Improving Your Business with Theory of Constraints
I attended the 42nd International TOCPA (Theory of Constraints Practitioners Alliance) conference in Johannesburg 13 to 16 May 2019. It got me thinking about how Theory of Constraints can and will benefit companies that adopt it.
For those of you unfamiliar with TOC (Theory of Constraints), and in fact those that are, I would like to share some of these amazing success stories.
In today’s times surviving has become the focus for many companies, across all sizes. In this blog, what I want to convey is the amazing results that TOC consistently returns, enabling business to ensure survival and/or increase profits dramatically.
All of the examples are extracts from various presenters and TOC consultants at the conference. These presentations will all be made available to the public via the TOCPA website in due course. See http://tocpractice.com/ for more details.
A TOC success example of the West African mine was accomplished with an amazingly simple solution once the TOC practitioner had evaluated and determined where the “bottleneck” was situated. They simply moved where the next truck was positioned while waiting, reducing the time it took to get into position. A simple and effective solution as can be seen in the image below.
Reduced positioning of empty truck by 24 seconds, resulting in an increase in productivity of 11.6%
If you are not convinced yet as to the power of “focus” and how small changes make massive differences, please study the graphic below.
In Example 3 if you increase your sales by 5% without changing Cost of Sales or Operational Expenses, you would increase your net profit by 50%. Those that doubt it is possible, l would like to recount a lesson I learnt at a seminar some years ago.
The speaker asked who would like to make 10% more profit. As expected, the entire audience put up their hands. Well then, increase your prices by 10% he said. Immediately looks of doubt could be seen throughout the audience. Next, he asked for a show of hands from those companies that had recently increased their prices due to their own increased costs. Approximately 30% of the audience put up their hands. The next question was for those that did not suffer lost sales due to the increase to keep their hands up, they all did!
As can be seen in our example above, you only need to increase your selling price by 1% to achieve a 10% increase in profits. This is definitely not as difficult as the 10% increase that he suggested.
In conclusion, this blog is a small sample of the amazing successes that TOC is bringing about for thousands of companies worldwide. Can you and your business afford to not investigate the opportunities that are just waiting to be exploited in your business.
Please feel free to contact Paradigm’s partner in TOC, email@example.com to discuss your TOC needs.