Constraint Management: Optimizing Revenues by Keeping the Net in the Water

A commercial fisherman spends a lot of money to be in business between the boat and equipment, the crew, the fuel and the licenses. However, a fisherman is only making money when the fishing nets are in the water. Since it costs so much to just get out to sea, a successful fisherman works to get to the fish and keep the nets in the water either until the nets are full or until the fish are done feeding.

The Opportunity or Threat:
I was working as the Director of Operations for a financially weakened organization with just above skeleton level staffing as we worked ourselves back from the brink of bankruptcy. Due to the hard work of our staff, we were able to get a celebrity to speak at one of our scheduled events. Our expectation for demand for the event tripled overnight without any supporting changes to our assets or resources.

The past behavior would have been to cap the event size, in this circumstance somewhere around 300 people but it was clear that if we did that, we would be squandering an opportunity. The same as a captain heading back to shore while the fish were feeding.

The Insight:

Following the principles of constraint management, as outlined in The Goal by Eliyahu Goldratt, we carefully examined each perceived bottleneck to accommodate a larger event. There are several types of constraints and in this case we mostly looked at policy and resource constraints.
Resource constraints exist when you outstrip the capacity of a resource whether that is staffing or asset-based. Policy constraints exist when your method of managing your resources results in their inability to produce the needed capacity.

The Action:
Our initial examination of our constraints showed three potential bottlenecks; the capacity of the auditorium where the celebrity would be speaking, our capacity to feed a group of people with our existing dining room and kitchen staff and finally our existing housing capacity.

With the participation of key people from throughout the organization, we began the work of unraveling the bottlenecks.
Although we were running a three-day themed event, our celebrity was only speaking and participating in one half day of the program. We decided to move the celebrity’s talk off-site and found a suitable venue about ten miles away. We rearranged the schedule, so that we could bus people attending the three day event to the venue and back. This allowed us to sell hundreds of additional tickets to the celebrity’s presentation beyond our other capacity bottlenecks.
The next bottleneck we worked upon was the food service operations. Here our strategy required three coordinated efforts to elevate the capacity of food service above other constraints. First we needed to change our schedule to allow us time to feed more people and remove the load of staff meals from the peak load. Second, we needed to change the menu to a menu that took less labor and allowed more preparation ahead of the events. Third, we needed to both modify the staffing and staff schedule by pulling extra workers from both inside and outside the food service area. This raised our food service capacity to nearly double for the three day event.

The final capacity bottleneck to be addressed was to manage our own housing capacity to fill it as efficiently as possible and then find housing outside our facility for additional customers. We worked out arrangements with several nearby establishments and developed internal rules to ensure that we optimized our own housing.

The net result was that we turned almost no one away from the event, leaving no feeding fish, when we pulled in our nets. We also handled nearly three times our typical capacity and double our normal peak capacity.

The event was so successful, that some of the methods were more broadly applied to our operations, policies and assets over the next two years and contributed to nearly doubling our gross revenues.


To see how our work benefitted a client related to this method, visit our case studies at Metamorphosis Management Group (http://www.metamg.com/).