Comments on _The Choice_ by Goldratt, chapter 12

I read and took notes on chapter 12 of _The Choice (Revised Edition)_ by Goldratt.

CHAPTER 12: Short Shelf Life Products

When an industry is already operating in line with a TOC solution, do we still have anything of significance to offer?

I lean on yes. This has been mentioned before in the book -- the idea that when you have a general theory that solves some specific problem, you should try to apply that theory to other specific problems. (I don't recall if the book said that or if I said it about something the book said. I vaguely recall that I said it, not the book.)

So the chapter starts talking about considering the idea of increasing the frequency of production and delivery by a bread manufacturer from once a day to 2 times a day. (i.e. reducing the batch size from a whole day's worth of sales to a partial day's worth of sales.)

Part of the consideration includes the fact that retailers are conservative with fancy breads and with breads that are new (new product to the retail store).

If a second delivery in a day will result in an increase in sales as high as 30 percent, it means that the fact that the company delivers twice a day is a very effective way to deal with the conservatism of the retailer. It means that the doors for a huge increase in sales of the fancy breads will be wide open. Considering the hefty throughput of those breads, the company will be able to further reduce the conservatism of the retailer by offering to take back, for full refund, the leftovers. One more fancy loaf sold compensates for two loaves taken back.

So as long as more than 1 fancy loaf gets sold for every 2 loaves taken back (on average), then the switch (to 2 a day deliveries) produced more profit (at least for the fancy bread category).

My real delight and astonishment comes from the results recorded at the same shops for the bread. From day one, bread sales increased by over 100 percent! The exact average for all fourteen shops for the four-month test was 118%.

So Goldratt expected a 30% increase in sales and what actually happened was ~4X bigger. And that's just from the start. The solution should produce stronger results in the future.