Theory of Constraints Handbook - James Cox Iii [667]
The Other Four Generic VV S&T Trees
Next, we will briefly discuss some key points regarding each of the other four generic VV S&T trees without presenting the steps of the S&T trees, given the limitations on how much content this chapter can address.
Consumer Goods (CG) S&T Tree
The CG S&T tree applies to manufacturers that sell to retailers.8 Two versions of the CG S&T tree exist: one for make-to-order (MTO) environments, while the other is for make-to-stock (MTS) environments. We will first explain the MTO S&T tree and then briefly explain how the MTS S&T tree differs. Step 2.1 of the CG S&T tree is focused on achieving an inventory turns competitive edge, while Step 2.2 is focused on achieving a TPS competitive edge. The NA of Step 2.1 is, “When most cash is tied up in inventory and availability is still an issue, improving inventory turns is a client’s significant need.” The resulting strategy is, “A decisive competitive edge is gained by providing a ‘partnership’ that delivers superior inventory turns (better availability coupled with substantially reduced inventories), when all other parameters remain the same.”
The titles of the four steps in Level 3 under Step 2.1 are: Produce to Availability, Inventory Turns Selling, Expand Client Base, and Capacity Elevation. The first step is achieved by implementing Drum-Buffer-Rope (DBR) and BM to improve performance in the plant. Thus, this step is focused on building the DCE. The second step of Inventory Turns Selling explains how to make an unrefusable offer (URO; the marketing solution of TOC) to prospective retailers. This step is focused on aligning the marketing and sales approaches of the supplier to capitalize on the inventory turns offer to the retailers. The third step of Expand the Client Base is about implementing the “mechanisms to generate leads, monitor, support, and effectively control their sales funnel (new clients).” Thus, these last two steps are about capitalizing on the DCE. The final step of Capacity Elevation is about ensuring that performance in the plant does not deteriorate when sales increase. Thus, this step is about sustaining the DCE.
The NA of Step 2.2 is, “When display is limited and has a major impact on sales, TPS is important to the extent that ensuring an acceptable TPS and increasing TPS are both clients’ significant needs. To rapidly achieve the VV it behooves the Company to capitalize on that fact.” The word “behoove” means that it is worthwhile to take this action although the action is not required. The resulting strategy is, “A decisive competitive edge is gained by providing a partnership that secures the clients an increase in TPS and provides a realistic chance of sharing in a much higher increase.” This means that the supplier would also benefit financially from the increase in TPS.
The version of the CG S&T tree for MTS explains how to shift from MTS to make-to-availability (MTA). In this S&T tree, there are three steps in Level 3 under Step 2.1: Aligning the Supply Chain, Inventory Turns Selling, and Capacity Control. The essence of the differences between this S&T tree and the one explained previously is that the changes needed in implementation differ because of how production is currently managed (MTS versus MTO).
Reliable Rapid Response S&T Tree
The RRR S&T tree is for manufacturers that sell to other manufacturers. Step 2.1 of the RRR S&T tree is focused on achieving a reliability competitive edge, while Step 2.2 is focused on achieving a rapid response competitive edge. The NA of Step 2.1 is, “When the due dates of the suppliers