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Inventories

Why have inventories?

There is much talk now about the need for low inventories in the system and the benefits that implies for the system. In a way it bothers me almost isolated approach the issue of stocks and perhaps the fact that somehow lost a bit the concept that inventories are in the Theory of Constraints, especially when it comes to low or high inventories.

Theory of Constraints for the essential is the cushion that protects the system against possible disruptions. A cushion can be long or stock depending on the protection we seek to establish in the system. So, to protect the exploitation of critical resources (physical restraints or internal lever pressing points), we define shocks while helping to establish the line (plan of releasing work orders or production materials) and affect in-process inventory. That is, the shock of time results in inventory of work in process, although the level of these stocks is consistent time on the shock and not a specific amount of materials or products.

Additionally, in a system we usually have two stock buffers to protect the system. Commodity cushion that protects us against disturbances in the procurement processes that require, and the shock of finished products that protect us against variations and disturbances that may exist in the market and distribution system. The management of these buffers is critical to meet the replenishment.

Then, the inventory is only a buffer is necessary only when the client is less tolerance of our time in advance, or in the case of inputs, when the time before the supplier is not so quick to supply us our needs within our own tolerance. Thus, we can not talk about low or high levels of inventories and even venture to compare this with the traditional in concept inventories. While we keep talking about inventories and buffers not, keep current confusion between traditional approaches and management constraints.

Shock Management, Accounting and Investment

I think the emphasis in this concept is critical to the TOC or management restrictions. It is therefore the ideal environment in the TOC is a make-orders and improvement efforts should always try to make as much as you can the traditional production environment to a production against orders. The shocks of time management and stock is the essential tool for this. This concept is essential to the solution of production, and distribution solution for sales and marketing solution under the constraint management.

addition, the emphasis in the TOC is the conversion of inventory sales, but that revolves around three key metrics of throughput, investment and operating costs. The investment concept is elementary in this case, since it is all that we acquired with the intent to sell and somehow cleverly split the investment in fixed assets we buy and then sell it. This ingenious concept is a difficult concept to digest from the traditional perspective, and especially if we have clarity of the concept of buffers. Clear that fixed assets are investments and accounting for TOC evaluation of future investments in capacity are clearly only when we can evaluate the real impact on the holistic system, taking into account the existing restrictions and possible future restrictions. Even considering that investments in fixed assets is part of there is one that deserves much attention from the merits involved.

Accounting in the Theory of Constraints clearly differentiates the buffer stocks of raw materials (which we bought with the intention of selling) of the dampers in process and finished products. Traditional accounting is not conducive to facilitate the detachment necessary for the management constraints are enhanced in a company and is one of the most restrictive normally found to initiate change under the management of constraints.

In an enterprise system we know we have stocks of both raw materials and products in process and finished products - mainly as a result of shocks and not a traditional budget outline. Also, the throughput speed is a concept in the generation of this contribution and also the emphasis of the concept of truly variable costs, without accounting devices such as the traditional cost accounting - can not continue talking about throughput and contribution as if they were synonyms.

Equating inventory investment, the TOC only intended to infer that is what we bought with the intention of selling and purchasing cost is the only thing we know with sufficient certainty - so we deal with stocks of raw material cost as an investment until you actually receive the income from the sale value . The real life of inventory in the system, from raw material to finished product depends only on the speed with which we move the incoming raw material to the actual sale of the same processing into products / services of added value.

And you ... What do you think about inventories?

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Restrictions Management Cluster Competitive Market Segmentation

Community Development Competitive Business and Clusters

A Constraint Management Approach

Much has been talking about community development as an essential element in combating poverty in developing countries. Almost everyone agrees the myriad factors involved and the complexities that surround disadvantaged communities to overcome its economic stagnation and persistent poverty.

We have also seen how they have structured hundreds of approaches and programs to find ways to meet community challenges successfully. The lessons are varied and mostly successes do not seem replicated from one environment to another environment.

How can Restrictions Management contribute to community development in a manner that is replicable between different environments? Is it possible that the Restrictions Management applications in the development? What are the major dilemmas that must be met to start a community development program? These and many other questions are essential to address if we seek success in a cohesive and replicable. I think

Restrictions Management contains all the elements needed for successful intervention and also may contribute to the development of a form of intervention Community replicable in any environment even though the vast differences we found in each environment.

I invite the contributors to this forum to participate in a new approach to community development business in underprivileged communities in developing countries, seeking to form competitive cluster approach Restrictions Management. I'm sure there a lot of wealth in the contributions of each.

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under "Restrictions Management" Best Practices

Traditionally we have learned that market segmentation is to identify parts of the market that are distinct from each other. The segmentation allows a company to better meet the needs of potential customers.

The definition gives us Goldratt on "segmentation" is a bit different from what we learned in college and in my opinion, it is also far more advantageous. A segmented market is considered if and only if the price and quantity of a product sold in a 'segment' of the market is not affected by the price and quantity sold in another 'segment' market. Therefore, segmentation is not simply to cram a niche market.

Here is an example. Suppose we supply PVC pipe both hardware, construction, irrigation systems, etc. Traditionally considered construction firms as a homogeneous segment of the market and offer the same conditions of service, price and quantities for any of these companies. Is there any way we can target more than the market for construction companies? What if a builder competes with other children based on time of execution of works and improved management of inputs to each work? Can we make a difference in price supply service to that building?

One of the fundamental rules regarding this issue is that the company should "segment their markets, not resources" . This statement is a call to establish the required flexibility to use our resources - human, technological, financial, infrastructure - in each market segment as it suits us. In fact, this flexibility is the only strategy that provides a rational perspective of long-term perpetuated an ever more surprising, more uncertain and more globalized. Today

need to operate in as many separate segments can successfully meet our production capacity - some suggest that we should have more than 15 segments, so that the declining sales in some countries is offset by income obtained in others - but this obviously must be considered in terms of strategy and entrepreneurship. We seek to protect not only the benefits of the company, but also the jobs of people working for it.

Practitioners Management of Constraints (TOC practitioners) believe that the combination of "irresistible offers" - offers designed to greatly increase the market perception of the value of our product / service - and "segmentation" - understood as we have stated here - any organization can ensure a more or less long - more than four years - economic boom. Once designed the irresistible offer, it should be placed so as to ensure proper market segmentation.

Also consider the following tips for Constraint Management in relation to the strategy in the market

• refrain from seeking 100% of any market segment, unless it is extremely lucrative;
• consider only those new products / services using resources already available;
• to organize your "portfolio" of market segments, opt for a combination that reduce or avoid risk for your company to meet a series of large and widespread reduction;
• concentrate on improving a single attribute of your product or service in several degrees of magnitude above its competition, so that provides a competitive advantage hardly imitable in the short term - for example, have an average response time that is four or five times faster than its main competitor.
• NEVER compete based on offering lower prices even if your competition is from China.

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Some consider the definition of "Best Practices "as the best way to do something. Others believe that the "Best Practices" correspond to performance standards for improvement. Logically, this approach involves a mindset which accepts that there is a way that is considered the best to accomplish something. One could almost say that it is for lazy mentality inherited from the traditional school, but our world needs to be governed by evaluating the various segments of our audience and not considering the audience as a homogeneous to establish what is relevant. What we learn to segment our audience is that what is supposed to be better for a segment does not always work well for another segment. There are no standards and therefore also can not seem to be something called "best practices."

So may be something like "best practices" for a segment? - The reality is that it depends. Behavior within a segment can be as varied as the factors affecting behavior. There are too many variables to get comfortable with something that has worked and accept that always work.

What do we do not know what will generate the best results?

started thinking. Seek ways and options to create the new. Ideas can be good or bad, but before trying preenjuiciarlas is not smart. In short we need to think differently. Perhaps we should not submit to search and evaluate specific solutions, including copying what others have done, if not to develop a methodology that allows us to identify what is relevant to our intent, goal, goal. We need a methodology that involves simple and allows us to strengthen and test our options before we even deployed. Definitely take some time and effort before we can implement solutions that bring the expected benefits, but when we did it correspond to "best practices" circumstances, audience and business that we pursue ... and the results will prove conclusively.

Thought Process of the Theory of Constraints provides us with this new way of thinking - the methodology that allows us to remove conflicts and to design our own future. When first exposed, either in addressing a specific problem or to identify the underlying causes of a situation, the thought process of the Theory of Constraints generated many expressions that everything is "pure common sense." Few people concentrate on the methodology that has been identified as referred to as common sense - this new way of thinking about what overwhelms us or cares.

Therefore, before we even explore "best practices" exist for any sector or industry, is essential to explore how people attend to their business responsibilities. The ability to create something new, something higher, is not never to copy the solutions implemented by other people, other businesses, other sectors. The ability to create something new, something higher, be limited to how we serve and instituted the process of continuous improvement.

Thus, the "best practices" will always be a result of continuous process improvement. Nothing is static and everything is subject to change. Similarly, the "best practices" will be subject to the ability to create value on an ongoing basis and in this capacity that we need to focus.

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this blog is to explore the progress and experiences Restrictions Management.

We want to expose some concepts that create dilemmas for promoting the exchange of views and experiences. We invite you to contribute your comments and suggestions, as this is the best way of learning enriches our readers.

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