Profit

Q:  

What is the main measure that determines whether a business goal is achieved?

A:  

Profit, and whether it is sufficient.

Unfortunately, determining profit is not an instant process!

Throughput Accounting simplifies the process for quick actions.

Throughput Accounting is constraint focused performance measurement. It is used to improve your entire company performance.

Making decisions in organizations is an on-going and continuous element of managing change. Decisions made, affect short-term and long-term plans, and of course, profit.

The main causes that prevent goals are constraints.

Companies flourish when they understand that performance is determined by their constraints.

Throughput Accounting measures the impact of decisions that either prevent or advance goals, giving you the choice.


 

TA requires a change in people’s attitudes. It requires the acceptance of the concept that improved productivity and returns are possible. It is about changing away from a system based on the internal competition of its parts, to one that is based on collaboration and shared purpose for the system’s overall common good, so that the system can function with goal congruence in order to achieve its purpose and goals. See how Throughput Accounting compares:

Throughput Accounting

Products do not have profits, systems do

Performance measurement is systems based

Constraints determines systemic performance

Drives behavior focused on global performance

Traditional Costing

Products have profits

Performance measurement is cost center based

Efficiency determines divisional performance

Drives behavior focused on local performance

 


Uses of Throughput Accounting:

• Improve the mix of products and services your organization offers to the market.

• Learn how constraints determine the performance of organizations.

• Build achievable budgets, forecasts, plans, & strategies.

• Improve customer mixes.

• Model your system’s Throughput.

• Improve productivity.

• Improve investment in non-constrained resources.

• Develop achievable financial goals.

• Design products that customers demand.

• Monitor distribution channel Throughput.

• Make a significant impact on wealth creation.

• Improve ROI (Return on Investment).

• Improve the productivity of entire supply chains.

• See why inefficiencies don’t always loose money.

• Combine LEAN principles with the Theory Of Constraints

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