongs to UniCo’s largest customer.

Needless to say, this large customer is not pleased. The division vice president then informs Alex that he has three months to turn the plant around. Otherwise, Peach plans to go to the management committee with a recommendation to close the plant.

90 days. That’s it!

Combined with rumors flying around that the entire division will be sold if a turnaround doesn’t come soon.

So the journey begins with Alex trying to become a hero and save the day. Save the plant. In addition, save his job as well as his career.

The book details the events necessary with averting closure while turning around a manufacturing plant. How? Applying a new strategic approach

Advancing efficiencies. Vastly improving cash flow and profit margins. Preventing the damage that a plant closure causes a small community. Saving hundreds of jobs as well as all of the families that would be negatively impacted.

Furthermore, the book describes the challenges that a manager faces not only with job security and the threat of his plant being closed, but also his own personal struggles at home. Work-life balance is a hot topic commonly discussed today. Marital problems. Raising kids. That is all here. 

Jonah to the Rescue

While waiting in an airline lounge for a connection at O’Hare, Alex runs into Jonah. Jonah was a physicist professor that Alex knew from college. Alex received a grant to study the mathematical models that Jonah was working on at the time.

Alex updates Jonah on his career and shares exciting information on UniCo. Jonah immediately sees through Alex’s exaggeration of optimism (aka B.S.) and starts questioning Alex about the inefficiencies at his plant. Alex is dumbfounded and questions how could an academic understand his business and manufacturing?

“I am a scientist”, Jonah says “And right now you could say I’m doing work in the science of organizations in particular.”

Jonah continues, “productivity is the act of bringing a company closer to its goal. Every action that brings a company closer to its goal is productive. Every action that does not bring a company closer to its goal is not productive.”

Alex tries to explain how his plant measures efficiencies through benchmarks and formulas. Jonah explains, “You think you’re running an efficient plant….but your thinking is wrong”.

What is “The Goal”? 

As Jonah boards his plane, he leaves Alex with the burning thought, “Alex, you cannot understand the meaning of productivity unless you know what the goal is. Until then, you’re just playing a lot of games with numbers and words.”

That meeting kicks off Alex’s quest to discover “The Goal”.

Alex finally discovers the goal of his plant. Actually, the goal of any organization for that matter: Make money and maintain sustainability.

Most importantly, create profits and positive cash flow.  

Once Alex finally discovers “The Goal”, then his adventure truly begins.

How to actually obtain “The Goal”?

  • Identify constraints
  • Maximize throughput
  • Increase profits
  • Lower expenses
  • Decrease inventory
  • Improve inventory turnover
  • Reduce lead times
  • Hit delivery times

To discover if Alex saves the plant along with the hundreds of jobs, grab yourself a copy of “The Goal” today! 

Wrapping It Up

Thank you for reading our post. 

To learn more about Falconer Electronics, check out these helpful links below: