Top Priority for a Business to Flourish: The TARGET

What will almost everyone tell you about the goal of their business? Is it:

• To make money, or
• To flourish forever?

Isn’t a business’s?raison d’être?to make money now, and more in the future. Isn’t it to flourish??

A business must continually improve because all competitors are doing the same. But what needs to be improved? Are there improvements that will improve the bottom line disproportionately? Are there improvements that will give a business a significant competitive advantage? Summarised,?“Where is the lever and leverage point for our improvement project?”

What do we need to change? It is the?obstacle?that blocks the?flow of Throughput.?Throughput is “the rate at which the business makes money”. Throughput is the same as Gross Margin, sales less?variablecost.

If you agree with these statements, you have found the lever:

• Focus sufficient resources on the obstacle to reduce or eliminate its blocking effect. The result is a big impact on the bottom line.
• To distribute resources to improve many elements has little or no effect on the bottom line. If one of the improved elements happens to be the obstacle, then the bottom line will benefit.?(But it is better to not trust to luck.)
• Management focus is the prerequisite to finding what should be changed first.

Eli Goldratt referred to the obstacle as the constraint. It is the TARGET for improvement.

Common practice usually does not have a specific TARGET. Many things are improved concurrently. The focus is often not on what should be the TARGET. Often efficiency everywhere, cost, and cost reduction are the targets.

The TARGET approach does not fit well with many improvement processes.?What are all the other resources supposed to do??We need an improvement programme for them. Improvements everywhere else must make sense for the TARGET.

What does make sense? Non-TARGETs must

• Never waste the TARGET’s capability.
• Enhance the Factory’s capacity by relieving the TARGET of work. The TARGET might be the best for a job, but others can do it too. (This is one way to increase factory capacity.)
• Help increase Throughput flow. This can mean salespeople sell those products that ‘consume’ TARGET capacity most effectively. They produce more Throughput per time TARGET time.

We have assumed an internal (factory) TARGET. The TARGET is easily elsewhere. Many companies TARGET sales growth. Their TARGET is customers that are not buying enough. What might cause customers to buy more? This TARGET is not part of the business. A business cannot direct customers to buy!??Instead, it must act to make its products and services more attractive to the TARGET.

• More new products more quickly than the competition.
• 100% product availability in stores and warehouses (less inventory; eliminate shortage and surplus).
• Shorter lead times; cut them by 50%
• Due date reliability – deliver to promise 100% of the time. 100% is the goal; the closer you get, the better.
• Etc.

Stop talking about constraints.?Talk about the TARGET. Get people to think about how to improve:

A.????The?TARGET

B.????How to support the?TARGET?so that it can perform.

Your Priorities:

• Decide what your TARGET resource is. (Find it!)
• Decide how to use the TARGET resource for your bottom line.
• Invite everyone else to serve the TARGET so that it is not hindered. Instead, it is supported. The TARGET can then achieve even more.

Every factory is a dynamic system so the obstacle and the TARGET will sometimes move. Management attention must be such that they are ready to adjust.

• If the TARGET moves processes and operating rules change with it. To maintain increasing performance requires management’s attention. (Go back to 1.)
• If the TARGET does not move, then expansion becomes necessary. That puts management into point 1 again.

Apologies to Eli Goldratt and the TOC community. I chose?TARGET?as a better word for businesses to focus on. Does?TARGET?make sense? Maybe you have an even better word. Focus might be one.

FOCUS ON THE TARGET

PS. TOC could mean TARGET IS ON CENTRE STAGE