This week, you will return to the business report you began working on in Week 8. As a reminder, you have assumed the role of a consultant who has been asked

Improving Business Performance

Week 9 Learning Resources

System Thinking and Social Change

Using these resources, you will explore how applying systems thinking principles can be used to promote positive social change. As you review these resources, consider how you might apply systems thinking to create change. How might these concepts benefit the greater good?

· Hernández, A., Ruano, A. L., Marchal, B., San Sebastián, M., & Flores, W. (2017).  Engaging with complexity to improve the health of indigenous people: A call for the use of systems thinking to tackle health inequityLinks to an external site. .  International Journal for Equity in  Health,  16(1), 26–31. https://doi.org/10.1186/s12939-017-0521-2

· Stroh, D. P. (2014).  Systems thinking for social change: Making an explicit choiceLinks to an external site. .  Reflections,  14(3), 35–42.

· Stroh, D. P., & Zurcher, K. (2012).  A systems approach to increasing the impact of grantmakingLinks to an external site. .  Reflections,  11(3), 31–43.

Ethical Consideration

Through these resources,  you will investigate how the application of systems thinking principles and tools can assist managers in understanding and mitigating ethical dilemmas. As you review these resources, consider some ethical concerns that you may have encountered in your personal and professional life. Can you think of any ways in which systems thinking principles could have done anything to address or alleviate those concerns?

· Bardoel, E. A., & Haslett, T. (2006).  Exploring ethical dilemmas using the “drifting goals” archetypeLinks to an external site. .  Journal of Management Education,  30(1), 134–148. http://dx.doi.org/10.1177/1052562905280836

· Noga, T., Pant, L. W., & Shaw, L. (2011).  Recalibrating ethical dilemmas using the “fixes that fail” archetypeLinks to an external site. .  Journal of Business Ethics Education,  8(1), 115–118.

· Steele, R., & Derven, M. (2015).  Diversity & inclusion and innovation: A virtuous cycleLinks to an external site. .  Industrial and Commercial Training, 47(1), 1–7.

· Werhane, P. H. (2002).  Moral imagination and systems thinkingLinks to an external site. .  Journal of Business Ethics,  38(1/2), 33–42. https://doi.org/10.1023/A:1015737431300

Important Documents and Resources for the Week

Goldratt, E. & Cox, J. (2014).  The goal: A process of ongoing improvement (4th ed., pp. 124–236). North River Press. Note: This resource will be used for this week’s Discussion.

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The Goal – Part 2

Lakenya Campbell

Walden University

Improving Business Performance

Prof Stauffer

July 23rd, 2025

The Goal – Part 2

In The Goal, Goldratt emphasizes how systems thinking and focusing on constraints over local efficiencies drive effective business management. Three passages from Chapters 17–28 illustrate these principles.

First, Goldratt (2014) states, “We can’t release materials according to a schedule if the bottlenecks can’t handle it” (p. 133). This passage is compelling because it challenges the traditional push-production mindset. By aligning material release with the capacity of bottlenecks, the Bearington team prevents excess inventory and work-in-progress, which aligns with throughput accounting principles that prioritize system flow over local efficiencies (Corbett, 2006). Effective business management requires managers to synchronize inputs with system constraints to prevent hidden inefficiencies and delays in customer delivery.

Second, Goldratt (2014) observes, “Activating a non-bottleneck to its maximum is an act of irresponsibility” (p. 137). This challenges the common belief that high local utilization equals productivity. Instead, non-bottlenecks should be activated only as needed to support the system’s flow. This aligns with systems thinking, where sub-optimization can damage overall performance (Hudson, 2017). It demonstrates that “breaking the rules” of maximizing utilization makes sense when prioritizing system throughput and delivery performance.

Third, the statement, “The bottleneck should never be idle,” (Goldratt, 2014, p. 161) is vital in managing constraints. It highlights the need to protect bottleneck uptime to maximize throughput, even if it means deviating from standard practices like fixed lunch breaks or rigid job classifications. This passage shows why the team’s techniques, including process reorganization and priority shifts, are effective. It also aligns with the principle that managing constraints, not eliminating them, enhances system performance (Weiss, 2004).

Reflection

“If I had only known this back when I was managing cross-functional projects, I would have prioritized identifying and managing system constraints rather than pushing teams for constant activity. This approach would have reduced burnout and bottlenecks during critical project phases and allowed us to deliver quality work on time. I also would have challenged the belief that busyness equals productivity, fostering a culture of flow, continuous improvement, and focus on the true organizational goal.”

References

Corbett, T. (2006). Three-questions accounting. Strategic Finance, 87(10), 48–55.

Goldratt, E. M., & Cox, J. (2014). The goal: A process of ongoing improvement (4th ed.). North River Press.

Hudson, J. D. Jr. (2017, October). CL6 allows three shots at better improvement: Instead of bickering over methodologies, find synergies between theory of constraints, lean and six sigma. Industrial and Systems Engineering at Work, 49(10), 43–47.

Weiss, E. N. (2004, February 20). A brief note on the theory of constraints. Darden School Foundation, University of Virginia. https://hbsp.harvard.edu/

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Improving Business Performance: An Evaluation of USPS (United States Postal Service)

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Improving Business Performance: An Evaluation of USPS (United States Postal Service)

Part 1: Business Improvements

The USPS is an autonomous, government-operated agency in the executive branch. As one of the few agencies officially allowed by the U.S. Constitution, it delivers mail and packages nationwide. Delivery to over 160 million locations six days a week by the USPS has long been considered essential to the national logistics and communication ecology. The necessity to objectively assess an institution providing vital public services under systemic constraints sparked this analysis. USPS has battled with rising financial losses, inefficient operational infrastructure, and competition and regulatory obligations. Due of its visibility and complexity, USPS is a good candidate for this analysis, which employs TOC, TA, and systems thinking to find sustainable ways to improve performance. This paper investigates underlying limits, provides focused treatments, and analyzes each improvement using theory and practice.

Organizational Overview

Industry Context and Offerings

The USPS delivers letters, parcels, and business mail nationwide and internationally. It has a universal service commitment to deliver to all US addresses regardless of location or cost. USPS offers First-Class Mail, Priority Mail, Express Mail, bulk business mail, media mail, and packages. Individuals, organizations, and government agencies use these services for everything from personal correspondence to e-commerce deliveries. The agency provides post office boxes, money orders, passport applications, and mailing supplies. It is unique in that it competes with FedEx, UPS, and Amazon while meeting government legal and operational requirements.

Operational and Financial Health

USPS employs approximately 600,000 people and has over 31,000 retail locations. It processes 425 million mailpieces daily and has one of the nation's largest fleets. The organization's growth and scope have also presented obstacles. Many facilities and logistics operations use antiquated infrastructure and manual methods. USPS struggles to compete with private enterprises that use current technology and simplify processes because to these inefficiencies. Due to dwindling mail volumes, stiff labor costs, and retiree benefit pre-funding, the company has had chronic losses for over a decade. According to the USPS 2022 Annual Report to Congress, the agency lost $4.9 billion, continuing a 15-year trend of losses over $2 billion. E-commerce has increased package deliveries, but operating expenses and systemic liabilities have outweighed revenue increases.

Systems Thinking and Operational Summary

The USPS functions as a vast and complex system with numerous interrelated components. From a systems thinking perspective, its operations can be divided into several interconnected subsystems, each playing a role in service delivery: mail and package intake (customer-facing retail and drop-off points), processing and sorting (regional and national distribution centers), transportation (air and ground logistics networks), and delivery (last-mile carriers and delivery routes). Information flows from customers to frontline workers and back through multiple digital and manual channels. Feedback loops exist in the form of customer service inquiries, tracking systems, and internal quality control mechanisms. However, these feedback loops are often ineffective due to outdated IT systems and bureaucratic inertia. The systemic inefficiencies create a negative ripple effect across the organization, from delayed mail processing to route-level delivery issues. The lack of synchronization between physical and digital infrastructure, compounded by rigid policies, results in diminished agility and responsiveness. This inefficiency stifles USPS’s ability to adapt to the rapidly evolving logistics landscape.

Identification and Analysis of Organizational Constraints

Theory of Constraints (TOC): Foundational Framework

The Theory of Constraints (TOC), first introduced by Eliyahu M. Goldratt in his seminal work "The Goal," provides a systematic approach for identifying and resolving performance-limiting bottlenecks in organizational systems. TOC posits that any manageable system is limited in achieving more of its goals by a very small number of constraints. These constraints may be physical (e.g., equipment or space limitations), policy-based (e.g., regulations, procedures), or market-driven (e.g., customer demand). By systematically identifying and addressing these constraints, organizations can improve overall throughput and operational efficiency (Goldratt & Cox, 2014). For the USPS, all three types of constraints—physical, policy, and market—are currently limiting organizational performance in distinct and overlapping ways.

Constraint 1: Physical Constraints – Aging Infrastructure and Inadequate Sorting Equipment

A critical physical constraint facing USPS is the widespread use of outdated mail sorting and processing equipment. Many of the machines currently in use are over two decades old and are prone to mechanical failures, inefficiencies, and high maintenance costs. Some facilities still rely on manual sorting for specific mail classes or delivery zones. The outdated equipment significantly slows down processing time, increases the likelihood of errors, and contributes to high labor costs. This bottleneck impacts First-Class and package deliveries, especially during holidays when volume rises. Monteiro (2018) found that outdated physical infrastructure makes it difficult to grow operations, resulting in missed service targets and customer unhappiness. USPS financial troubles and borrowing restrictions hinder capital investment, exacerbating this constraint.

Constraint 2: Policy Constraints – Legislative and Governance Limitations

USPS's legislative structure is another major restriction. The 2006 Postal Accountability and Enhancement Act (PAEA) mandates the corporation to pre-fund retiree health benefits for future employees up to 75 years in advance, which is the biggest policy constraint. No other federal agency or private enterprise has this requirement, which has burdened USPS financially and diverted billions from capital investment and operating improvements. USPS cannot set prices or add services without Congressional approval. This regulatory environment limits innovation, adaptability, and market response. Policy restrictions, especially those that limit budgetary flexibility and decision-making autonomy, are hardest to overcome in public sector organizations, according to Dalton (2009).

Constraint 3: Market Constraints – Shifting Customer Preferences and Competitive Pressure

USPS faces significant market constraints as consumers increasingly turn to digital communication and private courier services. The proliferation of email, electronic billing, and digital advertising has sharply reduced the volume of First-Class Mail, historically one of USPS's most profitable segments. At the same time, e-commerce has fueled the rise of private logistics competitors such as Amazon, FedEx, and UPS, who offer faster, more trackable, and often cheaper delivery options. These competitors benefit from technological agility and fewer regulatory constraints, allowing them to adapt rapidly to consumer demands. As Fox (2012) explains, market constraints force organizations to redefine their value proposition to remain relevant. USPS’s value proposition is increasingly being challenged by both technological obsolescence and customer expectations for faster and more customized services.

Recommendations to Address Constraints

Recommendation 1: Comprehensive Infrastructure Modernization

To address the physical constraint of outdated infrastructure, USPS must prioritize a phased yet aggressive infrastructure modernization plan. This should include the replacement of obsolete sorting machines with automated high-speed systems equipped with optical character recognition and barcode scanning technologies. Integration of RFID tracking and real-time monitoring systems would further enhance logistics visibility and customer service. Additionally, investment in energy-efficient vehicles and smart route optimization software can improve last-mile delivery effectiveness. According to Aghili (2011), combining throughput metrics with Six Sigma principles significantly enhances the efficiency and reliability of operations. USPS can finance these upgrades through public-private partnerships, lease agreements, and capital grants linked to sustainability and innovation goals.

Recommendation 2: Targeted Legislative Reform and Regulatory Autonomy

To overcome policy constraints, USPS must intensify efforts to advocate for legislative reforms, particularly the repeal or amendment of the PAEA’s pre-funding mandate. This can be achieved through coalitions with labor unions, state governments, and advocacy groups to apply coordinated political pressure. Additionally, USPS should seek increased autonomy over service pricing and the development of new product lines. Hudson (2017) emphasizes that organizations must align their internal policies with external strategies to create a dynamic performance environment. Gaining regulatory leeway would enable USPS to respond more nimbly to competitive threats and operational needs. Legislative reform would not only relieve financial pressure but also unlock opportunities for innovation and strategic investment.

Recommendation 3: Strategic Service Diversification and Market Repositioning

To counteract market constraints, USPS must reframe its service offerings to meet contemporary consumer expectations. This involves expanding into adjacent service areas such as financial services (e.g., postal banking), digital identity verification, and government document processing. These services are particularly needed in underserved rural and low-income urban areas where USPS already maintains a physical presence. By leveraging its trusted brand and nationwide infrastructure, USPS can offer value-added services while generating new revenue streams. Piraseth and Kannappan (2013) argue that service diversification, when aligned with customer needs and organizational capabilities, can serve as a powerful countermeasure to market displacement. Partnerships with local governments and digital platforms can further support implementation.

Throughput Accounting Evaluation

Overview of Throughput Accounting

Throughput Accounting (TA) shifts the financial focus from cost-centric decision-making to maximizing organizational throughput. TA is built on three core metrics:

· T (Throughput): The rate at which the system generates money through sales, calculated as sales revenue minus variable costs.

· I (Inventory): The money tied up in the system in the form of unsold goods, equipment, or resources.

· OE (Operating Expense): The money spent to convert inventory into throughput.

Corbett (2006) explains that traditional cost accounting can misguide decision-making by emphasizing local efficiencies at the expense of system-wide performance. TA, by contrast, promotes a holistic approach that aligns with the TOC philosophy.

Application to Recommendation 1: Infrastructure Modernization

Implementing automated sorting and real-time tracking technologies would increase throughput (T) by accelerating mail processing and improving delivery reliability. It would also reduce labor-intensive tasks, thereby lowering OE. Although I may increase temporarily due to initial capital outlays, the long-term reduction in equipment failures and rework would stabilize inventory. Kirli (2016) demonstrated that logistics firms implementing automation realized up to a 35% improvement in T and a 20% reduction in OE within the first two years.

Application to Recommendation 2: Legislative Reform

Eliminating the pre-funding mandate would result in a significant and immediate reduction in OE. These savings could then be redirected toward infrastructure investments and service innovations, increasing T in the medium to long term. While this recommendation does not directly affect I, the improved financial flexibility would allow for better inventory management and capital planning. Kadhim et al. (2020) argue that aligning policy reforms with TA metrics ensures that financial decisions contribute directly to system-wide efficiency and profitability.

Application to Recommendation 3: Service Diversification

Expanding into financial and digital services would open new revenue streams, thereby increasing T. Initial investments in infrastructure, staff training, and marketing may increase I and OE temporarily. However, leveraging existing post office locations minimizes overhead, making the cost-benefit ratio favorable over time. Albright and Lam (2006) observed that strategic diversification, when managed using TA principles, can deliver sustainable performance gains even in highly regulated environments.

Conclusion

The USPS is an indispensable institution that is presently constrained by outdated infrastructure, rigid policies, and shifting market dynamics. Applying the Theory of Constraints reveals the core limitations that must be addressed to elevate the organization’s performance. Throughput Accounting offers a robust framework for evaluating the financial impact of proposed interventions, while systems thinking ensures that solutions are sustainable and holistic. By modernizing its physical infrastructure, advocating for necessary policy reforms, and diversifying its service offerings, USPS can improve operational efficiency, restore financial stability, and enhance its value proposition to the American public. The path forward requires bold leadership, cross-sector collaboration, and an unwavering commitment to continuous improvement. However, the potential rewards—both in terms of organizational health and public service delivery—make the effort unquestionably worthwhile. 

References

Aghili, S. (2011). Throughput metrics meet Six Sigma. Management Accounting Quarterly, 12(3), 12–17.

Albright, T., & Lam, M. (2006). Managerial accounting and continuous improvement initiatives: A retrospective and framework. Journal of Managerial Issues, 18(2), 157–174.

Corbett, T. (2006). Three-questions accounting. Strategic Finance, 87(10), 48–55.

Dalton, M. A. (2009). What’s constraining your innovation? Research Technology Management, 52(5), 52–64.

Fox, K. (2012). Seeing the forest for the trees: Theory of constraints reduces cost of government. The Public Manager, 41(3), 10–13.

Goldratt, E., & Cox, J. (2014). The goal: A process of ongoing improvement (4th ed.). North River Press.

Hudson, J. D. Jr. (2017). CL6 allows three shots at better improvement. Industrial and Systems Engineering at Work, 49(10), 43–47.

Kadhim, H. K., Najm, K. J., & Kadhim, H. N. (2020). Using throughput accounting for cost management and performance assessment: Constraint theory approach. TEM Journal, 9(2), 763–769. https://doi.org/10.18421/TEM92-45

Kirli, M. (2016). Throughput accounting in strategic cost management: An application. Annals of Dunarea de Jos University. Fascicle I: Economics and Applied Informatics, 22(2), 78–87.

Monteiro, V. (2018). TOC in the emergency room. Industrial and Systems Engineering at Work, 50(7), 38–42.

Piraseth, R. M., & Kannappan, S. (2013). The synergy of continuous process improvement. Industrial Engineer, 45(6), 41–45.

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