Help for Mom

 

It looks like things are pretty grim for Mom. But help is coming! It comes from an unlikely source-the field of physics. The name of the concept is Theory of Constraints.

 

Theory of Constraints

 

The Theory of Constraints was invented in the 1970’s by a physicist named Eliyahu Goldratt. This theory uses scientific investigation on business processes. But what does that have to do with a baking business?

 

In a manufacturing process, TOC’s first step is to identify the constraint. The constraint is the step in the process that limits the throughput of the entire process. In Mom’s process, it’s easy to see that the capacity of the business is the packaging line, at 75 cookies per hour. We have completed step 1 of the TOC.

 

Step 1: Identify the constraint.

 

 

Now that we know what will dictate the throughput of the business, we need to protect the packaging line. This means that the packaging line gets regular maintenance, the bake and mix lines will always supply the packaging line. Let’s say we help Mom and the boys implement these changes. We have now completed step 2.

 

Step 2: Exploit the constraint.

 

 

The third step doesn’t cost money. All it takes is a change in thinking. If the throughput of the business is 75 cookies per hour, why are they mixing at 100 per hour and baking at 80 per hour? Max and Ray need to run their processes at 75 cookies per hour. They can run faster to catch up if their processes experience downtime. They will want to maintain a small inventory in front of packaging based on equipment reliability, but that’s it. In fact, they could completely eliminate the inventory between Mix and Bake. When Mom and the boys implement these changes, they have reached step 3.

 

Step 3: Subordinate everything else to exploit the constraint.

 

Now things are starting to turn around for Mom. These changes have given the following benefits:

 

• The focus on the packaging line has increased the uptime of the packaging line 10%. This caused a 10% increase in Sales!
• The dramatic decrease of inventory has freed up enough cash so Mom can pay her bills on time. Her banker doesn’t know what happened, but is glad that he doesn’t have to send Mom to the collections department.
• Gerry came back for a new party. Although he still had the tight turnaround time, Mom was able to make the special order this time. Gerry’s guests were so impressed, one offered to buy her company on the spot.
• Although there were some quality problems, the effects were much less than before. They averaged about 200 cookies per incident.

 

Mom and the boys should be proud. They turned their business around! Are they done? Or have they just begun? Click here to see what they do next.