About this Presentation
This presentation describes situations where cash is the constraint and actions that will eliminate that constraint. Some cash draining practices of cash starved organizations are purchasing more than immediate requirements to take advantage of quantity discount; combining supplies to get freight advantage; producing more than immediate requirements for better capacity utilization; not selling obsolete material below purchase price / book value. Exploiting a cash constraint means rotating the cash faster: reduce cash-to-cash cycle time; reduce cash collection time (Receivables); reduce manufacturing lead time (not processing time), and thereby WIP, and FG inventory; reduce supplier lead time, and thereby RM inventory. Do not waste idle cash in the form of surplus / obsolete material and equipment. Exploiting the cash constraint means shrinking collection time, raw materials lead time, shrinking manufacturing lead time. Exploiting the cash constraint also means selling surplus / obsolete materials.
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.
This presentation challenges the reflex to cut costs as the main path to profitability, arguing instead that many manufacturers damage income and worsen performance when they focus on expense reduction without identifying the real system constraint.
A core takeaway is that TOC improves cash by focusing on the weakest link in the chain, not by optimizing every department. The session emphasizes that global improvement does not come from the sum of local improvements, and that policy constraints are often the real limiting factor.
The presentation gives special attention to cash-constrained organizations, showing how faster cash rotation can become the primary lever. It highlights reducing cash-to-cash cycle time through faster collections, shorter manufacturing lead times, lower WIP and finished goods, shorter supplier lead times, and liquidation of surplus or obsolete stock.
It also reinforces the TOC operating logic of Throughput, Investment, and Operating Expense as better day-to-day decision guides than local efficiency or utilization measures, linking those operational choices directly to net profit, ROI, and cash flow improvement.
Instructor(s)
