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There are some universal truisms that apply to all businesses. The first of these is that, a business must be able to provide products and services at a lower overall cost than the competition. The second is that the inflation-adjusted cost of production and logistics must continuously decrease. Knowing the true cost and profit picture of each product is the third. Finally, understanding and managing cash flow is as important as profit. Each of these …

…inventory will increase. The fourth change is to improve the factory layout. Machines and processes are relocated so the product will not have to be physically moved from one part of the factory to the other during production. These changes allow the products to flow more smoothly along the production line. The final step is to design performance measurements and reward systems that encourage throughput. Eliminate or reduce rewards that discourage production of unnecessary inventory.