Manage Constraints to Realize ‘The Goal’

Sales are critical in our industry, as they are in every industry. Without them, we wouldn’t have a business at all. And in our competitive markets where success walks a razor’s edge, sales deserves—and demands—our attention. It’s why “Print Confessions” is consistently the most read blog on PIworld; I highly recommend it to everyone in our business.

All organizations suffer from a bottleneck or two. Management of such capacity situations can determine the success or failure of an entire organization. If you were to ask most people in the industry about their tightest bottlenecks, they’d probably point to their sales organizations. Without sufficient sales at the top of the funnel, you’ll never cover your fixed costs to see black at the bottom. As owners and managers, many of us invest a lot of effort on this issue.

By this time of year, the bottleneck tends to shift. In fourth quarter, pressure often moves from sales to production. From talking with many of my friendly competitors and suppliers, I can tell that print is stronger than it’s been in years, so the shift in pressure this year is more marked than usual.

And that’s a great thing! Backlogs have extended beyond recent benchmarks and managers are concerned about how they’re going to deliver against their order book. This is where the fun starts!

Of course, this dynamic brings about other challenges. For when backlogs are too robust, flexibility goes out the window and delivery dates can be jeopardized. When throughput approaches capacity, inventories build and cycle times increase. That’s when you hear people use the code sign “Charlie Foxtrot.” It’s feast or famine in this industry.

While recently away from the office, I read “The Goal”—the classic operations novel written by Eliyahu Goldratt. I’d been encouraged to read it for the past 20 years, but just hadn’t gotten around to it.

It was worth the wait.

“The Goal” explores the theory of constraints, and through vividly described stories, breaks through the shackles of cost accounting. But it’s not just about cost accounting; its lessons extend far beyond bean-counting…to the very heart and soul of an enterprise. It reveals a methodology for operations management that looks at the entire system, rather than just the individual components.

Take the example of a loaded press schedule, but a wide-open bindery. The hourly cost of your press becomes the total incremental revenue achievable with one more hour of press capacity, which might include dollars realized through diecutting, folding, gluing, imaging and mailing. At this point, your press might be worth many times the $500/hour you normally charge for it.

Put another way, in terms of opportunity cost, your press bottleneck may be COSTING you many times the $500/hour you normally charge for it. Maybe that monthly filler work isn’t as valuable now as you thought it was.

Goldratt reveals his lessons through the story of a plant manager whose plant will close in a few months if his operation doesn’t start making money. He’s working long hours and destroying his marriage. It’s uncannily close to the life of a printer.

While on a Boy Scout hike, he figures out the concept of the bottleneck. Herbie, the fat kid, just can’t keep up. He’s like your sales department in the summer, or your lettershop in the fall. Herbie becomes the symbol of the bottleneck, and the operations folks chase Herbie as they learn and apply various theories to return the plant to profitability.

“The Goal” really hit home for me as a printer. Especially now, during the holiday mailing season. I’m finding myself chasing Herbie around the shop. I’m juggling presses and altering production methods to minimize the damage Herbie can cause. I’m using outside vendors to expand capacity while pushing the limits of our facilities’ production.

It’s a lot of fun—much more so than when Herbie is hanging out with our sales team, holding them back.