The Goal: a process of Ongoing Improvement

DW: As a finance guy, what was your specific contribution?
CM: The Theory of Constraints is built on the premise of breaking the
barriers of the cost model of accounting, and we were a heavily cost-driven
organization, as a lot of manufacturing companies are. Everything in the
company was designed as the cost-system would dictate. That’s where I
began to add value—by helping to develop different measurement tools that
we could use instead of the traditional cost tools. And that’s what I believe
began to drive real change in the organization. We are still struggling on the
sales side but we’ve made progress in breaking away from the cost method of
sales and estimating.
DW: How does that work?
CM: The cost method of accounting creates departments and it allocates
indirect overhead expenses. TOC, however, says you’re one big happy
family, you have fixed expenses and you have variable expenses. Your
variables are your materials and your fixed is everything else. And sitting
around spending all your time trying to figure out how much electricity and
square footage of air conditioning and cooling goes to the press room, how
much to the bindery and the prepress and how much to the office doesn’t help

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you manage your business.
DW: Because it distracts you from the goal.
CM: Yes! Of meeting the needs of the customer. And flowing the work in a
timely fashion. When we began to concentrate on making the work flow, that
is, maximizing the capacity of the press room, and subordinating everything
else to that, we began to improve our ontime delivery. The critical issue is
how you measure the performance of the organization. We use two methods.
DW: And they are?
CM: Eli Goldratt talks about developing a constraint management tool. Ours
is called TCP, for throughput contribution per press hour. When the market
isn’t a constraint, you choose which products and which customers to bring in
based on that number. That’s how you build profitability. Assuming, of
course, that the constraint is not in the market.