About this Presentation
“Boosting sales, productivity and profits by 50% in less than 6 weeks and ongoing” Introducing Throughput Compression, Smart Pricing Decision Support Tool and Case Study Update for 2020. In this modified* presentation we will learn how a small Australian family business increased sales by 50%, increased its sales quote conversion rate from 30% to over 95%, and reversed declining profit margins in the space of just 6 weeks. This presentation provides a deep look into how the company applied Throughput Accounting methods to achieve these results with an update for 2020. We will introduce the technique of “Throughput Compression” based on backward and forward levelling 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, b) Expose and condense available capacity for the sales team to exploit using a decision support tool for Throughput Pricing, and c) Increase Throughput Velocity (the speed of making money) for the whole business. d) Grow the top line from $10.8m to $17.8m (+60%). Various pricing scenarios with the Pricing Decision Support Tool to win jobs will be demonstrated along with how the sales and production teams work together visualising current and future capacity and their approach to best maximise Throughput. Video length: 1:01:31. PDF: 106 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 challenges one of the most common assumptions in Make-to-Order businesses: that protecting a predetermined cost-plus margin protects profit. In this case, Andrew identifies the company’s pricing policy—not the market—as the real constraint. The market had opportunity and production had capacity, but internal pricing rules were suppressing sales and leaving money on the table.
Andrew shows why pricing decisions need to be connected to Throughput and available capacity rather than allocated product cost. When sales are low, he argues that additional Throughput can improve the company’s financial position even when a job falls below the traditional margin threshold—provided the relevant variable costs and capacity implications are understood. This shift helped the company move from cost-world thinking toward Throughput-based decision making.
The breakthrough was not pricing alone. Andrew combines S-DBR, Buffer Management, Throughput Pricing, and what he calls “Throughput Compression.” Operations first reduced WIP by more than 70%, cut job lead times from 5–6 days to 1–2 days, and brought due-date reliability close to 100%. With that operational foundation in place, the team could reorganize existing orders to expose usable capacity and deliberately sell into it without compromising customer due dates.
The speed and scale of the turnaround make this case especially compelling. The implementation began in early 2019; within 38 days, sales moved from roughly 50% below target to roughly 50% above target, including a major $2.3M order. By mid-June, the company had already achieved its entire 2018 sales level, Throughput had nearly doubled, and profit had increased significantly. Andrew uses the case to show how changing a few deeply embedded business rules can unlock results far faster than simply trying to “sell harder.”
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.