Do constraints really determine performance?
Yes! Whether profit is the main objective or not, whether it’s known exactly where constraints are or not, whether systems are small or large enterprises, constraints do indeed determine the performance of systems… otherwise infinite output or profits would be made. This proven logic is based on the principles of the Theory Of Constraints¹ that uses Throughput Accounting to measure performance.
Throughput Accounting provides metrics for swift decisions.
Throughput Accountants know that constraints determine the performance of an enterprise, so they measure Throughput¹ speed generated through identified internal and external physical or non-physical capacity constrained resources. Knowing what the constrained performance is, enables better product & service mixes with more Throughput. The win:win:win does exist! For the system, customers, employees, shareholders, and suppliers.
Throughput is the velocity of money flowing through an enterprise. Identifying what limits an enterprises Throughput, improves its ability to generate more Throughput…adding more returns to the bottom line.
Companies flourish when they measure performance with Throughput Accounting. Let TPACC show you how.
¹ The Theory Of Constraints (TOC) as developed by Dr EM Goldratt uses Throughput as its first measure of performance. TPACC are experts in TOC.
Implementing Throughput Accounting results in systems that function with goal congruence.
Is your enterprise ready for Throughput Accounting?
Here are some differences to consider:
Throughput
Accounting
Systems have profits
Performance measurement is systems based
Constraints determine performance
TA drives behavior focused on global performance
Cost
Accounting
Products have profits
Performance measurement is cost/activity based
Cost Efficiencies determine performance
CA drives behavior focused on local performance
Uses of Throughput Accounting:
• Improve the mix of products and services your organization offers to the market.
• Discover how constraints influence the profit mix.
• Build achievable tactics & strategies.
• Improve Throughput rates.
• Make a significant impact on wealth creation.
• Improve ROI (Return on Investment).
• See why certain inefficiencies don’t always loose money.
• Combine LEAN principles with the Theory Of Constraints.
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