Ruedi asks Scrooge for Help

"Good day, Scrooge! Very pleased to get to know you! I hope you will be able to help me with my business."

Scrooge:?"Ah, greetings! I'm always up for making a buck, but don’t dilly-dally—I’ve got gold to count!"

"Ok, I will be brief. What I'm looking for is a generic approach to improve any business or at least manufacturing businesses like mine. Do you have a recipe?"

Scrooge:?"Well, lad, it's as clear as the shine on a freshly minted coin! You need more customers buying more, plain and simple. And make sure you can meet that demand without spending a fortune. Your factories must produce without piling on extra costs. The first few extra units will only cost you for raw materials and components, but eventually, you'll need more resources."

"So, don’t be quick to open your wallet just because business is booming. Only spend when you have to. Middle managers love to add resources—it boosts their 'responsibility' and lines their pockets. They'll try to convince you they need more people (and a raise).

To boost sales rapidly, focus on three key things:

1. Shorter lead times than your competition — both for projects (like product development or engineering) and production.
2. Near-perfect reliability. Deliver projects and production on time with exactly what was promised. (On Time In Full)
3. Products that meet customer needs and wants better than the competition.

The first two are on your supply chain managers. The third is for your engineers, product developers, and marketers. Supply chain managers, except for purchasing, don’t have much to do here. Purchasing is charged with finding the materials and components for your new products. Short lead times and reliability come from slashing WIP (work-in-progress) to about half. Look at your lead time—if turning materials and components into products takes less than 10% of the time, you can likely cut lead times by 50%. Release new orders at the same rate your constraint completes a batch. Your constraint controls order release, keeping lead time and WIP steady.

Critical Chain project management is similar. This process keeps the constraint from bouncing between tasks, or at least minimizes it. Like in production, the Critical Chain protects the constraint from multitasking (task switching). The result? Shorter projects and about a 25% capacity boost. Engineering and product development deliver more projects on time and faster. Don’t think this is only for engineering and product development. These methods work just as well for paperwork operations with many steps and resources. Critical Chain applies to marketing projects too. Being faster and more reliable boosts demand. Your factory must handle this increased demand—ideally without needing more resources. Sales and production should grow faster than resources (and costs). Do this by making the most of your constrained resource or wasting less of its capacity. Here are some quality tips:

1. Inspect out poor quality before it hits the constraint; don’t waste constraint capacity.
2. Buffer the constraint so it never runs out of work due to upstream problems.
3. Buffer the constraint so it always has space to store its products if there's a problem downstream. Don’t block the constraint.
4. Apply Six Sigma after the constraint to minimize scrap that wastes constraint capacity.
5. Apply Six Sigma before the constraint so less needs to be inspected out.
6. Improve the constraint’s quality—it shouldn’t produce faulty products.

Got it, lad? Follow these steps and you’ll boost your capacity and slash lead times. So, get to it! Or better yet, invite me over to your business, and I’ll help you myself—just be ready to pay handsomely for my expertise!"