Constraint Theory and Technology
A critical aspect of running a successful business is the identification of constraints
and the development of strategies and tactics to handle these constraints.
Standing on a garden hose creates a flow constraint, and limits the amount of water
that reaches your garden. Similarly every business has numerous constraints that
limit sales and profits. For example, if we take the happy but unrealistic case where
the sales department starts delivering five times the usual volume of sales, does
that mean that sales and profits will be five times larger? We know that this is
not the case.
We understand that receiving an order still requires us to process the order, procure
the raw materials for the order, manufacture the order, deliver it and collect for
it. Each step is made up of multiple steps and processes that “constrain” the flow
of sales and profits.
Consider the following common constraint example where the customer accepts a quotation
produced in a sales front-end system. It is then often rekeyed into the production
system and also into an accounting system. The work is done and recorded in another
system and billing information is then fed back into the accounting system. Invoices
are sent out and a collection system of some sort is used to collect the money. The
multiple steps, multiple documents, multiple data entry points all introduce delays
and errors. This is one of the scores of constraints in your corporate system.
Technology can help.
Imagine changing the above scenario where the approved order is electronically sent
to the “accounting” system. The accounting system generates the suggested purchase
order with the relevant data already captured. The “production” system receives the
order information electronically. The final billing data is then added in to complete
the transaction and the accounting system sends out the invoice electronically.
If elapsed days of clerical activity (i.e. the constraint), could be reduced to hours,
what would that mean for your business?
Evron can help you identify and deal with constraints. Call us for a free consultation.
Larry Noble, P.Eng, MBA
President, Evron Computer Systems Corp.
Lnoble@evron.com
