Production Management Philosophy and Principles of Toc

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Question 1

Highlight the production management philosophy and principles of TOC

The Theory of Constraints is a management philosophy introduced by Dr. E Goldratt through his book ‘The Goal’ (1992 2nd Ed.). The Theory of Constraints (TOC) focuses, through scientific principles, on the resources of an organisation by improving the performance of the constraint that directly affects the production methods of a specific company. It is an approach which seeks to solve constraints and problems in a logical way by building a logic chart of the problem, finding its roots and developing steps to remove the core of the problem. TOC methods are used by managers to improve the management and sales of their companies/product(s).

TOC contends that the output of any system consists of a series of steps where the output of one step depends on the output of one or more previous steps will be limited, or constrained, by the least productive steps. The system's constraint dictates its performance and if one is to increase the system's performance the systems constraint will need to be indentified and explored further in depth.

TOC involves an adoption of special thinking processes which, in most cases, are different than the current thinking processes, but, are logically accepted and used widely, Watson, Blackstone & Gardner (2007)

The constraint, is first identified. To increase throughput, flow through the constraint is increased. Throughput is defined as all the money that enters the company minus what it paid to its vendors. When the constraint is identified, the next step is to focus on how to get more production within the existing capacity limitations, known as exploiting the constraint. The next step is to subordinate the non-constraint resources. Subordination is used to prevent materials from waiting in queue at a non-constraint resource that is running a job that the constraint doesn’t need.

After the non-constraint resources have been subordinated, following step is to determine if the output of the constraint is enough to meet any demands. If not, it is necessary to find more capacity by "elevating" the constraint. Following this sequence ensures the greatest movement toward the goal of making more money-now and going forward.

Once the output of the constraint is no longer the factor that limits the rate of fulfilling orders, it’s no longer the constraint. Step 5 is to go back to Step 1 and identify the new constraint because there always is one. The five step process is then repeated.

One of the basic principles of TOC is that an organisation cannot allow a constraint to move around or suffer an untidy result. This is not the case in a flexible manufacturing system. It depends on the cycle time of a part at a particular work station. A flexible manufacturing cell allows the constraint to move around from one piece of equipment to the next depending on the particular part that is being processed. In other words, it is advantageous.

Secondly, TOC treats symptoms and not root causes of problems. Shuffling inventory around from one work centre to another is not the way to successfully manage a manufacturing plant.

Theory of Constraints is no magic solution, nor should it be embraced as a belief, or a trend. It is an operational strategy which needs to be carefully reviewed and applied for implementation. The best way to approach the situation is to first downsize a facility and its processes, identify the opportunities, and then identify a solution. If this sees fit, then many would highly recommend adaptation to such an approach.

Question 2:

Describe how TOC can help to prioritise the most profitable high impact initiatives within a production environment

A major component of the Theory of Constraints to aid in prioritisation of production/manufacturing is technique known as the VAT analysis. This technique grew out of an OPT philosophy and is a procedure which categorises manufacturing...
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