The Theory of Constraints (TOC) is a powerful technique for harnessing the intuition of managers to achieve "The Goal". In Goldratt's book The Goal, which is about production systems, he defines the goal as "To make more money now and in the future".

Goldratt explains that all decisions should be evaluated against the following criteria (and ignoring traditional financial measures). The first is what will be the impact on throughput of the company as a whole - will in increase or decrease? What will be the impact on operating cost - ill it increase or decrease? Finally what will the impact on inventory - will in increase or decrease?

For service companies, the first two measures still make sence. Throughput = money through sales and operating expense is operating expense. But what of inventory? Is inventory applicable to service companies, who by definition do not have a large amount of goods.

Lets explore this further. First let us try to understand inventory means, in a broader sence. One synonym for inventory of Work-in-progress. For me, this is much easier to relate to the service sector. So lets replace the term inventory with work-in-progress and see how far we get.

The main commodity that is required to provide services, is peoples time. Time = Work in progress = Inventory? Could it be?

In his talk at the 2008 Intranet summit Mark Riversdale http://www.miramarmike.co.nz/intranetconference suggested that the business objectives should be evaluated against the following criteria: increase sales, decrease costs, or increase customer service.

Is it possible to equate work in progress with customer service? What is the meaning of good customer service? If this means providing a quality service and to minimise rework, then this will equate to a decrease in time spent providing the service.

Without deep analysis, by initial conclusion is that the primary measurements of the goal of service companies is to:
1. Increase Throughput while simultaneously
2. Decreasing costs while simultaneously
3. Decreasing the time it takes to provide the service