Theory of Constraints Handbook - James Cox Iii [572]
Not only can service providers use this technique to improve their own enterprise, they can use it to help clients improve theirs. Indeed, the TOC approach to marketing and sales depends on this specific capability. Of course, the TOC approach can be applied to more than just marketing and sales of services. What to change throughout PSTS is covered next.
Expertise and Assets
Every enterprise in the PSTS sector depends on expertise. It’s how sales are made and reputations maintained. Missteps here have condemned to oblivion some trusted professional service firms, cutting-edge research organizations, and high-flying technology start-ups.
If a PSTS enterprise is labor-based, having the right professionals, scientists, or technicians is a critical success factor. Each professional practice, research lab, and technology group needs to have the right skills in the right amount in the right place at the right time.
Conventional approaches include hire-to-plan, which requires a forecast, and hire-to-deal, which requires clients who are patient enough to wait, if necessary. Of course, forecasts are notoriously inaccurate, and clients have less and less patience. Consequently, oscillating between too few and too many resources is a common conflict in PSTS enterprises.
If a PSTS enterprise is asset-based, expertise still plays a vital role. However, the experts put more of their effort into assets that clients value and less effort into serving clients directly. Those assets may be physical capital, such as architectural models, research laboratories, or data centers. Alternatively, the assets may be intellectual capital, such as legal databases, engineering designs, computer patents, or consulting methodologies.
To the degree that assets serve more clients than the experts could without assets, the enterprise gets leverage from its investment in assets. Thus, it might seem that assets lessen the need for experts, but the opposite can be true because a shortage compromises service to multiple clients. For example, a service outage of just a few minutes can provoke howls from all the clients who have come to rely on the service provider’s assets.
Service Delivery
Every enterprise in the PSTS sector generates Throughput via projects or processes. Although these terms are sometimes used interchangeably, making a distinction is useful when applying TOC.
A project is a set of finite-duration tasks that must be performed in a specified sequence to produce the desired result within a prescribed time and budget, such as designing, building, and implementing an information system. Every project is therefore unique, even if based on a standard methodology with known deliverables.
A process is a set of activities performed continuously or on a frequently recurring schedule, such as doing legal research, repairing equipment, and processing purchase orders. Every process is therefore highly repeatable, and the output of processes is typically measured in terms of service levels, such as the percentage of service requests completed within a specified period.
If a PSTS enterprise is project-based, it has to execute individual projects, of course. However, it also has to manage a portfolio of projects for multiple clients. Moreover, those projects compete for resources, so project management and resource management are complementary. TOC has traditionally treated resources as relatively fixed, and has managed projects according to the prevailing resource constraint. This approach can be quite acceptable in an enterprise that does internal projects as an adjunct to its main business, such as when it performs engineering projects in support of its manufacturing business.
Although PSTS enterprises also do internal projects, such