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, throughput, or decrease costs, you didn’t increase productivity. You could think you’re running an efficient system, but your thinking might be wrong. Find the new constraint and return to step 1, consider increasing resources to other areas to match the bottleneck’s improvement.Increase resources for the bottleneck ONLY once you’ve squeezed the most you can out of it.
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