TOCICO

Fleetguard Filters Limited (FG) is a joint venture between Fleetguard US and Perfect Sealing Systems P Ltd for manufacturing filters and other auxiliary systems for heavy commercial vehicles and heavy duty internal combustion engines. FG has been growing sales and profits consistently at 20%+ for the last 4 years. While sales and profits were growing at a healthy rate, the return on capital employed (ROCE) was stagnant around 10-12%. Around 2005 the senior management team at FG was exposed to TOC through the TOCICO conference at Barcelona, and the Viable Vision (VV) event at Mumbai. Our TOC guide helped us understand our constraint, and explained how our measurements were preventing us from exploiting and subordination to our constraint. We decided to measure only 3 parameters i.e. throughput, throughput loss, and productivity (T/OE). We started monitoring these on a weekly basis. We also abolished most of our monthly reports. We linked our people compensation to increases in throughput. Within 30 weeks our throughput increased by 35% without any increase in operating expenses, and thereby our profits increased by almost 100%! We experienced the truism that measurements drive behavior. Fleetguard Filters was able to increase its sales and profits continuously over 4 years but not its return on capital employed.