Definition: Throughput is a measure of the performance of certain productive process within a given time frame. In other words, it is the amount of output that a system can effectively deliver within a period of time.
What Does Throughput Mean?
A productive system can be evaluated by using different metrics that will illustrate its effectiveness in terms of quality, resources or output. The throughput figure is one of those metrics and it focuses particularly in the size of the output that a given process can produce within a pre established time frame.
This figure can be compared with other similar time periods or with the performance of peers such as competitors or different production lines within the same company. In business scenarios, it could mean the amount of goods being manufactured by a company in a time period or it could also be the amount of goods sold by the business.
There are different elements that can affect a business’ throughput, one of them is supply chain management, as having a reliable network of suppliers and an effective purchase department is crucial to increase output levels; and, on the other hand, a productive sales team will also affect the number of goods that a company can, not only produce, but also effectively sell to customers in that time frame.
Example
Dark Lake Co. is a company that produces chocolate for individual and industrial consumers. The Board recently decided to hire a new Supply Chain Manager since the last one was not effective at increasing the throughput level of the business. It appears that the problem lies in the fact that there are too many delays in the delivery of some materials that are being imported and that are essential to the manufacturing process.
The board established a goal for the new manager, he has to increase the business’ throughput from 800,000 pounds to at least 950,000 pounds within the next fiscal year. He has a difficult task ahead but he is confident that by enhancing the supply chain process he can achieve this objective.
