HighX is a job-shop manufacturing company, producing 12 different categories of products, each according to detailed specifications from the client. There is no practical way to make-to-stock/availability; it is a pure MTO environment.
Steve, the CEO, got interested in the Strategy and Tactic (S&T) process in order to achieve a decisive-competitive-edge over his competitors. The idea is to offer high-reliability and also fast-response delivery to clients and by that gain a decisive competitive edge. Clients currently suffer from not-too-good delivery, which characterizes also the performance of the main competitors.
Some clients need, from time to time, much faster delivery. The current order lead-time is four weeks and if that is achieved in high reliability it would relieve much pain from the clients. If it’d be possible also to offer fast response, say delivering a specific order in just one week, then 25% markup on the original price will be considered fair. It is predicted, based on actual queries from clients, that 17% of the orders would be for one-week special delivery at the higher price. TOC operational methodology can achieve the capability of reliable delivery including the faster delivery order.
However, during the initial sessions on the S&T Steve raised the issue of the current improvement initiatives that are already on progress. The R&D department is busy on adding new features to the most lucrative seven categories of products. These features are demanded by the customers and it is reasonable that the competitors are working on them as well.
More, there are two even bigger initiatives, coupling R&D and business development, of entering two promising new market segments with new categories of products. The two market segments offer higher ratio of T/Selling-Price. The two projects have been initiated nine months ago and are expected to be ready to launch between six to twelve months from now.
James, the key TOC expert leading the S&T session, said that all those development projects should be frozen until the basic TOC procedures, including the new TOC performance measurements, would be implemented.
Steve reacted that he cannot afford to freeze those projects as they are critical to maintain the position of HighX in this competitive market. James suggested waiting with the S&T for six months until three most important projects would complete and then start the implementation. He also suggested that while the three most important projects are making progress, the other projects would be frozen until the three are completed and also until the operational part of the TOC methodology is successfully implemented.
What do you suggest Steve should do? How such a decision has to be made?
I call you to write your comments on the above. It is time to discuss this matter.