One of the most important concepts of The Goal is to increase throughput. Throughput is the rate at which the system generates money through sales. That is, when your company takes raw materials, processes them into a finished good, and sells it, the measured rate of that activity is your throughput. Severe emphasis on sales. Throughput is not the same as efficiency. Today, we will look at throughput vs. efficiency and how these concepts apply to IT.

Though we are focusing on throughput, we must state the descriptions of the two other measurements. Inventory is all the money that the system has invested in purchasing things which it intends to sell. Operational expense is all the money the system spends in order to turn inventory into throughput. I list the three definitions together because the definitions are precise and interconnected. Changing even a single word in one requires the other two be adjusted as well.

Another important concept in throughput is that it measures the entire system, not a locality. Whether you work in your garage or in a giant auto plant, you can not measure throughput locally, it must be measured over the entire system. This conflicts with most companies’ measurements of local efficiency. Employers naturally want to keep all their employees busy and employees like to see their coworkers pull their own weight. Why should Jane get to twiddle her thumbs at the Fob machine when Jill is busy pushing pallets of Fob parts around the floor? Is it fair to George to watch Jeff read the newspaper while he has to investigate hundreds of parts for quality control? And shouldn’t Jane and Jeff be worried that they might be reprimanded or fired for not being efficient, or draw the ire of their coworkers?

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