About this Presentation
In this presentation we will learn how a small Australian family-business increased sales by 50% (an additional $2m), increased its sales quote conversion rate from 30% to over 95%, and reversed declining profit margins in the space of just 6 weeks. The Project commenced late January 2019 and is ongoing. This presentation provides a deep look into how the company applied Throughput Accounting techniques to achieve these results. We will introduce the technique of Throughput Compression based on backward and forward leveling introduced by Dr Eli Goldratt in his book The Haystack Syndrome. Whilst Dr Goldratt applied this process to internally constrained operations, this case study shows how it can be applied to market constrained operations to concurrently: a) Turn a loss-making period into a profitable one, and b) Expose and condense available capacity for the sales team to exploit using a decision support tool for Throughput Pricing. The presentation will go into some practical detail to show the process and present actual results. Part of the solution required development of a simple and practical Pricing Decision Support Tool. The presentation will also reveal some minor challenges to be overcome along the way. The following addresses the other questions for submission to the Panel. Video length: . PDF: slides.
What Will You Learn
To help you get the most value from this session, we’ve highlighted a few key points. These takeaways capture the main ideas and practical insights from the presentation, making it easier for you to review, reflect, and apply what you’ve learned.
Andrew Kay shows that the company’s biggest constraint was not necessarily production capacity or lack of market demand—it was its own pricing policy. The Australian agricultural and industrial shed manufacturer had available capacity and a growing market, but cost-plus-margin rules prevented the sales team from accepting orders below a predetermined floor price. Andrew identifies that policy as the constraint that was suppressing sales and leaving capacity unused.
Andrew deliberately fixed operations before stimulating more sales. His Negative Branch Reservation showed the danger of increasing demand while lead times and due-date reliability were still poor. The team first implemented visual S-DBR and Buffer Management, reducing average production lead time from roughly 5–6 days to 1–2 days and exposing hidden capacity. Only then did Andrew move aggressively into pricing and sales.
The presentation introduces Andrew’s concept of “Throughput Compression.” Rather than allowing available capacity to remain scattered throughout the schedule, Andrew adapted backward and forward load leveling to an underloaded, market-constrained environment. Existing work could be compressed without compromising customer due dates, creating concentrated blocks of capacity that the sales team could deliberately sell into.
Andrew also makes a strong case for adaptive TOC rather than mechanically applying rules. To create the rapid turnaround, he says the team temporarily challenged conventional interpretations of T/Cu > OE/Cu when “pump priming” sales and applied Throughput Compression even when the market was the constraint. The outcome was dramatic: sales moved from almost 50% below target to almost 50% above target, the business reached its entire 2018 sales level by mid-June 2019, and Throughput nearly doubled.
Instructor(s)
Andrew Kay
ANDREW KAY, TOCPC™ , Founder/Owner TOC3 Pty Ltd & Director of TOC for Education Australia
Recognized in Australia as a leading TOC Practitioner, Andrew is the founder of an independent boutique TOC consulting firm TOC3 Pty Limited based in Sydney, serving the Asia Pacific.
With a TOC career spanning nearly 20 years, Andrew has delivered and helped deliver over 85 successful TOC implementations across a multitude of industry sectors in Australia, New Zealand, Singapore, Indonesia, Japan and the USA. Andrew brings a depth of TOC knowledge and implementation experience in guiding organizations to systematically and rapidly achieve their goals Andrew is proficient in all TOC application solution areas including the Logical Thinking Process Tools. He specializes in rapid and visual implementation methods.
Andrew partners with world-class practitioners and is actively engaged in the International TOC Community. He has commenced sharing his experiences and insights through several case studies at TOCICO and other international TOC Conferences.
Andrew is also the Director of TOC for Education Australia working to introduce the TOCFE thinking tools to schools and communities and wishes he could do more.
Andrew is passionate about TOC and what it can deliver to the world.
Before his TOC career, Andrew served as a scientific-systems based professional in strategic planning for Sydney City and the Blue Mountains Region. A pioneer in Integrated Local Government Geographic Information Systems, Andrew held senior management roles in Government Corporate Strategy and Business Planning and later for 5 years, in the private sector with Business Improvement Consulting with clients such as The Sydney Opera House, Phillips, Canberra Hospital, A V Jennings, and Perrigrin Semi-Conductor. In between he helped establish and run Australia's first micro-finance operation based on the Nobel Prize-winning Grameen Bank of Bangladesh.
Andrew holds a BSc Hons in Applied Science (dual major/Magna Cum Laude) from the University NSW, a post-graduate MBA from Macquarie University, and he is certified by TOCICO, and is a qualified Jonah+ and CCPM IC3PM instructor.