Theory of Constraints - Research Paper Example

Once the organization defines its goals and there is agreement on how to evaluate the achievements toward the identified goals, it possible to apply the TOC’s five focusing steps. From the case scenario, the primary goal of the HMC is to develop a lean production system that considers the expenditure for any purpose other than value creation for the end customer is wasteful. The TOC’ five focusing steps are applied to the HMC’s supply chain below. Identify the constraint: Even though HMC generates majority of its sales from the assembly area, the assembly side of the company is not very efficient currently.

Another constraint to the HMC’s supply chain is that it does not have adequate space capabilities to maintain its large scale assembly operations. In addition, the company has never modified its initial layout since its establishment and this issue causes a series of ongoing production inefficiencies. Exploit the constraint: In this phase, the organization has to cut down its inventory volume to the targeted level. Evidently, this practice would assist the organization to improve space utilization in the plant.

Subordinate to the constraint: In order to improve the production cycle time, the firm has to replace its weaker labors with highly developed technologies. In addition, the HMC may make some special arrangements with its suppliers to reduce its expediting and obsolescence costs. Furthermore, the organization has to identify and eliminate any supply chain activity that does not create value for the end customer. Elevate the constraint: It is better for the organization to develop its plant capacity so that it can bear more assembly operations efficiently.

Identify the new constraint: Once the HMC finished the above steps, the management has to watch for new constraints developed. 2. Theory of constraints in logistics The process of logistics is of vital importance in a lean production system because a lean system is specifically concerned with elimination of wastes (Lean logistic understanding). Logistics can be simply referred to the management of resource flow between the point of origin and point of distribution. The TOC is very helpful to detect any constraint that affects the effective flow of resources.

Timely identification of constraints in resource flow would aid the firm to remain competitive in the automotive industry. In case of HMC, constraints in logistics create some other potential operational challenges for the organization. The TOC can be applied to logistics to timely identify some other needs in supply chain management. For instance, lack of plant layout upgradation is a potential constraint that reduces the efficiency of logistic management. By applying the TOC, it is possible to identify such plant modification needs and thereby keep the plant unaffected of production inefficiencies.

In addition, the TOC would assist the logistics management to improve the organization’s production cycle time through identifying inefficient labors and malfunctioning machineries. The organization can compare current logistics activities with those of previous years with the help of TOC. This practice would benefit the organization to clearly identify areas of improvement and enhance its market share growth. Lucent Technologies Lucent Technologies is a US based multinational telecommunications corporation that has applied the TOC to its supply chain.

Like other