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    Neha Jain's TOC

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    Pankaj Dogra
    This document provides an overview of the Theory of Constraints (TOC). It begins by defining a constraint as anything that limits an organization from achieving its goal. There are two types of constraints - physical and non-physical. The TOC maintains that every system has at least one constraint. The five focusing steps of the TOC are identified to help organizations exploit and elevate their constraints. Examples of companies that successfully implemented aspects of the TOC are provided.

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    Neha Jain's TOC

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    Pankaj Dogra
    31 views16 pages
    This document provides an overview of the Theory of Constraints (TOC). It begins by defining a constraint as anything that limits an organization from achieving its goal. There are two types of constraints - physical and non-physical. The TOC maintains that every system has at least one constraint. The five focusing steps of the TOC are identified to help organizations exploit and elevate their constraints. Examples of companies that successfully implemented aspects of the TOC are provided.

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    This document provides an overview of the Theory of Constraints (TOC). It begins by defining a constraint as anything that limits an organization from achieving its goal. There are two types of constraints - physical and non-physical. The TOC maintains that every system has at least one constraint. The five focusing steps of the TOC are identified to help organizations exploit and elevate their constraints. Examples of companies that successfully implemented aspects of the TOC are provided.

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    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    31 views16 pages

    Neha Jain's TOC

    Uploaded by

    Pankaj Dogra
    This document provides an overview of the Theory of Constraints (TOC). It begins by defining a constraint as anything that limits an organization from achieving its goal. There are two types of constraints - physical and non-physical. The TOC maintains that every system has at least one constraint. The five focusing steps of the TOC are identified to help organizations exploit and elevate their constraints. Examples of companies that successfully implemented aspects of the TOC are provided.

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    of 16

    Course : Management

    Perspectives

    Topic : Theory Of Constraints

    Submitted by :
    Neha Jain
    Roll No. : 17
    Bibliography :
     International Journal Of Management and
    Organizational Behaviour, Vol. 8(6), Pg.: 540-558.

     ‘THE GOAL’ by DR. Eliyahu M. Goldratt.

     Study Material, Management Perspectives, The


    Business School, Pg.: 77-106.

     Internet Sources:
     Avrahm Y. Goldratt Institute - http://www.goldratt.com
     Crazy About Constraints! - http://www.rogo.com/cac
     Wikepedia – http://www.wikepedia.com
    Contents :
     What is a CONSTRAINT?
     Types of Constraints.
     Bottlenecks and Non bottlenecks.
     GOAL of a Business Organisation.
     Measures for achieving the GOAL.
     Theory of Constraints.
     Focusing steps of TOC.
     Some TOC guidelines.
     Thinking Processes.
     Tools of Thinking Process.
     Corporate Examples.
     Conclusion.
    What is a CONSTRAINT ?
    A Constraint is anything in an organisation that limits it
    from moving towards or achieving its GOAL.

    There are two basic types of CONSTRAINTS:

     PHYSICAL CONSTRAINT: It is something like the


    physical capacity of a machine.
     NON-PHYSICAL CONSTRAINT: It might be
    something like demand for a product, a corporate
    procedure or an individual’s paradigm for looking at
    the world.
    Some of the CONSTRAINTS are:

     Inaccurate forecasts.
     Clients change their minds.
     Unreliable vendors/suppliers.
     Unreliable processes.
     Unreliable machines.
     Untrained workers.
     Undisciplined management.
    Bottlenecks & Non-Bottlenecks :
     Bottlenecks:
    It is a resource whose capacity is equal to or less then
    the demand on it. It is a constraint that prevents an
    organisation from increasing throughput.

     Non-bottlenecks:
    It is any resource whose capacity is greater than the
    demand placed on it. It helps in increasing the
    throughput of an organisation.
    GOAL of a business organisation :

    Provide satisfaction Make money now as


    To the market now as Well as in the
    Well as in the FUTURE. FUTURE.

    Provide a
    Secure and satisfying environment
    For employees
    Now as well as in FUTURE.
    Measures for achieving the GOAL
    :
     THREE OPERATIONAL MEASURES:
     Throughput (T)- The rate at which the system generates
    money through sales.
     Inventory (I)- All the money invested in purchasing things
    the system intends to sell.
     Operating Expenses (OE)- All the money the system spends
    in turning I to T.
     TWO PERFORMANCE MEASURES:
     Productivity, P = T/OE.
     Turnover, TO = T/I.
     THREE FINANCIAL MEASURES:
     Net Profit, NP = T – OE.
     Return on Investment, ROI = NP/I.
     Cash Flow (CF).
    Theory of Constraints :
    The Theory of constraints maintains that
    every system is subject to at least 1
    constraint, which prevents the system
    from achieving high levels of
    performance.

    The Chain Analogy – Given by Dr. Goldratt.


    Focusing Steps of TOC :
    1. IDENTIFY the system’s constraint(s).
    2. Decide how to EXPLOIT the system’s
    constraint(s).
    3. SUBORDINATE everything else to the
    above decision.
    4. ELEVATE the system’s constraint(s).
    5. If in the previous steps a constraint is
    broken, go back to STEP:1 but DON’T allow
    INERTIA to cause a system constraint.
    Thinking Process :
     What to change?
    Identify the core problem.

     To what to change to?


    Construct a solution.

     How to cause the change?


    Devising the implementation plan.
    Tools of Thinking Process :

    1. The Current Reality Tree.


    2. The Evaporating Cloud.
    3. The Future Reality Tree.
    4. The Prerequisite Tree.
    5. The Transition Tree.
    Corporate Examples :
     Avery Dennison:
    Reported a 20% increase in market share only 18
    months after adopting the TOC.
     Texas Instruments:
    Reported that the company improved operations
    to the extent that it could defer a $600 million
    investment in new plants.
     Euripa Lab., Silicon Valley, California:
    TOC Tools were used in identifying core problems
    of leadership, organizational structure &
    performance appraisals; & developing solutions that
    addressed the core problems.
    Conclusion :
    The TOC is already being used to a great effect
    in many companies throughout the globe. It is
    a logical basis for managing complex problems.
    The failures have arised only due to the non
    implementation of the theory throughout the
    organization and confining it only to the shop
    floor.
    For effectiveness of TOC, it should be
    implemented at every level of an organization.
    THANK YOU
    QUERIES, IF ANY, ARE
    WELCOME.

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