Throughtput Based Decision

Throughtput Based Decision Making by Eli Schragenheim

 

Eli Schragenheim presents "Throughput Based Decision Making: Developing a complete and effective TOC decision support process based on Throughput Accounting” during a conference in Paris, France, in March 2014. This is the full 90 minute conference.

 

“Throughput Based Decision Making” is a TOC decision support process to answer fundamental decisions such as: what should we sell and at what price? Eli presents the history of Throughput Accounting and explains why the “solution” was not complete. He discusses how business decisions regarding new opportunities are made today. He explains why Throughput per constraint unit is an incomplete answer. He proposes a new logic: “Throughput Based Decision Making”. He presents several examples in production, projects, distribution...He discusses: the “Cost Accounting is Enemy N°1 of Productivity” 1983 episode; the traditional Cost Per Unit and Robert Kaplan’s reasoning; the valuation of inventory; product mix dilemmas; marginal costing; bottlenecks and interactive constraints; the necessity of protective capacity; why “decide how to exploit the constraint” does not mean loading a bottleneck 100%; the difference between “Products” and “Throughput-Generators”; why and how to add capacity; why it is not true that there is only one constraint in a system; manageable levels of complexity; the “Management Attention” problem…

Eli Schragenheim is one of the most knowledgeable and experienced Theory Of Constraints experts in the world today. He started working with Eliyahu Goldratt in 1985. He is the co-author with Eli Goldratt and Carol Ptak of the bestselling business novel “Necessary But Not Sufficient”. Eli collaborated with William Dettmer in writing “Manufacturing at Warp Speed”, a reference book about TOC in production in which he introduced Simplified-DBR. He co-authored with Carol Ptak “ERP, Tools, Techniques and Applications for Integrating the Supply Chain. He was a partner in the A.Y. Goldratt Institute and a Director of Goldratt Schools. He is a board member of TOCICO (TOC International Certification Organization). He is currently the president of Elyakim Management Systems Ltd. based in Israel.

Quotes

 

“Eli [Goldratt] said to me, “I have a problem, people expect me to give them a [Throughput Accounting] number, and I cannot give them a number.”

“I believe that the constraint should not be a bottleneck… you should not load it 100% because you will cause bad market performance.”

“Goldratt said don’t be too greedy.”

“In the short term TOC [Throughput Accounting] gives you the right answer but it is a short term view.”

“By the way, TOC never said there was only one constraint.”

Filmed in Paris 20th of March 2014. Eli Schragenheim was a guest of Marris Consulting.

Marris Consulting, expert in Theory of Constraints & Critical Chain Project Management

 

Marris Consulting is an expert in the Theory of Constraints (ToC) and Critical Chain Project Management (CCPM). As industry consultants, we are focused on helping process and manufacturing industries reach their highest levels of performance by using Constraints Management  combined with Lean and Six Sigma. We also use Critical Chain Project Management which we sometimes combine with Lean engineering to improve project performance. If you are unsure about the actions which need to be implemented to improve operational efficiency, our industrial management consultants can also conduct a performance audit. Furthermore, our experts host numerous Theory of Constraints (ToC), lean and project management training sessions throughout the year.

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About Marris Consulting

Marris Consulting is an industry consulting and training company specialized in the Theory of Constraints (ToC) and Critical Chain Project Management. We focus on improving the performance of manufacturing and process industries by using Constraints Management combined with Lean and Six Sigma. To boost project performance, we also use Critical Chain Project Management (CCPM), which we sometimes combine with Lean Engineering. Our 2-day performance audits, our performance consulting services and our project management, Lean & ToC training by our industry consultants offer a wide range of solutions to help our clients around the world reach the highest possible levels of performance.

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