TOC Goldratt

[GG]

Hi !

I am studying TOC and Goldratt since a year and a half and am always
impress about the discoveries I am making. However I feel like a
missionary in my workplace since nobody else has this knowledge here.

I am facing a classic situation. Right now I am being asked to cut the
cost by 20%, in a month on my product. Obviously it wont be achieved.
My marketing is quoting at a cost + % and we are not getting any
orders.

I am totally convince that selling price for a product should be
determined from the market, not from marking up an arbitrarily
allocated product cost.

What is the best way to communicate this?

I am affraid, taking back the missionary parallel above, if I can't
convert my management I hope not to be the next martyr!

Nevertheless... I keep faith !

Can anybody help me?

GG

[John A. Weeks III]

Post by GG
I am facing a classic situation. Right now I am being asked to cut the
cost by 20%, in a month on my product. Obviously it wont be achieved.
My marketing is quoting at a cost + % and we are not getting any
orders.
I am totally convince that selling price for a product should be
determined from the market, not from marking up an arbitrarily
allocated product cost.

But if a product isn't selling at cost + %, it doesn't matter
if the market wants it at a lower cost. It simply means that
it isn't worth producing that product at this time in this
market. You either need to find a revolutionary way to reduce
the cost of manufacture so the cost + % is much lower, or you
need to put your huge investment to work selling something else
that will give you a rate of return.

-john-

[e***@gmail.com]

Post by GG
Hi !
What is the best way to communicate this?
I am affraid, taking back the missionary parallel above, if I can't
convert my management I hope not to be the next martyr!
Nevertheless... I keep faith !
Can anybody help me?

If no one is buying, then obviously there is a serious problem. Either:
1) Your price is too high
2) Your product is crap.
3) Your marketing is not effective.

Let's assume the product is fine, therefore, there is potential to
reverse things.

Just like Alex did in the first part of 'The Goal', you have to
understand the core reason for you business and then change the
operations to match that core reason. To do this I would start with
creating a SWOT analysis. If you don't know this, its to analyse:
1) Strengths
2) Weaknesses
3) Opportunities
4) Threats

This may open up the questions necessary for you to see some revealing
answers.

Good luck. Eric.