They’re measurements which express the goal of making money perfectly well, but which also permit you to develop operational rules for running your plant,” he says. “There are three of them. Their names are throughput, inventory and operational expense.

I write down the three measurements which Lou and I agreed are central to knowing if the company is making money: net profit, ROI and cash flow.

Alex, the goal is not to reduce operational expense by itself. The goal is not to improve one measurement in isolation. The goal is to reduce operational expense and reduce inventory while simultaneously increasing throughput,” says Jonah.

We need financial measurements for sure — but we don’t need them for their own sake. We need them for two different reasons. One is control; knowing to what extent a company is achieving its goal of making money. The other reason is probably even more important; measurements should induce the parts to do what’s good for the organization as a whole.

There are more ways than one to measure profits and losses.

"Well, I don’t. Not absolutely. But adopting "making money’’ as the goal of a manufacturing organization looks like a pretty good assumption. Because, for one thing, there isn’t one item on that list that’s worth a damn if the company isn’t making money.

What gets measured gets done.

What gets measured gets done.

Measure what can be measured, and make measurable what cannot be measured.

Measure what is measurable, and make measurable what is not so.

Measure what is measurable, and make measurable what is not so

What gets measured gets managed. — PETER DRUCKER, management theorist, author

[Inventory is measured by] the money the system invests in purchasing things the system intends to sell.

What Gets Measured, Gets Done