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And a non-bottleneck is any resource whose capacity is greater than the demand placed on it.”. A kid can come to a halt, but he can only catch up as much as the kid in front of him, he can never catch up past the point the previous kid has already walked.īottleneck: “A bottleneck is any resource whose capacity is equal to or less than the demand placed upon it. Since output can only deviate up to the maximum level determined by its dependent events, but it can deviate down much lower, with successive dependent events you’ll get further and further negative fluctuations. In the analogy, put the fat kid at the front of the line, and make his backpack as light as possible so he can walk faster. The whole system only moves as fast as the bottleneck, so it makes sense to focus on increasing the bottleneck’s capacity, and tying the rest of the system’s rate to the rate of the bottleneck. You can’t have a “balanced plant” without doing excess work.īecause of dependent events and statistical fluctuations, you’ll naturally run into bottlenecks in the system, kind of like the fattest kid on a hike slowing everyone down. A plant where everyone is working all the time is very inefficient.

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If you keep everyone and everything working at full capacity, you’ll naturally build up inventory by creating excess work. Not to do them in isolation, but to do them all together. The Goal Reframed: Increase throughput while simultaneously reducing both inventory and operating expense.

Money that you have to pay out to make throughput happen.

Operational Expense: All the money that the system spends in order to turn inventory into throughput.

Inventory: all of the money that the system has invested in purchasing things which it intends to sell.

You can also think of it as money coming in.

Throughput: the rate at which the system generates money through sales.

Those money making measurements are difficult to use day to day though, so you can use:

The Goal: Increase net profit while increasing return on investment and increasing cash flow Just because you’re paying for someone doesn’t mean they should be busy all the time, it could be harmful. Keeping people working and making money aren’t the same thing. And the goal of any business is to make money. If you don’t know what the real goal is, which you could very well be wrong about, then you can’t figure out what to do to reach the goal. If you didn’t increase sales, throughout, or decrease costs, you didn’t increase productivity. You could think you’re running an efficient system, but your thinking might be wrong. ? SUPPORT BESTBOOKBITS BY CLICKING THE LINKS BELOW

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