ASSIGNMENT #1: The Goal and Theory of Constraints (TOC)
Shahrouz Ebadian (Shahrouz.Ebadian@gmail.com)
The Goal: Do you think that this is an operational methodology or a philosophy? Please explain.
The Goal is a management-oriented novel that focuses on the concepts of systems management. The fictional novel focuses around Alex Rogo and the problems in his production plant. The plant is constantly behind schedule and unprofitable. Alex is given three months to turn things around or the plant will be shut down.
The Goal introduces the “Theory of Constraints (TOC)” which is an overall management philosophy that adopts the idiom “A chain is no stronger than its weakest link”. This emphasizes how organizations and processes are vulnerable because that weakest link can always adversely impact and damage the company.
The “goal” is to make money and anything that assists in doing this is productive, while anything that hinders this is a bottleneck. The Goal goes on to identify bottlenecks (constraints) in the manufacturing process and how identifying them helps reduce impact and allows for controlling the flow of materials.
One of the main emphasis points throughout is the communication element. Whenever a problem arises the team discusses the problem amongst themselves to find a solution. The discussion process uses five steps to solve any problem: 1. Identify the system’s constraint
2. Decide how to exploit the system’s constraint
3. Subordinate everything else to the prior decisions
4. Elevate the system’s constraint
5. If, in the prior steps, the constraint has been broken, go back to step one. The line between an operational methodology and a philosophy in my opinion is not clear cut black and white. An operational methodology in certain instances can be well defined. Let’s start with a simple example of putting a computer together. The steps could be:
• Installing a motherboard
• Installing the Processor
• Installing the CPU Cooler
While not all computers contain the same parts or pieces, from an abstract layer all computers do require a standard set of pieces to run. This high level standard could be the operational methodology for assembling a PC. It would be tough to argue that this is a philosophy. Now if we are to get into more detail and begin discussing processor optimization, this could blur the lines of operational vs philosophy based on proven facts and research.
The actual definition of philosophy as stated by Google is “A set of views and theories of a particular philosopher concerning such study or an aspect of it”. With that being said I do feel that The Goal is abstract enough to be considered an operational methodology. The thesis of The Goal is that the goal of an organization is to increase throughput while simultaneously reducing both inventory and operating expense (Fig 1.0). That statement can be applied to all businesses. All organizations have some constraints or bottlenecks. Lack of resources and/or resource allocation is one of the most common and challenging constraints organizations face.
A good attempt to try and counter argue The Goal would be to look at one of the world’s most profitable companies in Apple. An initial thought might be what possible constraints could such a large and profitable company have. Apple recently set the records for the most valuable company in history with a net worth of $624 billion. However, this has not come without restraints or bottlenecks in the process. One of the major issues Apple has had for a while is in the manufacturing process. At multiple points in time Apple was having difficulties manufacturing enough iPhones to meet the demand. This of course was a constraint on the system and on the bottom line. More recently, Apple has come under fire about its worker treatment in some of its manufacturing plants in China. These constraints have...