4.1 Theory of Constraints

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BMAL 215
Nov 10, 2023
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1 Clinton Roberts SCLM456-861N 10/20/2023 4.1- Theory of Constraints The theory of constraints is the concept that every process has a single constraint. The only way the total process can improve is if the constraint is corrected or improved. When you look at different areas of the supply chain, there are many managers who spend time trying to improve areas of the business that are not creating a constraint or bottleneck. The theory of constraints will tell you that you will only get closer to the goal if you improve the aspects of the business that surround the constraint. There are five steps that supply chain managers and operators should review under the theory of constraints in order to identify and eliminate the constraint or bottleneck. Using the Five Focusing Steps, the operator would need to identify the constraint or bottleneck. Look for ways to exploit the constraint by maximizing the operations processing capacity. Subordinate everything based on the constraint to ensure that all processes align with the bottleneck. Elevate the constraint by increasing the capacity or throughput. Lastly, once the constraint is resolved, the operator should work to find a new constraint or bottleneck and repeat this process. (Theory of Constraints (TOC) | Lean Production, n.d.) There are a number of benefits associated with leveraging the methodology of the theory of constraint and supply chain. The first benefit is streamlining the flow of production and information throughout the supply chain. When the operation is managing the constraint, it reduces the opportunity for delays and maximizes flow. To result in reducing lead times in improving customer service. In return, the operation should see increased throughput by focusing on the constraint which should also eliminate any bottlenecks impacting the business. As the constraint is improved, the operation should become more efficient which should also reduce overall operating expenses. By increasing capacity, they should allow the business to also increase revenues and making the business more efficient should result in cost savings for the organization. The theory of constraint should allow the organization to become more agile and quickly adapt to the changing demands of the customer. The goal is to ensure that throughput is aligned with the constraints which should allow the business to become more responsive to
Theory of Constraints 2 changes in demand. As the business becomes more focused on demand planning, this should reduce the need for safety stock and excessive inventory. This should also reduce holding costs and minimize the need for liquidation. Even though the theory of change can benefit an organization significantly, supply chain managers should always expect challenges when implementing a new process. Shifting the mindset of employees and leaders takes a certain level of change management to help navigate these associates through a change in process. In my experience, fully understanding the complexity of the supply chain and how one change can impact other processes is essential before implementing a new process. When explaining changes to employees, explaining the "why" behind these changes and providing supporting data, goes a long way when sharing the benefit to the organization. The theory of constraints is a methodology that focuses on identifying and eliminating bottlenecks throughout the supply chain. Improving the flow throughout the supply chain and improving efficiencies throughout the business can result in a significant reduction in costs while increasing throughput at the same time. Even though the theory of constraints can significantly benefit an organization, implementation can only happen through proper change management, accurate data, and a commitment to continuous improvement.
Theory of Constraints 3 References Theory of Constraints (TOC) | Lean Production . (n.d.). https://www.leanproduction.com/theory- of-constraints/ Theory of Constraints of Eliyahu M. Goldratt . (n.d.). Theory of Constraints Institute. https://www.tocinstitute.org/theory-of-constraints.html
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