I have been reading Goldratt’s book “The Choice” and I’ve made some notes.
Goldratt wants to live a full life.
Does this require genius?
No, you need to think like a scientist.
A scientist understands how his instruments are supposed to work. If it stops working that is an opportunity to find out more about why the theory about how works can be improved.
If you always work like a scientist you don’t get disappointed by plans going wrong.
“The more complicated the situation seems to be, the simpler the solution must be,” he recites.
Main obstacle to thinking like a scientist: people believe reality must be complex so they look for complex explanations and solutions to problems.
big brand are clothing company. they think in five years they can increase their net profit to $1 billion per year in five years. Goldratt sez they can do $4 billion per year in five years.
Most popular items are about 30% of the items they provide.
Since they run out of the most demanded items their losses are higher than the percentage of missing items. They are out of the most demanded items after about 1 month of a six month season. the total amount of missed sales > all realised sales.
problems is that lifetime products < time to supply those products
regard being sold out as positive but it’s actually hiding a large missed opportunity.
also outlet sales of stuff that they can’t sell illustrate the problem
don’t know demand before start of season but try to forecast anyway. Find out demand in first two weeks of the season but the lead time is 2 months so they can’t use that information.
but the long lead time is a result of large quantities, but if they make smaller and more frequent orders in the same volume over the season the cost is the same.
big brand could offer to take back unsold stuff for a full refund. If they mostly hold and supply highly demanded stuff this won’t cost much.