Theory of Constraints

It is beneficial because it will ensure that your bottleneck is highly utilized and properly subordinated. At the same time, you will know which among the product lines need to be prioritized relative to the profit it will give to the company.

We had a facility that was maxed at 50 lots per year (24/7 staffing) and were looking to increase plant area and add $1.5M in equipment to meet demand.  With TOC, we were able to meet demand, eliminated all of the new equipment and floor space, reduce the staffing to 20/4, and increased the maximum area capacity to 180 lots per year (24/7 staffing).
That said, read the afterword by Goldratt in “The Goal” and Chapter 10 from “The Measurement Nightmare” by Smith.  TOC is tricky to implement in a single area or a single site without complete buy-in from the higher ups.

Hi all,
It sounds to me that TOC is working well in your company. However, i found it difficult to understand and implement regarding the tool that is proposed: eg. current and future reality tree etc. Can you suggest some good articles or papers ?
b.rgds

You’re right – the reality trees are sometimes confusing.  This book helped me a little bit…
Thinking for a Change:  Putting the TOC Processes to Use, Lisa Scheinkopf
This is also a decent website…a bit disorganized, but some good information
http://www.saigon.com/~nguyent/toc.html
 

TOC can work well with ERP as long as the constraint is known and doesn’t move. You can design the decision trees into ERP to exploit your constraint and run your financials off the bottleneck, although it’s a bit of work. However, if the constraint moves (which it should if you’re continually working on process improvement on the constraint) you now need to completely re-design much of your ERP.
If your constraint occassionally moves on it’s own simply because of  fluctuations in product mix, demand, etc. it can be an ERP nightmare if you’ve tied the system to the TOC model.

If you think the constraint moves with product mix, you have not identified the constraint.  You can have the bottleneck move, but the constraint and bottlenecks are not the same.
TOC is not a spin-off of Lean.  It was out there prior to the reshaping of JIT into Lean.  It has some better understanding concerning “balancing” production lines.
TOC has strong benefits to understanding where and how to drive Lean and SS.  It can also be a great tool for a quick turnaround like described in the book. You shouldn’t do it on it’s own unless you have a good Jonah.  It is too dependent on the thinking and understanding of the mental models for a company to just read and book and go.
MHO,  Mark