Tuesday, February 5, 2019

Metrics from The Goal: Throughput

In the manufacturing-production novel The Goal, our production manager eventually understands that there are three key metrics that show the health of his factory. The first is Throughput.

Throughput is defined as "the rate at which the system generates money through sales". A higher number is better and represents more money made for the factory.

Important: this is NOT simply how much product is made. It has to be sold in order to count as throughput. This means you don't get to cheat by over-producing product that sits on the shelf. It doesn't matter how many products you make that don't sell.

The best way to increase your throughput is to make products to match all of the potential sales. However, this will have an impact on the other two metrics, which are Inventory and Operational Expense. 


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