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AN OVERVIEW OF THEORY OF CONSTRAINTS _TOC - Info

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					AN OVERVIEW OF THEORY OF
    CONSTRAINTS (TOC)



       Chwen Sheu, Ph.D.
     Certified TOC Instructor
     Kansas State University


                                1
      INTRODUCTION TO TOC:
          EVOLUTIONS
A. Creative Output Inc., 1976
B. The Goal: An On-Going Improvement Process,
   1984
C. Avraham Y. Goldratt Institute (AGI), 1986
D. It’s Not Luck, 1994
E. The Theory of Constraints & Its Implications for
   Management Accounting, 1995
F. Critical Chain, 1997
G. Necessary but not Sufficient, 2000

                                                      2
          II. WHAT IS TOC?
A. TOC is a management philosophy that
   emphasizes constraint identification and
   management as the keys for achieving an
   organization’s goals.
B. SYSTEMS, GOALS & CONSTRAINTS

   The “Goal” of a company 

   Productivity is nothing but … …

                                              3
  II. WHAT IS TOC? (Cont’d)
• C. The Chain Analogy




  – The strength of a chain is governed by its …
    ...
  – Local & Global


                                                   4
    II. WHAT IS TOC? (Cont’d)
D. Types of Constraints
  – Physical constraints


  – Nonphysical constraints




                                5
        III. TOC APPLICATIONS
A. Production Scheduling

B. Continuous Improvement: Thinking Process (TP)

C. TOC Performance Measurement

D. Project Management the TOC Way

E. Distribution


                                                   6
          THINKING PROCESS

A. A generic approach for continuous improvement:
• What to Change?

• To What to Change to?


• How to Cause the Change?


B. “… the biggest obstacle to successful implementation
  is to overcome resistance to change.”

                                                          7
                                 TP: Westar Energy
           Dissatisfied New/Existing External Customers
•   Backlog of new installations
•   Lack of appropriate technology????? (What technology?)
•   Difficult to use IVR????? (What is this for?)
•   Lack of consistency in installation charges due to “installation distance” from the customers facility (business or
    home)
•   Lack of consistency in customer contributions
•   The Company tries to decide for the customer what they need????? (Need to be more specific)
•   Too many power outages
•   Customers complaining to field personnel (not customer service) on various issues (e.g. bills)
•   Does not follow service priority systems especially with "whining" customers (Which operations?
    Installation?)
•   Charging different rates for different customers causes customer complaints
•   Unable to meet desired customer service dates
•   Customers complain about unpredictably high bills due to excessive weather conditions
•   Customers complain about loss of service due to excessive weather conditions
•   Year-end budget cram takes away productive time from supervisors and therefore affects customer service
•   Lack of consistent billing regulations
•   Delayed installation (or monthly) billing to the customers
•   Inaccurate installation (or monthly) charges to the customers
•   Slow response to service calls
•   Customers receive inconsistent/inaccurate information over the telephone
•   Construction crews do not communicate with design groups




                                                                                                                          8
1.Current Reality Tree:                                                           4. Prerequisite tree:
                                          2. Evaporating Cloud:                   What currently prevents the implementation
Why is the system sick?                   What conflict is preventing the cure    of the injection(s)?
  UDE
                                                                                              Injection        Injection
                               UDE
           UDE                                                                   Obst.                 Obst.                  Obst.
                                            Cloud’s            injection
                                           Objective                                      IO              IO             IO
                  UDE
                                                                                                                    Obst.
          Core                                                                                 Obst.
         Problem                                                                         IO                    IO             IO
                                                                                                  Obst.
                                              DE
                                                                                                   IO
3. Future Reality Tree:              DE
Will the injection lead to                   DE
all desired effects
without creating                                             Inj                  5. Transition tree:
                                          Objective
new UDE’s?                                                                        What actions does the initiator have to take to
                                                       DE                         effectively implement the cure?

                                                                                                                    IO
                             Inj
                                                                                                Initiator’s
                                                                                                  action
                                           Injection
                                                                                                                    IO        Initiator’s
                                                                                                                                action




                                                                                          Initiator’s action
                                                                                         (which deals with
                                                                                              Obstacle)
                                                                                                                                            9
10
         TOC PERFORMANCE
           MEASUREMENT
A. P&Q Example

B. “Tell me how you measure me, and I will do as I
   am measured.”

C. Conventional cost accounting systems




                                                     11
                              P & Q EXAMPLE
                        100 unit/wk                          80unit/wk
                         $90/unit                            $100/unit


                         Mach A                               Mach D
                         10 min                               10 min


          Mach C                           Mach C                        Mach B
          10 min                           5 min                         10 min


          Mach D                           Mach B                        Mach A
          10 min                           10 min                        10 min


           RM X                             RM Y                          RM Z
            $25                              $20                           $20


(1) One unit for each machine type; 8 hrs/day & 5 days/wk;
(2) Labor & OH = $6,000/wk.

                                                                                  12

				
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posted:6/15/2012
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