Question

Most if not all of you have been previously introduced to The Theory of Constraints and have read “The Goal” . It is an “older” book but TOC has stood the test of time. It is a fairly easy read but you can see the chapter summaries and view the summary on what TOC is to gain enough understanding to complete this assignment.

I want you to consider your place of work (or a past employer) or if you have never been employed consider a University learning environment. Apply TOC and material learned to evaluate how the understanding of TOC might improve (or already improved) a situation at your work place (or University setting). The report need only be ~3 pages double spaced with references as appropriate. I am looking for “creativity” here to convey your understanding and APPLICATION of TOC

Writing should be professional using APA style as appropriate. While this assignment is less specific that prior ones, we are looking for you to apply MBA level learning in the context of a real world work situation. Answers ought to be fully developed as if presented to a business executive. Complete enough to be meaningful and conveying critical thinking at the MBA level without being so long as to lose specificity and context

Answer 1

Let me start by providing the definition and meaning of the Theory of Constraint (TOC)

The Theory of Constraints is a methodology for identifying the most important limiting factor (i.e. constraint) that stands in the way of achieving a goal and then systematically improving that constraint until it is no longer the limiting factor.

TOC systematically focus efforts, energy and attention on the "system constraint." This constraint, or bottleneck, restricts the output of the entire system and at the same time represents the primary leverage point for improving it. Simply put, TOC means identifying constraints and managing them, resulting in:

• On-Time In-Full (OTIF) delivery to customers
• Elimination of stock-outs across the supply chain
• Better control over operations and far less firefighting
• Reduced cycle times and therefore inventories
• Rapid response culture and fewer chronic conflicts between team members
• Exposing additional production capacity without any investment
• Higher Net Profit, ROCE & Free Cash Flow

There are 6 steps in the Theory of Constraint

1. The first is to identify a goal which can be measured. This is defined as the Throughput or the amount of products and services to be produced.

2. The second step is to identify the bottleneck. This is typically the constraint that is hindering the output of the entire process.

3. The third step is to Exploit the constraint. That means putting the constraint to its maximum profitable use.

4. The fourth step is to lower all other processes to to the bottleneck operation thus optimizing the production process to the pace of the bottleneck.

5. The fifth step is to increase the capacity of the bottleneck. Basically now the bottleneck or constraint has been identified and it needs to either mitigated or eliminated or to alter the process so that the factor is no longer remains a constraint.

6. The sixth step is to repeat the process if the factor still remains a constraint in the process or identify another constraint and try to remove that as well. This will enable us to not be complacent at any given time.

Advantages of the Theory of Constraint

1. It is an organised way of improving a business operation. The TOC takes the analytical and diagnostic approach and lays out step by step procedures to mitigate or eliminate the bottleneck.

2. TOC's key processes are focused on removing barriers that prevent each part from working together as an integrated whole.

3. The Theory of Constraint is a scientific approach and provides powerful set of tools to achieve the most important goal of an organisation that is "To make Profit".

To understand the same through an real life example

I have co-founded a healthcare application, I wanted to create the product as soon as possible so as to get ahead of the market in terms of getting maximum traction from the consumers and immediately start earning some money.

The next step was to gain a better understanding of what I wanted to do with product. I followed a lot of online product in the internet marketing space at this time.

By watching these product, buying a couple of subscription of the products, I was able to get a good grasp, at least conceptually, of how a create of an healthcare product.

The problem with my plan was that after looking at my competition I wanted to create a product that had multiple product lines and which ultimately had no uniqueness just the combination of product made by my competition.

I applied the Theory of Constraint to the problem to improve the product

Step 1 - What is the Constraint?

The constraint was that my healthcare application had few good features which can take on the competition but due to the lack of understanding I was overlooking unique features and wanted to take on the competition and wanted to create a bulkier and bigger product but with no unique features.

Step 2 - Exploit the Constraint

The idea here was really understand the what we had at that time and to maximize the value from those features in the application regardless of the competition. My team needed to remove non-value added work, limit interruptions, and to prioritize work.

Step 3 - The Lower the other processes

The team and I need to lower our other priorities such as looking at different competitions, focusing on the features and developing the features as much as possible in order to bring the product near creation and not waste time.

Step 4 - The Constraint is identified

Me and my team now identified the constraint and focused our energies to mitigate it or to eliminate it. What did we finally did? Because we decided that we were ready and I realigned my expectations to make it possible for us to get it done. I decided that I would do it for the passion for my idea, regardless of the competition. I committed, knew the big picture of what I wanted to do, and ate the elephant one bite at a time, spending time on the project every day until we created the project and make ourselves ready to launch it in the market.