Oh the fallacy!

Ok - TOC has indeed given me new thinking skills. In the past I would never have challenged an article that promotes methods to cut costs. I ran across an article via my inbox today entitled "How to slice 30% off your learning costs." (published by trainingzone.co.uk). Wow - 30% cost reduction - that's huge. My first thoughts were back to The Goal when Jonah acted really impressed when Alec Rogo told him of the impressive productivity gains by automating processes in his plant and also something I read in the Haystack Syndrome where Dr. Goldratt makes the observation that most cost savings never reach the bottom line in terms of net profit.
Armed with this insight, I read through the article. Besides the fact that the author was pulling numbers out of thin air without an ounce of supporting analysis (e.g. "You could save 7% of your supplier costs by improving supplier management. That equates to a 2.8% reduction in overall learning spend."). Most of his techniques for reducing cost involved reducing the effort of the training organization. So the question from TOC standpoint is - how much of this labor is variable and how much is fixed. Assuming your training department consists of a certain number of full time employees, you are going to have to pay them regardless of the amount of work they are doing - so what is the cost savings? well... nothing obviously.
I think this article has merit since it suggests techniques that may indeed help the training department reduce truly variable expenditures - however, the 30% cost saving is, in my humble opinion, a bit of a fallacy.

Update on Novamerican

In my November 2008 post, I observed Novamerican had added board members Martin D. Powell and Oded Cohen, both TOC gurus. Here's a quick follow up:
In February 2009, Novamerican changed their name to Barzel - they also changed their ticker symbol from TONS/TONSW to TPUT/TPUTW... They have committed to The Decalogue (TM) operating methodology developed by Oded and Dr. Domenico Lepore which "brings together the ideas of Dr. W Edwards Deming's Theory of Profound Knowledge and Dr. Eli Goldratt's Theory of Constraints, and facilitates their application through a set of logical thinking tools and statistical methods." (http://www.marketwatch.com/news/story/10-q-barzel-industries-inc/story.aspx?guid=%7B864A1A9E-B28E-4EA2-94AC-0FCB7BAFA1EE%7D&dist=msr_1)
Barzel is suffering along with the rest of the economy, and according to the first quater 10-Q, they have been forced to reduce labor expenses including layoffs. They seem cautiously optimistic about the future - stating that shorter lead times and faster inventory turnover will mitigate the negative effect of declining steel prices on their published quarterly reports.
They are in the early phases of "Adopting the New Philosophy" (Demings 2nd key principle) - I wish them luck and eagerly await the 2nd quarter report.