A Constraint in your production process drains cash – the Throughput Production System can help you find it, and stop it from going down the drain

When we put on a Throughput Managerial Accounting lens, we see that virtually everything that goes on in your factory is really a conversion of cash. Once you spend that cash to get things placed into the process, you want to convert it back to cash as soon as you can. This is more than just getting back the cost of materials, it’s also the cost of the labor, the electricity, the building and equipment, even the non-recurring effort you previously put into the job. If you saw YOUR cash piled up and laying around your shop gathering dust, wouldn’t you want to be able to reach it, and put it to better use?

The constraint does more than just slow down the conversion of cash invested in time and materials back to cash – it also limits the revenues you can realize from your system. In fact, with Throughput Managerial Accounting, we don’t realize throughput until it converts back to cash, in the form of revenue. This puts a whole different light on Throughput Velocity and its true meaning – we realize we want our cash back as soon as possible.

With Constraint Management and the Throughput Production System, we find where the cash gets stuck, and get it converted back to real money as soon as possible. And more importantly, we make sure it doesn’t get lost forever, in the form of lost revenues.