Page 9 - Demo

Slippery Rock Gazette
September 2024 | 9
Training & Education
Times are tight right now in the coun- tertop industry, and it’s a good time to look for leaks in the plumbing of your business. There are four main flows of money that need to be monitored and managed:
1. The Revenue stream (R) coming into the production system.
2. The Truly Variable Expenses stream (T.V.E.) exiting the system to buy materials.
3. The Throughput Dollars stream ($T) staying in the system to pay bills and contribute to profits.
4. The Operating Expenses stream (OE) exiting the system to pay bills.
I use this simple diagram to teach how a business makes money with the four streams: It’s the fifth stream of money, that which overflows the bucket and
Pete DuBruhle
Synchronous Solutions
Fixing the Leak
There is a reason the best countertop software products like ActionFlow and Stone App integrate $Ts into their soft- ware. There is no number in a fabrica- tion business that is more important to manage.
The four most critical Key Performance Indicators (KPIs) of a business are derived from $T, and help answer four key questions:
1. $T per day – Is there enough $T flowing to fill the OE bucket and meet NP goals?
2. $T per Constraint minute – Is it flowing at a fast enough rate through the Constraint to meet $T per day goals given the available Constraint minutes?
3. $T Ratio ($T/R) – Is Revenue being converted into $T efficiently by making good use of material?
4. Productivity Score ($T/OE) – Is the business using OE (people and equip- ment) efficiently?
These four points are listed in their order of importance. Apply the compa- ny’s scarce resources accordingly.
• Marketing and Sales must focus on bringing in the Revenue that most effi- ciently converts to more $T.
• Production must be focused on increasing Constraint capacity while ensuring all non-constraint processes have sufficient extra capacity to never hold up or limit the Constraint.
• Production must be maximizing material usage.
Determined focus on, and improvement of these simple metrics will ensure your business will “make money today, and more money in the future”.
Peter DuBrule
– Synchronous Solutions
We help clients control the flow of information and materials through their system to increase profitabil- ity, decrease process times, and reduce chaos.” Contact us at www.synchronous solutions.com .
becomes profit, that is most compelling. It is the result of how well the other four steams are managed. Manage the other four streams correctly and the profits sim- ply take care of themselves.
The most important flow of money in the business is the stream labeled $T: the money that stays in the business to pay expenses (everything except mate- rial cost). When this stream exceeds the out flow of money represented by the bucket labeled OE (Operating Expense), the result is Net Profit. This means that
more different. The upside to increasing Revenue is almost unlimited. The potential losses in the TVE pipe are very finite.
If the upside of the Revenue stream is almost unlimited, then so too is the $T stream. What limits the ability to capture $T is the capacity of the production system.
In relative terms, the potential to increase Revenue and $T are huge, the potential to decrease TVE is small, while the potential to reduce OE is extremely small.
If profits are not where you want them, where should you focus?
Use these simple metrics to make
money today, and more money in the future.
generation of more profit requires more $T and or less OE.
Of the two opportunities, the potential to reduce OE is very limited. What is the potential to increase $T?
$T is simply the R (revenue) stream minus the T.V.E. stream. To increase the $T stream, it is necessary to either increase the Revenue stream or decrease the TVE stream. The opportunities pre- sented by these two streams couldn’t be
Registration Now Open for ISFA’s 2024
Annual Conference
Fabricators and other professionals within the surfacing industry are in- vited to explore growth opportunities at the International Surface Fabricators Association’s (ISFA) 2024 Annual Conference November 6-8 in Miami. Attendees will enjoy three days of edu- cational sessions, business development workshops, networking opportunities and more at The Palms Hotel & Spa. A trop- ical escape in the heart of Miami Beach, The Palms Hotel & Spa is an oceanfront resort with a unique emphasis on wellness, nature’s beauty and luxury.
At the 2024 Annual Conference, attend- ees can unlock a world of possibilities, where innovation meets creation. This event is an excellent chance for fabrica- tors and other professionals to elevate their businesses, enhance their skills and make meaningful connections.
This year’s theme is Crafting Success: Innovate, Fabricate, Dominate.
“The ISFA Annual Conference is the premier event for our members, and this year’s event promises to be outstanding,” said Marissa Bankert, chief executive officer of ISFA. “We have thoughtfully planned programming and resources to create opportunities to learn, connect and elevate successes. It’s a must-attend event designed to empower attendees with the knowledge and the relationships they need to drive their businesses forward.”
Registration is open to members and non- members, and anyone interested in attend- ing can find more details at www.ISFAnow. org/annual-conference. Those who regis- ter before September 20 can take advan- tage of early bird pricing. Registration fees include programming and activities listed on the agenda.
Learn more at www.isfanow.org .