Theory of Constraints Handbook - James Cox Iii [668]
The titles of the five steps in Level 3 under Step 2.1 are: 99% Due Date Performance (DDP), Reliability Selling, Expand Client Base, Load Control, and Capacity Elevation. The first step is achieved by implementing DBR and BM to improve DDP in the plant. Thus, this step is focused on building the DCE. The second step of Reliability Selling explains how to make a URO to prospective customers (manufacturers). This step is focused on aligning the marketing and sales approaches of the supplier to capitalize on the reliability offer to their customers. The third step of Expand the Client Base is about implementing the “mechanism to generate leads, monitor, and effectively control their sales pipeline (new business opportunities).” Thus, these last two steps are about capitalizing on the DCE. The fourth step of Load Control is focused on ensuring that due dates given to clients are based on actual load in the plant. Thus, the ability to continue to meet due dates does not deteriorate as sales increase. The final step of Capacity Elevation is about ensuring that the delivery lead times are not too long as sales increase. This ensures that business is not lost due to long lead times.
Thus, the last two steps are about sustaining the DCE.
The NAs of Step 2.2 (Goldratt, 2008c) are:
To rapidly achieve the VV, it behooves the company to have the ability to command high premiums, even on a portion of sales.
In a non-negligible percentage of cases, the client gains heftily from rapid response.
The client cannot get cheaper RRR (or even an acceptable alternative) from anybody except the company.
Clients are not dumb.
The resulting strategy is, “On a considerable portion of the sales, high premiums are gained by the market knowing that the company can deliver in surprisingly short lead time.” The right side of the S&T tree explains how to implement Rapid Response. Two speeds of rapid delivery with set lead times for each are typical, with each speed of delivery having a predetermined price that is some set percentage above standard pricing.
Projects S&T Tree
The Projects S&T tree applies to companies that make a unique product.9 Step 2.1 of the Projects S&T tree is focused on achieving a reliability competitive edge, while Step 2.2 is focused on achieving an early delivery competitive edge. The NA of Step 2.1 is, “When the due dates of the suppliers are notoriously bad and late delivery has major consequences for the client, reliability is a client’s significant need.” The resulting strategy is, “A decisive competitive edge is gained by the market knowing that the company’s promises are remarkably reliable, when all other parameters remain the same. In the multi-projects arena, remarkably reliable (very high DDP without compromising on the content) is defined as delivering well over 95 percent on (or before) the promised due date, while in cases of late delivery the delay is much smaller than the prevailing delays in the industry.”
The titles of the five steps in Level 3 under Step 2.1 are: Meeting Project Promises, Reliability Selling, Expand Client Base, Load Control, and Capacity Elevation. The first step of 3.1.1 is achieved by implementing the Critical Chain Project Management (CCPM) solution (the TOC solution for managing projects). Thus, this step is focused on building the DCE. The second step of Reliability Selling explains how to make a URO to prospective clients. 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, and effectively control their sales funnel (new business opportunities).” Thus, these