“What I’m telling you is, productivity is meaningless unless you know what your goal is,” he says.

“What you are telling us,” I say slowly, trying to digest it, “is that we have switched the scale of importance.” “That’s precisely what it is,” Lou says. “In the past, cost was the most important, throughput was second, and inventory was a remote third.” Smiling at me he adds, “To the extent that we regarded it as assets. Our new scale is differen

“Throughput is the money coming in. Inventory is the money currently inside the system. And operational expense is the money we have to pay out to make throughput happen. One measurement for the incoming money, one for the money still stuck inside, and one for the money going out.”

So the way to express the goal is this? Increase throughput while simultaneously reducing both inventory and operating expense.

With a smile he says, “This is trivial. If the goal of our company is ‘to make more money now as well as in the future,’ then our job is to try and move our division to achieve that goal.” “Can you do it?” Stacey asks. “If the goal includes the word ‘more’, can we achieve the goal?”

“Throughput,” he says, “is the rate at which the system generates money through sales.”

“A bottleneck,” Jonah continues, “is any resource whose capacity is equal to or less than the demand placed upon it. And a non-bottleneck is any resource whose capacity is greater than the demand placed on it. Got that?”

So this is the goal: To make money by increasing net profit, while simultaneously increasing return on investment, and simultaneously increasing cash flow.

STEP 1. Identify the system’s bottlenecks. (After all it wasn’t too difficult to identify the oven and the NCX10 as the bottlenecks of the plant.) STEP 2. Decide how to exploit the bottlenecks. (That was fun. Realizing that those machines should not take a lunch break, etc.) STEP 3. Subordinate everything else to the above decision. (Making sure th