In your own experience, identify an instance when the Theory of Constraints (TOC) was successfully used to improve a process, or when you saw the potential for TOC to improve the process. Provide examples of the bottleneck(s) in the process.

The theory of constraints is used as a means to identifying the weakest link within a supply chain. Here the theory is a form of continuous process improvement that aims to eliminate complacency with the supply chain management processes of companies. This theory is particularly relevant given the overall supply chain disruptions that have occurred as a result of COVID-19. Currently, globalization has created a much more comprehensive and interconnected network of suppliers each with their own unique value proposition. Through the theory of constraints methods, these nodes on the value chain can continually innovate creating a much more efficient network of global operators (Atwater, 2017).

One such instance that TOC can be used to improve processes is in the gaming industry. Here, the console market has experience immense supply and demand imbalances due in part to the COVID-19 pandemic. A critical input into consoles are microchips which are experience large shortages due in part to the large uptime required to manufacture them. This global chip shortage is a critical input with the gaming console manufacturing process. As a result, a missing microchip can create a gaming console that can not meet consumer demands in an appropriate fashion. Likewise, the microchip market itself is an oligopoly with three major manufacturers controlling nearly 80% of the market. This further exacerbates the supply chain issues due to price increase due primarily to high demand. To improve the process, gaming consoles should improve their forecasting models to better anticipate demand in a manner that allows them to procure the necessarily components. In addition, these forecasts should be shared with suppliers in order to have a much more comprehensive manufacturing process for critical components (Baxendale, 2018).

References

1. Atwater, B. and M. L. Gagne. 2017. The theory of constraints versus contribution margin analysis for product mix decisions. Journal of Cost Management (January/February): 6-15

2. Baxendale, S. J. and M. Gupta. 2018. Aligning TOC & ABC for silkscreen printing. Management Accounting (April): 39-44