Comparison of Toc vs Lean

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Assignment #5:
Comparison of Theory of Constraints (TOC) versus Lean Manufacturing

MBA 571
November 22, 2011

In today’s business world, competition is fierce and manufacturers are struggling to squeeze out operational costs reductions. To stay in competition, more and more organizations are trying to determine what improvement method will work best and fit best with their culture. Each improvement methodology appears to be driving toward common tools and concepts. However, different methodologies begin the journey from different perspectives. Even though each improvement methodology contributes valuable concepts, ideas and techniques to every organization not all of them serve to the needs of organization if leadership doesn’t actively involve to the efforts of the improvement teams. Theory of Constraints (TOC)

At his book Goldratt (2004) defines the primary goal as to make money. This can be achieved by simply identifying and eliminating the constraints that limits the output of the entire system. As a result of the organizational change, he aims to see an increase on throughput and decrease on operational expense and inventory. Theory of constraints (TOC) is based on the premise that the rate of goal achievement is limited by at least one constraining process. Only by increasing flow through the constraint can overall throughput be increased where throughput is the rate at which the system generates money through sales. Inventory is all the money that the system has invested in purchasing things which it intends to sell. Operational expense is all the money the system spends in order to turn inventory into throughput. He recommends a five step process: 1. Identify the constraint.

2. Exploit the constraint.
3. Subordinate other processes to the constraint.
4. Elevate the constraint.
5. Repeat the cycle.
Line Manufacturing (Thinking)
Lean is a total operating system for manufacturing plants and has broad application in product or service...
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