Theory of constraints

TOC will find, we believe, widespread application in supply chain orchestration. The theory of constraints was described earlier in Chapter 25. In formulating this theory, Eli Goldratt and Robert Fox observe that a production system can produce no more than its capacity constraint resource, or CCR. They use this principle as a foundation for what they call the drum-buffer-rope way. While the authors focus on individual factories, the lessons apply equally to the supply chain. 

The buffer is a device to protect capacity at the CCR. This protection is in the form of inventory that assures a supply of work for the CCR in case of upstream disruption in supply. The size of the inventory is equivalent to the number of days needed to recover from any anticipated disruption upstream interruptions. If a disruption at Process stops the flow of material to Old Line, a buffer will keep the CCR at Old Line going imtil the disruption is fixed. 

The DBR system s final component is the rope. The rope is symbolic of the link between the CCR and the front end of the production process, or gating 

The DBR system assures maximum output from the CCR, hence the entire supply chain system. For example, assume the supply chain partners determine that Old Line s operation is the system s CCR. As such, it will set the pace for the entire supply chain. Linkages will pace operations at both Process and High Tech. The form is less important than the realization that it s needed. Options include periodic (hourly, weekly, or even monthly) status or automated linkages for continuous monitoring. 

---

How do you then design an effective system There are several techniques you can use. Failure Modes and Effect Analysis (FMEA), Fault Tree Analysis (FTA), and Theory of Constraints (TOC) are but three. The FMEA is a bottom-up approach, the FTA a top-down approach, and TOC a holistic approach. 

The third method is not new but not widely used. The Theory of Constraints developed by Eliyahu M. Goldratt in the 1980s examines the system as an interconnection of processes and focuses on the one constraint that limits overall system performance. The... 

Dettmer HW. Goldratt s theory of constraints a systems approach to continuous improvement. ASQ Quality Press, 1997. 

Rubinstein has constructed on a reptation-fluctuation approach a detailed self-consistent theory of constraint release, allowing each loss of entanglement in one chain to permit a random jump in the tube of another [37]. When this is done the form of predicted relaxation functions are in good accord with experiments. However, in monodisperse linear melts it appears that the fluctuation contribution is more important than constraint release. 

In the remainder of this chapter, we first provide a more detailed discussion of JIT/TPS in Section 2, including its philosophy and implementation issues. In Section 3, we examine the kanban system, widely used in JIT for control of production and inventory, and present a case study of JIT/kanban implementation. Section 4 follows with an examination of JIT s relation to complementary approaches such as total quality management (TQM) and total productive maintenance (TPM), together with a case study of their joint implementation. In Section 5, we examine lean production as an extension of JIT, explore the relationship of JIT to theory of constraints (TOC), and conclude with a brief consideration of applications to service industries of JIT, TOC, and other manufacturing-based approaches. 

Figure 5 Analogy of Drum-Buffer-Rope in (a) Theory of Constraints and (b) Kanban System.

Dettmer, H. W. (1997), Goldratt s Theory of Constraints A Systems Approach to Continuous Improvement, ASQC Quality Press, Milwaukee. 

Goldratt, E. M. (1990), Theory of Constraints, North River Press, Croton-on-Hudson, NY. 

Noreen, E., Smith, D., and Mackey, J. (1995), The Theory of Constraints and Its Implications for Management Accounting, North River Press, Great Barrington, MA. 

Siha, S. (1999), A Classified Model for Applying the Theory of Constraints to Service Organizations, Managing Service Quality, Vol. 9, No. 4, pp. 255-265. 

Online forams were also used for cyber discussions. Those were in the form of assignments where students were required to research, analyze, and discuss three main topics (1) the theory of constraints and its applications in constiuction, (2) integrated project delivery (IPD) and its barriers for implementation, and (3) the application of time management skills to student life. 

The Bottleneck Simulation exercise teaches students abont the theory of constraints (TOC) which can be applied to project schednhng and can help in managing resonrces, project costs, and risks. It clearly simnlates how the throughput of value is determined by the key constraints of every system (Steyn 2002). 

Steyn, H. (2002). Project management application of the theory of constraint behind the critical chain method. IntemationalJoumal of Project management, 20, 75-80. 

Ricketts, J. A. (2007) Reaching the Goal How Managers Improve a Services Business Using Goldratt s Theory of Constraints. IBM Press, New York, NY. 

Physical contradictions as well as technical contradictions are usually crystallized during the problem analysis. Sometimes technical contradictions can be obtained by analysis techniques such as in the Root Cause Analysis framework or Goldratt s Theory of Constraints (Wilson et al. 1993). 

During the past three decades, manufacturing underwent many transformations. The primary process evolutions were total quality management (TQM), theory of constraints (TOC), Lean and the Toyota production system (TPS), and Six Sigma, ft will change even further as companies implement the new processes for digital manufacturing (covered in Chapter 6). 

Quadrant III Efficient Supply Chain Theory of Constraint Logic (TQC)... 

Dmm, Buffer, Rope) -Theory of Constraint Decision Support -Supply Visibilty -Use of Channel Demand Data... 

For the past 30 years the business world has been inundated by concepts and jargon. These include Materials Logistics Management (MLM), Just-in-Time (JIT), Materials Requirements Planning (MRP), Theory of Constraints (TOC), Total Quality Management (TQM), Agile Manufacturing, Time Based... 

Throughput (T)—In the theory of constraints, the rate at which the system (firm) generates money through sales. Throughput is a separate concept from output. 

In the theory of constraints (TOC) system, it is important to value inventory at the price for which the material was purchased. So, finished goods are carried in inventory only at the cost of the raw materials in them. The cost of... 

Operating expenses—In theory of constraints, the quantity of money spent by the firm to convert inventory into sales in a specific time period. 

Kevin James Watson is an assistant professor in the Department of Management at the University of New Orleans (USA). His academic and professional interests involve supply chain management, process design/improvement, environmental management, and the theory of constraints. He has published a number of articles in academic journals including the Journal ofOperations Management, International Journal of Production Research, and Management of Environmental Quality. 

---