The Goal
Plant Improvement by TOC (Theory of Constraints)
-The Goal: A Process of Ongoing Improvement-
It is believed that business world is continually changing. To cope with the changing and to survive the business competition, The Goal shows how to succeed plant improvement within short period by the Theory of Constraints (TOC). This paper focuses on the improvement process the plant made and the contents are as follows: (1) Understanding the company goal, (2) Organizational value index, (3) Use of the constraint resources, (4) The Five Steps of TOC, and (5) Conclusion.
I. Understanding the company goal The base of the theory of constraints is that nearly all products and services are created through a series of linked processes (Cecil & Robert, 2008). Each process step has a specific capacity to produce output or take in input. In every case, there is at least one process step that limits throughput for the entire chain, and this process step is called the constraint. Increasing the capacity at any other process step except the constraint will not increase throughput for the entire process chain. Therefore, the theory of constraints is the idea that the system must be seen as a whole, not individual process. When the system is analyzed as a whole, it is possible to see the effects of the decisions in relation to the goal. One example was shown by Alex’s explanation of the installment of robots in the plant. Alex tried to make it clear to Jonah that the robots were increasing the plant’s productivity. Even though efficiencies increased by thirty six percent, what Alex did not recognize is that it only increased in that one area. Jonah explained the increase in production by those robots was only contributing to build up more assembled inventory, which moved them away from their goal. What is the company’s real goal? It is to make money. Those factors of technology, quality, the prime cost, market share, and customer satisfaction are only means to the
-The Goal: A Process of Ongoing Improvement-
It is believed that business world is continually changing. To cope with the changing and to survive the business competition, The Goal shows how to succeed plant improvement within short period by the Theory of Constraints (TOC). This paper focuses on the improvement process the plant made and the contents are as follows: (1) Understanding the company goal, (2) Organizational value index, (3) Use of the constraint resources, (4) The Five Steps of TOC, and (5) Conclusion.
I. Understanding the company goal The base of the theory of constraints is that nearly all products and services are created through a series of linked processes (Cecil & Robert, 2008). Each process step has a specific capacity to produce output or take in input. In every case, there is at least one process step that limits throughput for the entire chain, and this process step is called the constraint. Increasing the capacity at any other process step except the constraint will not increase throughput for the entire process chain. Therefore, the theory of constraints is the idea that the system must be seen as a whole, not individual process. When the system is analyzed as a whole, it is possible to see the effects of the decisions in relation to the goal. One example was shown by Alex’s explanation of the installment of robots in the plant. Alex tried to make it clear to Jonah that the robots were increasing the plant’s productivity. Even though efficiencies increased by thirty six percent, what Alex did not recognize is that it only increased in that one area. Jonah explained the increase in production by those robots was only contributing to build up more assembled inventory, which moved them away from their goal. What is the company’s real goal? It is to make money. Those factors of technology, quality, the prime cost, market share, and customer satisfaction are only means to the
References: Cecil. C. B. & Robert. B. H. 2008. Introduction to Operations and Supply Chain Management. 2nd ed. Pearson Education. Goldratt, E. M. 2004. Essays on the Theory of Constraints. Great Barrington, MA: North River Press. ISBN 0-88427-159-5 Goldratt, E. M. & Cox, J. 2004. The Goal. Great Barrington, MA: The North River Press.