Goldratt's Theory Of Constraints

1.0 DEFINATION OF THEORY OF CONSTRAINTS

1.1 HISTORY

The theory of constraints (TOC) is an overall management philosophy introduced by Eliyahu M. Goldratt in his 1984 book titled The Goal, which is help organizations continually achieve their goals. Goldratt adapted the concept to project management with his book Critical Chain, published in 1997.

An earlier transmitter of a parallel concept was Wolfgang Mewes in Germany with journals on power-oriented management theory (Machtorientierte Führungstheorie, 1963) and following with his Energo-Kybernetic System (EKS, 1971), later renamed Engpasskonzentrierte Strategie as a more advanced theory of bottlenecks. The publications of Wolfgang Mewes are marketed through the FAZ Verlag, publishing house

TOC 's key processes are concentrated on removing barriers that from working together as an integrated whole. 1.3 KEY TO UNLOCK PERFORMANCE

Some people call “constraint” as “bottleneck”, a situation, like the weakest link in a chain, every system must have own bottleneck or "CONSTRAINT" which governs its output. There is no system has unlimited output, you can prove from the financial report of organization. A particular type of machine, employee, or even shelf space might serve as the constraint. So could supplies, orders, or cash.

Constraints control output whether we acknowledge them or not. When properly recognized and managed, constraints can provide the fastest route to the significant improvement and form the foundation for constant growth. When organization ignored it, the constraint may lie idle, wasting large amounts of company’s capacity. A loss control constraint may also cause disorder on delivery schedules and cause unexpected delays. It is important for every manager to make the most of their constraint and manage it

In that situation, although the main goal of the Supply Chain Management (SCM) is to achieve a solution with maximize profit for all SC’s partners, there is often a great disparity between possible benefits and the practice (Simatupang et al., 2004). This situation occurs because there are several troubles regarding Supply Chain which need to be solved by an efficient Supply Chain Management. Some of these difficulties are: take a long lead times, large number of unfulfilled orders, they are performed with much extra effort, e g: overtime, high level of unnecessary inventories and lack of relevant inventories, lack of key customers engagement, large number of emergency orders and expedition levels, high levels of devolution, wrong materials orders, frequent changes and/ or absence of control related to priority orders, which suggests on schedule clashes of the resources, among many others. (Goldratt et al.,