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is achieved. Identifying, analyzing, learning, and improving the system is the only way to reach the goal of making the most money now and in the future. By definition, an effective feedback system considers all of the tactical objectives that determine ROI simultaneously rather than any single performance standard because understanding their interdependent nature is a necessity in the feedback system. Companies that understand this thrive on TOC and continue to grow regardless of the economic circumstances in which they are operating. Those TOC implementers who do not understand the significance of BM in providing a process of ongoing improvement will commonly see any improvement stagnate and decline after experiencing initial “brilliant” results and will ultimately end up discarding TOC.

If a manager gains visibility—through BM or any other mechanism—to a potential problem in advance of it affecting performance, this is a great sign that the system is working. Do not mistake this sign with an absence of problems. Companies and the humans who work in them have no shortages of problems. We want those problems to surface when they affect the company performance so that they can be clarified, understood, and resolved. Each problem seen and understood is an opportunity for improvement. Too many individuals of a “fixed” mindset view the presentation of the problem as an indication that the system is not working. To accept that identification of potential problems is vital to the measurement and execution system working effectively is to accept full responsibility and accountability. This thinking is not entirely comfortable for everyone. Without top management understanding and owning this view of the system, there is very little hope that the rest of the organization’s management will be able to adopt the “right” mindset.

What Should a Good Measurement System Achieve?

A measure is simply a reading at any point in time of the state of the system relative to the standard the system was directed to execute. It is not used to reward or punish individuals. Cross-functional and interdependent parts of a supply chain can affect the same data but for very different reasons. A fair and productive performance metric will focus and coordinate the efforts of a team, department, process, etc., but a real-time exception feedback is needed to identify exceptions and their causes. Buffer metrics and rules are used to create an early warning system and provide a feedback loop to alert people when and how to act together to get the production system back on plan (to meet market demand). Strategic buffers and BM are used to identify and focus on local improvements most needed for organizational improvement and that have the highest ROI.

It is impossible to separate the measures from the system in TOC because the system is the decision-making tool and buffer status reporting is simply the feedback loop on the health of the system. The key to a successful measurement in a BM system is to generate the “hunger” to identify and learn from the problems. The performance standard (when properly aligned) will resolve itself naturally and should not require constant attention from the individuals executing the plan.

Physicist Niels Bohr defined an expert as “a person who has made all the mistakes that can be made in a very narrow field.” Mistakes, problems, and disruptions in logistical systems should never be regarded as negative unless we do not resolve them, learn from them, and ultimately get better. These are opportunities. Managers should strive to be experts in what they manage. If things are running smoothly, the productive manager is going to push the system to ensure that the buffer is “stressed.” This mindset will undoubtedly result in very short-term negative blips in buffer performance, but will ultimately trend upward and create the learning and thinking organization necessary for ongoing improvement.

The Key Feedback Information

The TOC information system has five necessary components:

1. Constraint and shipping buffer reporting