Throughput: The rate at which the system generates money through sales.
How soon Delivery team liquidates account receivables? How fast customer pays the invoice? depends on customer acceptance of the delivery Quality. Delivery Quality is determined by the strong upstream control in Requirements management, great design, less defects through construction and testing. These all dependent upon the understanding of the customer requirements by resources in development. These are preceded by Sales in its ability ability to judge how the customer requirements can be met by their delivery team. In order to reduce the gap of sales’ understanding the customer needs, it pays to have Sales people with previous experience in development. This is how (development and sales) system generate money through sales need to be looked at, if Throughput is to be maximum. Thanks Goldratt for giving direction.
Inventory: All the money the system invests in things it intends to sell.
Maximum percentage of total investment goes to resources. Followed by software, systems,hardware, infrastructure etc.
As per TOC the money invested means Human resources invested and how their skills are intended to be sold. Technical skills, soft skills, domain skills, customer interaction skills become THE investment that can be sold. These are the skills that organisation should consider as Inventory. Have great resources, excellent training, develop passion in serving customer needs. That could be a way to create Inventory the Goldratt’s TOC way.
Operating Expense: All the money the system spends in turning Inventory into Throughput.
Training the resources, providing them right tools and systems are the Operating expenses that will ensure Inventory(Resources) to turn their expertise into Throughput(Money)
Current practice of useless time sheets data, incorrect entries, guess estimations are really the pains that need to be treated the TOC way.
WALK the TOC !
Filed under: Quality