Theory of Constraints Term Paper

  • Length: 22 pages
  • Subject: Business - Management
  • Type: Term Paper
  • Paper: #49169861

Excerpt from Term Paper :


What is the Theory of Constraints?

There has been a continuous development of management from the time it was realized that it can be studied carefully to form a branch of knowledge and the individuals who had studied it generally performed better as managers than others who never spent time on the matter. The Theory of Constraints or TOC is basically a philosophy of management and improvement. The first person to draw the attention of the world to this was Eliyahu M. Goldratt and he brought it to the notice of others through his famous book, The Goal. The guiding principle behind this theory is that in any organization there exists a weak link, and this acts somewhat like a chain with a weak link. This tops the organization from performing even better than it is performing at any period of time. In short, it is important to remove the weak link for the organization to improve its performance. This involves a direct effort to try and find out the piece of weak link, as it must be found before it can be changed. This must be realized and the management must act accordingly. (What is the Theory of Constraints?)

There is a body of knowledge and different analytical tools and these are called the TOC thinking process. These are powerful as these processes come from our experience in the accurate sciences and have their base on rigorous, easily understood and cause and effect logic. These methods are useful in finding of development of breakthrough solution. This is bound to happen as the conflicts within all systems in practical life are a result of the unexamined assumptions that have been taken on when the organization first started running. These matters can be carefully studied and the results will provide benefits for every individual in the organization. The TOC thinking processes are to be taken as a whole and used for not only solving the problems that can be seen, but should also find out the solutions along with the needed communication and successful solutions of the changes in the system.

The solutions can be found for all existing areas of business and for this article we shall concentrate on some areas of business and those areas include production, project management, distribution, supplier relations and marketing. The study will try to provide some solutions for finding out customized generic solutions for these areas. When the solutions are taken individually, they can also be seen to increase communication and improve functions through solutions like win-win conflict resolution, idea evolution and feedback, team building and empowerment and delegation. (What is the Theory of Constraints?) The methods are important for all business and are not related to the particular business for which it was found.

Operations/Production Management - Speed, Reliability, and Capacity

Operations or production is an area where the TOC process has been applied in quite a few instances. There are some signs in performance of business that gives individuals an ideal that the business is suffering from these defects. The flaws in operation can be expressed as poor on time performance, long lead times for production, high inventory of cork in process or finished goods, payments of very high amounts of overtime, requirement in production of expediting and rescheduling in many instances, bottlenecks in different areas or in the same area of business, and a general reluctance by the production management to accept new business. These are a possible indication that the organization is not being properly managed as far as production is concerned. This is then a correct indication that an investigation in that area will be beneficial for the business. Of course there will be the necessity of implementing the change later. Just as it happens in the total business, even the operation of the production operation has its own limitations. When the production function is an important factor in the operation of the organization, then this matter has to be properly taken care of. In these organizations, the constraint on productivity is the restriction on the operation of the organization. This operation was first introduced in the affairs of business by the book, The Goal of Eli Goldratt. His approach to the management of production gave excellent results and the restrictions brought about by the constraint are known as "Drum Buffer Rope" and as "Buffer Management." (Operations/Production Management - Speed, Reliability, and Capacity)

Here drum is the constraint or set of constraints connected to the demand for the product in the market and that determines the beating of the drum in the plant. The explanation of buffer is the gap or time or inventory that makes it certain that the constraints in the operation ultimately do not cause a great hurt to the total system. Rope is the release of material from the organization and this is the item that ties up the other two elements which has been described. The three elements of drum, buffer and rope are the reasons for the establishment of production schedules and the general attempt will be to prepare a schedule that is not likely to be disturbed. This will also try to make sure that excess inventory is not carried and small batches are produced every time to ensure that the lead time for production of individual batches remain small.

Even with a lot of care being taken into the system of managing the operations through drum, buffer and rope, there are some disruptions that happen in certain instances. The control of these situations is then made with "Buffer Management." When the two methods are used together -- "Drum Buffer Rope" and "Buffer Management" the aim is to reach productivity which will be lean or ones with low inventory. At the same time, the production should be able to regularly supply material in time for 95% of the orders. The system should also reduce lead time by about 35 to 50% and inventory by around %0%. Since the planning is done correctly, it is expected also that there will not be much requirement for rescheduling or expediting of orders. (Operations/Production Management - Speed, Reliability, and Capacity)

Gathering data

To improve the operations as discussed above, there is requirement that data is collected from the area. This is not an easy task as two people can go to the same area and collect two different sets of data. The difference may be even in the time taken by the two, and the quality of the data that is collected. The aim of every organization is to be able to collect accurate data within the shortest possible time. The first question is the starting of gathering of data. The next important aspect is to maintain common sense while the data is being collected and the third is the recording technique that is used. There is also a great requirement to keep the data organized. In the working life of today, the processes of work are changing very rapidly. Electronics has been important for man for a long time, but now human beings have started to use it a lot more so that processes have started to move much faster. (Fact Gathering)

Earlier the computers were main frames and the control was with a few specialists, and there was not much change. Today, computers are very popular, and every person wants to use computers. The operators are now at the level of simple operators. This means that in companies which use computers, it is essential to collect data from the employees even at low levels. This is easy in some companies, but a lot of companies have never done it in the past. This depends on the attitude of the company as they view the employees to be assets at one stage and expenses when the revenue drops of the company. This is the reason why the answer to the first question of the employees has to be decided first, and that is why the company is collecting this information and what they were planning to do with the facts. If the aim is for a TOC exercise, then it is a matter which can be explained to the employees. They should not get an idea that some of them will be compelled to leave their job.

The problem is that often the data is being collected by people whom they do not know. This makes the employees suspect all future moves. This is especially true for new employees as they are not aware of the history of the organization. The suspicion among the employees is that these outsiders will use the information for different purposes. They may get the feeling that a lot of employees will be removed, and this is also reflected in the newspapers which are reporting downsizing by many organizations. Yet the methods of work cannot be changed without gathering of facts. The situation will only be worsened if there are rumors which are flying. This may affect…

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