TOCICO

The goal of for-profit organizations is to make more and more money now and in the future. Five levels of goal achievement: level 1 unable to meet financial commitments; Level 2 Meeting financial commitments but not making profits; Level 3 Making profits consistently but profits fluctuating; Level 4 Profits increasing consistently year after year; and Level 5 Profits and return on investment increasing year after year. How many companies are at level 4 in India? Answer: 23 companies out of 3000 companies; less than 1%. The five focusing steps: what are the obstacles to implementing them? Where is the constraint? Market? Orders? Suppliers? Operations policies? Operations capacity? Balanced line? Cash? Case 1: capital goods manufacturer. It lost money 2.5 years, Owner decided to close plant in 6 months; Cash was the constraint. Turned around in 100 days; throughput increase 30 times in 5 years. Case 2: manufacturer of automotive gears; losing money last five years; action initiated for divestment; constraint is operational policies / goal achievement level 2. Actions stop measuring tons; all functional heads' Key Results Areas abolished; started measuring on-time in-full delivery; focus on throughput instead of sales. Results: Throughput increased 70% within 2 years. Case 3: refractory manufacturer for steel and cement industry Inconsistent profits results in Goal achievement level 2. Constraint is Orders. Actions taken were: stopped measuring in tons; started measuring in throughput loss; focus on throughput instead of sales; weekly review. Results: Throughput increased by 25% within 3 months. The presentation goes on to provide what to measure and what not to measure for each level of goal achievement. For example, what to measure are the outstanding payments status; cash collected; and free cash flow (T-OE-delta I). What not to measure is more difficult to implement. The results of five different cases are provided.