Thanks for your support always. From next week, TLS Business Tips gets changes in the structure. Each week, I will be sharing 3 Successful Business Habits – One for Thinking, One for Action and One for Sharing. I call it as Think-Act-Share Business Habits Newsletter. I am so excited to start this journey as I believe it will add more value to your business and work. Keep encouraging me with your support and feedback. Now enjoy the last version of TLS business tips.
Theory of Constraints
Extract: “Yes, the goal is to make money. I know that now. And, yes, Jonah, you’re right; productivity did not go up thirty-six percent just because we installed some robots.” [from the business novel, The Goal – A Process of Ongoing Improvement. When Alex Rogo, the plant manager was proud about the installation of new robot that increases the productivity of a line, he later realized that it is not increasing his overall sales.]
Lessons Learned: Making investments do not guarantee the overall increase in sales or profit, unless the investment is made on the constraint resources (machine, infrastructure or people). The investment only to be made when the current resources’ efficiency is unable to improve by all means, even at a little higher cost.
Lean
Extract: If a major investment is required, you’re not getting lean.1
Lessons Learned: By eliminating muda2 (wastes) on continuous basis we can soon reduce the cost base of the product, shorten the production lead times and reduce the time to bring the new products into the market etc. Due to this, over the time, the flexibility of the business is increased. Hence, the requirement of heavy capital investment need not be necessary for the existing processes.
Six Sigma
Extract: For any capital project selections (investments), the following are essential in six sigma approach, evaluating the costs, benefits, risks, and feasibility of each option and comparing them against the criteria and constraints of your organization is essential3.
Lessons Learned: This includes taking into account the return on investment, payback period, net present value, internal rate of return, and break-even point for each project. All these factors should be carefully weighed to make an informed decision that will generate the most net income for your organization.
Share with your friends, If you like the above wisdom.
FOOTNOTES
- Lean Thinking – Banish waste and create wealth in your corporation by James P. Womack. and Daniel T. Jones ↩︎
- ‘Muda’ means ‘uselessness’ or ‘wastefulness’ in Japanese terms. It is indicating the 7 types of wastes contributing non-value added activities, such as Transportation, Inventory, Motion, Waste (Rejection), Over Production, Over Processing and Defects (Rework) ↩︎
- https://www.linkedin.com/advice/0/how-do-you-prioritize-capital-equipment-projects ↩︎
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