HOME WEB NEWS IMAGES CLASSIFIEDS YELLOW PAGESPOLLS - SURVEYS WIKI COUNTRIES PHOTOS US UK INDIA
Cities Stocks Weather Movies Coupons Travel Blogs Health Horoscope Maps ASIA EUROPE Classifieds Yellow Pages
|
||||
|
||||
|
||||
|
||||
|
||||
|
||||
|
||||
|
||||
|
||||
|
||||
 1
|
Theory of Constraints (TOC) is an overall management philosophy. It is based on the applicaiton of scientific principles and logic reasoning to guide human based organizations.
TOC is geared to help organizations continually achieve more of their goal. If that system is a for-profit business, then the goal is to make more money now as well as in the future,Goldratt, Eliyahu M. (1990). What is this thing called Theory of Constraints an how should it be implemented. [Croton-on-Hudson, NY]: North River Press, 161. ISBN 0-88427-166-8. .
TOC is based on a set of basic principles (axioms)Goldratt, Eliyahu M. (Director, Presenter). (2002). TOC - Self Learning Program [Computer CD-ROM]. Goldratt Marketing Group., a few simple processes (Strategic Questions, Focusing Steps, Buy-In processes, Effect-Cause-Effect), logic tools (The Thinking Processes or TP) and through the logical derivation of these some applications to specific fields (Operations, Finance, Distribution, Project Management, People Management, Strategy, Sales and Marketing).
According to TOC, every organization has - at any given point in time - at least one constraint which limits the system\'s performance relative to its goal (see Liebig\'s Law of the Minimum). These constraints can be broadly classified as either an internal constraint or a market constraint. In order to manage the performance of the system, the constraint must be identified and managed correctly (according to the Five Focusing Steps below). Over time the constraint may change (e.g., because the previous constraint was managed successfully, or because of a changing environment) and the analysis starts anew.
The publicity and leadership behind these ideas has been dominated by Eliyahu M. Goldratt through a series of books, seminars and workshops. Goldratt introduced the theory of constraints in his 1984 book entitled \'The Goal\'.
Contents |
Explicitly articulated in SLP 7 - Managing People and Necessary and Sufficient - Unit 2 The Basic Assumptions of TOCGoldratt, Eliyahu M. (Director, Presenter). (2003). Necessary and Sufficient [Computer CD-ROM]. Goldratt Marketing Group.
The principles are treated as axioms, and therefore have no proof. Even so Goldratt provides, some indication on why he chose these as basic assumptions or principles to base TOC upon.
The first two are a derivation of Newton\'s words: natura valde simplex est et sibi consona (nature is exceedingly simple and conformable to herself), while the third is a bridge on how to deal with human reactions and motivations.
The first principle: Convergence, also called "Inherent Simplicity" states that "The more complex a system is to describe, the simpler it is to manage." Or that the more interconnected a system is the fewer degrees of freedom it has, and consequently the fewer points must be touched (managed) to impact the whole system. A corollary of this principle is that every organization has at least one constraint active in any given point of time (otherwise it would achieve infinite performance relative to its goal). The more complex and interconnected the organization is the lower the number of constraints it will have.
The second principle: Consistency, also called "There are No Conflicts in Nature" states that "If two interpretations of a natural phenomenon are in conflict, one or possibly both must be wrong". That is, when in an organization with a common goal, two parts are in conflict (or in a dilemma) this means that the reasoning that led to the conflict must contain at least one flawed assumption.
The third principle: Respect, also called "People are not Stupid" states that "Even when people do things that seem stupid they have a reason for that". In other words this principle is stating that people are inherently not bad.
One of the most important process of the Theory of Constraints is based on the premise that the rate of goal achievement is limited by at least one constraining process. Only by increasing throughput (flow) at the bottleneck process can overall throughput be increased.
The key steps in implementing an effective process of ongoing improvement according to TOC are:
The focusing steps, or this Process of Ongoing Improvement has been applied to Manufacturing, Project Management, Supply Chain / Distribution generated specific solutions. Other tools (mainly the TP) also led to TOC applications in the fields of Marketing and Sales, and Finance. The solution as applied to each of these areas are listed below.
Within manufacturing operations and operations management, the solution seeks to pull materials through the system, rather than push them into the system. The primary methodology use is Drum-Buffer-Rope (DBR),Cox, Jeff; Goldratt, Eliyahu M. (1986). The goal: a process of ongoing improvement. [Croton-on-Hudson, NY]: North River Press. ISBN 0-88427-061-0. and a variation called Simplified Drum-Buffer-Rope (S-DBR).Eli Schragenheim and H. William Dettmer (2000). "Simplified Drum-Buffer-Rope: A Whole System Approach to High Velocity Manufacturing" (PDF). Retrieved on 2007-12-08.
Drum-Buffer-Rope is a manufacturing execution methodology, named for its three components. The drum is the physical constraint of the plant: the work center or machine or operation that limits the ability of the entire system to produce more. The rest of the plant follows the beat of the drum. They make sure the drum has work and that anything the drum has processed does not get wasted.
The buffer protects the drum, so that it always has work flowing to it. Buffers in DBR have time as their unit of measure, rather than quantity of material. This makes the priority system operate strictly based on the time an order is expected to be at the buffered operation. Traditional DBR usually calls for buffers at several points in the system: the constraint, synchronization points and at shipping. S-DBR requires only a single buffer at shipping.
The rope is the work release mechanism for the plant. Only a "buffer time" before an order is due does it get released into the plant. Pulling work into the system earlier than a buffer time guarantees high work-in-process and slows down the entire system.
There are four primary types of plants in the TOC lexicon. Draw the flow of material from the bottom of a page to the top, and you get the four types. They specify the general flow of materials through a system, and they provide some hints about where to look for typical problems. The four types can be combined in many ways in larger facilities.
The solution for supply chain is to move to a replenishment model, rather than a forecast model.
The solution for finance and accounting is to apply holistic thinking to the finance application. This has been termed Throughput accounting. Throughput accounting suggests that one examine the impact of investments and operational changes in terms of the impact on the throughput of the business. It is an alternative to Cost accounting.
The primary measures for a TOC view of finance and accounting are: Throughput (T), Operating Expense (OE) and Investment (I). Throughput is calculated from Sales (S) - Totally Variable Cost (TVC). Totally Variable Cost usually considers the cost of raw materials that go into creating the item sold.
Critical Chain Project Management is utilized in this area. Based on the realization that all projects look like A-plants: all operations must converge to a final deliverable. As such, synchronization of activities is a common problem that CCPM seeks to address.
While originally focused on manufacturing and logistics, TOC has expanded lately into sales management and marketing. For effective sales management one can apply Drum Buffer Rope to the sales process similar to the way it is applied to operations (see Reengineering the Sales Process book reference below). This technique is appropriate when your constraint is in the sales process itself or you just want an effective sales management technique and includes the topics of funnel management and conversion rates.[citation needed]
The Thinking Processes are a set of tools to help managers walk through the steps of initiating and implementing a project. When used in a logical flow, the Thinking Processes help walk through a buy-in process:
TOC practitioners sometimes refer to these in the negative as working through layers of resistance to a change.
TOC has been initiated by Eliyahu M. Goldratt and is being actively developed by a loosely coupled community of practitioners around the world. TOC is sometimes referred to as "Constraint Management".
The TOC International Certification Organization maintains a variety of TOC certifications.
Some academics in the Operations Research and Management Science communities claim[attribution needed] that the TOC founder, Eliyahu M. Goldratt, and some of his followers display a strong guru-like and sales pitch attitude that it is not compatible with the spirit of true scientific investigation.[citation needed]
In particular, people claim[citation needed] Goldratt\'s books fail to acknowledge that TOC borrows from more than 40 years of previous Management Science research and practice, particularly from PERT/CPM and JIT.
D. Trietsch from University of Auckland argues that DBR methodology is inferior to competing methodologies. http://iospress.metapress.com/openurl.asp?genre=article&issn=0167-2533&volume=24&issue=1&spage=105 D. Trietsch, From Management by Constraints (MBC) to Management By Criticalities (MBC II), Human Systems Management (24) 105-115, 2005http://staff.business.auckland.ac.nz/staffpages/dtrietsch/WorkingPaper281.pdf D. Trietsch, From the Flawed “Theory of Constraints” to Hierarchically Balancing Criticalities (HBC), Department of Information Systems and Operations Management, University of Auckland, Working Paper No. 281, May 2004.
This article is licensed under the GNU Free Documentation License. It uses material from Wikipedia
