An Introduction to Theory of Constraints - Essay Example

An Introduction to Theory of Constraints Theory of constraints (TOC) is a procedure of reasoning in order to come with solution to problems of allocation of resources and making of resolution (Mark, 2). TOC depends on instinct instead of mathematical reasoning and is yields by and large view of solutions instead of local optimization. TOC is very significance in the fields of management and engineering when it comes to finding solutions to problems in the most accurate, simple and consistent. It helps in reduction of inventory levels, lead and cycle times while improving revenue and reducing time. Significant researches have been done in the field of TOC. Elyahu Goldraft and Jeff Cox in their book “The Goal: Process of ongoing improvement” highlighted various TOC processes like identification and exploitation of system constraints and goals. They also came up with the classification of constraints as market, policy and physical. These constraints were further subdivided into sub constraints and theories of constraints discussed. Mindset constraint is based on culture and frame of mind, measures is based on the relationship between constraints and achievement of organizational goals and method constraint based on relationship between procedures and technique to achieving actions incompatible with the organizational goals. Application of TOC in the Manufacturing example indicates understanding of redefinition of systems goal, thru put, inventory and operating expenses. TOC also helps in calculation of profits and making production decision. Financial Management, Cash Flow and Accounting Principles The objective of this topic would be to comprehend the creation and usage of the accounting information, understanding of accounting language and application of financial accounting in an organization. This would be summarized in the following paragraphs. Finance and accounting have varied roles within an organization. Some of these roles are applied internally within an organization while others are used externally outside an organization. Finance and accounting helps in provision of financial position of an organization, taxation of an organization by the state, federal and the local government. ES-4910 Survey of Engineering Management presents (1) Organizational financial report is also used by external organs in investment regulation and valuation. Organizational management uses finance and accounting in budgeting, setting product prices, checking of organization performance as well as in general operation of an organization. Understanding of accounting information is very vital to the organizational management. Recording of cash versus accruals forms basics of financial entries. Cash is always entered when there is transfer of cash whereas accruals are entered there is revenue earned or expenditure is incurred. Accrual is a record of transactions over the same period whereas cash records are not time dependent. Other accounting basics include the understanding of business assets, liabilities equity ledger, revenue, expenditure and profit. Accounting entries like the principle of double entry in an accounting is very important in making account receivables and expenditure occurring at the same time. Rules of making entries in journal and using it in calculation of profit and loss are very important. Financial statements help in understanding of different activities in a business. They include cash flows, owner’s equity, business financial position and operational statements. Financial analysis involves comparison of financial information based on period, company changes whereas ratio analysis involves comparison of assets and liabilities. There are current ratio and quick ratio. In the analysis of profits the following are considered; asset return, equity return, gross margin, earning per share. Analysis of ratios involves calculation of; turnover ratio on assets, average turnover ratio and turnover ratio of inventory. In the analysis of capital structure, ratio of debt to equity, interests on coverage ratio are analysed. These are the ratios of liabilities to stockholders equity and income before and after to interest expense respectively. Market analysis involves usage of ratios of price earnings, market to book, dividend yield and dividend payout. Management accounting involves; operational and strategy management. These are further divided into; financial strategy, investment management, financial operation, performance management, cost planning, budgeting, funding, tax and treasury. Before designing a budget, one needs to ask himself a lot of questions such as its importance, user and reason for budget as well as measurement of performance. A good budget should manageable, measurable and easy to improve. The keys of designing budget includes; history, consideration of external influence on the budget, assumptions to be made and its flexibility. Planning process is a cycle of impact analysis, recording actual results, calculation of variables and development or revision of forecasts. In the analysis of trend, one needs to consider its impact on budget making process, how to use it and its definition. Corporate structure involves selection of a unit, examination of corporation and flow through entities, comparison of limited and unlimited liabilities. In valuation process, an individual needs give definition, significance and both internal and external impacts on the business. Valuation is driven by internal and external factors. Internal factors includes; innovation, comparative advantage and performance. External factors involve; market of products and services i.e. stock, economy and the activity of the shareholder. I do agree with Abraham Lincoln on his saying that things can and shall be done and the way shall be found. Once there is a problem at hand and at the same time are the people to think about it, and then even if the solution is not found now, there will be a time when the solution shall be found. Intellectual Property Intellectual property deals with matters of individual ownership of property emanating from their research or innovative works. So long as a person comes up with an idea and implements it for the first time then he is entitled to ownership of that idea. The idea is recorded under his name. Any usage without his or her author is an offence punishable by the law of the land. Intellectual property takes different forms such as trademarks, copyright, patenting and trade secrets. Patent is the ownership based on ideas, inventions, ornamental designs and plants of at least twenty years of filling. Copyright is ownership based on individual’s original works of authorship within the life of the author. It take seventy years and above. Trademarks are used for product identification purposes. The product can either be goods or services. Trademarks exist as long as the business exists. Trademarks are legally registered and its usage is entitled to one company. There are fees charged for registering trademarks by the customs authority and usage by another company in identifying their products is punishable by the federal court. Trade secrets are the hidden information of a business and can only be accessed when an individual is given an authority by the owner of the information. Any usage is subject to payment. Its existence depends on the value. Registration comes with several advantages. Some of the advantages includes right to file a suit on unauthorized usage, assumption of valid ownership of an idea, gaining of public testimony and entitlement to any damages emanating from an unauthorized use. Patenting in United States is applied in usefulness plant, designs and provisional. Patenting costs averagely between eight thousand to fourteen thousand dollars there is also international body for patenting ideas and inventions. This means that patenting applies globally. Before patenting any idea, one needs to put into consideration several factors. The invention to be patented must be useful, unique, nontrivial and easy to be used by others in making and using it. An Overview of Quality Business process is a combination of similar, prearranged tasks in the production of specific goods and services for customer in question. It is looked at on the succession of actions. Business processes are of various types such as supporting, operational and management processes. Management process manages systems operation like strategic and corporate entities. Supporting processes chains main processes such as technical, accounting and staffing. Processes are important as it help in task accomplishment by provision of training of completing such tasks. Consistency in instructions provides a basis upon which procedure improvement, procedure control and procedure capability occurs. Inspection is the assessment, measurement and investigation of products, process and services in opposition to requirements to determine conventionality. In the early times it was used in inspection of checking quality of jobs and product in relation to the meeting market requirements. Taylor in 1911 came up with a framework for usage of workers industrial setting. This was done to improve quality of products and avoidance of wastage emanating from wastage. A lot of focus was put on ensuring that no faulty product remained in the production factory. Dr. Shewhart used this idea to come up with statistical method application in order to ensure quality of products. He used a chart in demonstration of variation in production process in order to come up with high quality product of high standards. In analysis of statistical quality control focus was made on product, fault detection and quality control. Total Quality Management is an approach in management of organization aimed at improving product and service quality through modification and continuous response. Though total quality management originated from manufacturing area, is has universal application in the field of management like schools, hotel and construction. In design of total quality management, questions are always asked on the following; need expectation, product or service product expectations, process of production and corrective action for product improvement. Total quality management basically deals with identification of customers, their demand and how to deliver quality product to the customers. Process control is an engineering discipline dealing with architectures, algorithms and mechanisms of process production control. Process control has the following tools; Japanese 6 s, FME, quality circles, process capability, TQC process and statistical tools. Project management This topic covers organization, structures of work breakdown, cycle management, implementation and control of a project as well as merging of sub projects into framework of project management. Project management in itself is the science and skill of organizing, planning integration, directing and controlling project resources to achieve the foreseen objectives of customer’s satisfaction and within the particular range, quality, time and cost. It is geared towards meeting project management goals of project expectations, timely submission and working under predefined budget. These are the uncertainties to be managed in any project. The uncertainties should be checked carefully to beat competitive advantage by the competitors. A project is composed of goals and objectives, tasks, scope, plan, financial plan and unique undertaking. A project requires staffing, organization, controlling, planning and direction. Good planning, negotiation, leadership, conflict resolution creativity and flexibility are required skills in project management. Project management follows the following steps; project definition, planning, organization, staffing, and directing, controlling and completion. The primary resources used by project managers in achieving project objectives are; information, equipment, personnel, money and materials. However, the projects has their own constraints, money, time and performance are the major constraints in any project. In any project management, the way uncertainties are handled will determine the success of any project. Segmentation of the entire project into phases would somewhat help project managers in meeting project objectives by beating these uncertainties. Project life cycle give s definition of project in terms of what needs to be done at each phase of the entire project. Planning is necessary in any project management as it will help in reduction of uncertainties, improve efficiency, give better understanding of project objectives, provide basis of work monitoring and help reduction of the uncertainties. Concept, development, implementation and termination form the sequential phases of project life cycle. However, the project life cycle does not exist in isolation without putting into consideration; cumulative costs, level of effort put, potential for cost reduction, information quality analysis of risk versus amount at stake and the fixation of escalating cost. Work breakdown structure has been used over time to outline scope of work integrating planning, monitoring and communication. Proposal A successful proposal must be executable as specified and also get customer’s approval. A company should bid for a project that is in line with its policy and strategy, within its capability and able to yield profit. Project time management Time management in projects leads to greater efficiency .Good time management entails scheduling where dates for each project activity is planned through methods such as Gantt charts, Milestone charts, Network diagrams or critical path method. Project teams The success of a project depends on the project team. Within the project team, the personnel should be assigned tasks that they are best at. Also, motivation is a prime factor in ensuring successful completion of the project. Leadership Leadership entails a clear vision and working to influence others to accomplish a given task. The common leadership styles include: laissez-faire, autocratic and democratic styles. Leadership differs from management because while management entails administration and doing things right, leadership entails doing the right things and inspire trust. The entrepreneur An entrepreneur is a person who is able to generate new ideas and business processes. He is deemed as an innovator. A good entrepreneur must possess leadership, management and team building qualities. Entrepreneurs are thought to have innate traits such as extroversion and proclivity for risk taking that makes them good innovators. An Introduction to Marketing, Sales, and Business Development This topic is geared towards understanding of marketing roles, business development, sales as well an understanding of process of creation of business plan and account plan. It will also help in the comprehension of sales process, creation and presentation of value proposition. In the comprehension of the above stated there is need for engineering skills emanating from life experiences, engineering education and some universal skills. Marketers are responsible for determination of market strategy, target customers, distribution strategy, determination of product roadmap and prices, competitive analysis, brand determination, business planning and ensuring customers’ satisfaction. They help determine the bear to be hunted. The business developers’ work is to develop proposals, lead account planning and internal sales, manage customer relationships, and negotiate for business deals and contracts. They bring the bear through the doorstep. Sales department helps in leading execution of sales process. This is done by building good relationship with the bear and using marketing tools to bring the bear to the doorstep. Operators are responsible for skinning the bear. Business planning is the description of business goals and strategies as well as provision of blueprint of marketing, financing and operational execution plans. It gives the direction to be taken by the company and how to reach the destination. Creation of business plan is determined by customers and hence provides a standard for communication. Accounting plan is the customer’s specific plan which helps in understanding of customers’ needs. Market competitors and used in laying down plans to accomplish customers objectives. It is linked to overall revenue, product and growth plans of the business. Accounting plan helps in communication with the board of directors and the business executives. It forms the very first stage in sales process. Sales process is important in provision of common framework for identifying opportunities and leading the teams towards new business opportunities. It helps in alignment of the team and uses best practices from various team members in a business set up. It is a very important process for sustaining an opportunity. The process follows sequence of opportunity generation, definition, validation and qualification to solution development, proposal, and negotiation to the achievement of the goal. This is the experimental profit that organization is making an offer promise to convey. It is the positional value of a business. It acts as a communication sentence in a business. Company can be started as a small business. The business is started from scratch comes with its advantages of feeling a sense of personal ownership. However, it is subject to challenges of knowing what market demands, lack of experience and understanding of competition in the market and small capital base. Management vs. Leadership Management is the coordination of people in order to achieve the project’s desired goals and objectives by effectively employing available resources. Management is composed of planning, organizing, leading, staffing, controlling and directing an organization in order to achieve organization’s goals. There are skills in management ranging from political, conceptual, interpersonal, diagnostics to technical. Politically, a manager must be able to establish a power base and connection. Conceptually, a manager must be analyser of complex situations. Interpersonally, a manager must be in a position to communicate, mentor, delegate and motivate those whom he is managing. Managers should be in a position to visualize most appropriate response to a problem or a situation. The managers must possess expertise in their functional areas of management. A leader is someone who persuades other people in order to achieve given objective of an organization or a group. However, leadership traits are very important in choosing leaders. Such traits includes; planning, teamwork, decision making, adaptability, persuasion, relationship, integrity, vision and communication. Global Business Trade is defined as resource bequest including natural, human investment as well as technology, efficiency of production and rate of exchange. Global business is the business that occurs internationally. Over decades, international business has grown. There has been exchange of goods and services, physical and intellectual assets, capital and technology, professionals and labour. There has been existence of global links that join different countries commercially. Trade and investment has been opened such that borders do not restrict investment and other commercial activities. Cross border trade has increased to a tune of one trillion annually from one billion in 1960. There has been in existence sophisticated cross border technology that facilitates financial transactions across the globe. Financial institutions of international calibre such as IMF (International monetary fund) together with World Bank has been in existence to facilitate international collaboration. According to Mercantilism, the country’s economic growth is dependent on the export. The rule of comparative advantage argues that profit maximization is at its peak when the country specializes in what it can produce best. What it cannot produce it should buy from other nations. According to the law of competitive advantage, argues that what a country would trade in is dependent on human capital and technology as well as geography, resources among other factors. Industries, market structure and demand will determine economic advancement of a country. The increased international trade is an indication of decreased financial barriers, economic nationalism as well as realization of world trade and regional trade agreements. In order to facilitate international exchange of goods and services, the world has adopted international exchange rates governing currency exchange. Exchange rate is the value of a country’s currency compared to the other. Currency rates are dependent on the market, linked system and the type of government systems. Demand of currency will affect its value. The government can regulate the value of her currency by controlling its trade. International trade is divided as either direct, indirect trade contractual or direct investment depending on the scale and governments regulation. Political and internal risks affect the smooth trade. Care should be taken in their analysis before venturing in any international trade. Engineering decision making and risks Decision making is a process of choosing from several alternatives to come up with the most desirable one compared to the unwanted consequences. Decision making are of different types among which are the linear programming, under risk and under certainty. Linear programming employs mathematical modelling in decision making. Problem at hand is treated as constraints against the expected result which is looked at as another variable. This method of problem solving requires creation of pseudo-model in finding the feasible solution to a problem. Solving a problem using linear program results in infinite feasible and single feasible solution, no solution and unbounded solution.Linear Programs with Multiple Objectives deals with multi-objective programming. Its evaluation involves seeking optimal goals to determine degree of tradeoff among objectives. A non- inferior solution is the most possible solution to be selected in decision making process. This kind of solution has multiple no conflicting objectives. Goals used in the analysis of nonferiority are identification of non inferior solutions. There are two methods of generating no inferior sets i.e. weighting and constant methods. Integer programming uses integers as the only possible solutions. Requirements of the final project The final project accomplishment is divided into eleven sessions. The sessions flow sequentially from the beginning to the final accomplishment of project then submission and patenting. The table below summarizes the order starting with what comes first to what comes last. Session Instructor Ranking Leadership Hynes 1 Theory of constraints Hynes 2 Risk analysis Young 3 Quality control/ assurance Hynes 4 Project management day 1 Urynowicz 5 Project management day 2 Urynowicz 6 Business development/ sales Hynes 7 Finance day 1 Steingrebe 8 Finance day 2 Steingrebe 9 International Issues in Engineering Alexander 10 Intellectual property Jones 11 Leadership is the ability to influence others in achieving organizations goals and objectives. Major topics in leadership are; leadership skills and traits. This topic is applied in the management of organizations. Theory of constraints (TOC) is a procedure of reasoning in order to come with solution to problems of allocation of resources and making of resolution. This topic is applied in getting solution to problems and in decision making process. Risks analysis is the examination of potential strengths and weaknesses geared towards achieving business goals. This topic is applied in the decision making process as well as avoidance of losses emanating from failure to foresee threats in a business. Quality control/ assurance are the product management aimed at meeting the customers’ satisfaction as well as withstanding the market competition. The topic is applied in meeting the market demand as well as profit optimization. Project management in itself is the science and skill of organizing, planning integration, directing and controlling project resources to achieve the foreseen objectives of customer’s satisfaction and within the particular range, quality, time and cost. This topic covers organization, structures of work breakdown, cycle management, implementation and control of a project as well as merging of sub projects into framework of project management. This topic is applied in management of projects. Business development is the work of developing proposals, lead account planning and internal sales, manage customer relationships, and negotiate for business deals and contracts. Major topics here are planning, proposal development and management of customers. This topic is applied in the starting of a business venture. Financing is the allocation of monetary resources aimed at achievement of business goals and objectives. Major topics here are budget and budget making process. Intellectual property deals with matters of individual ownership of property emanating from their research or innovative works. Major topics here are trademarks, copyright, patenting and trade secrets. This topic is applied in protection of ownership rights as well as ensuring that innovators and inventors reap well from their inventions and innovations. International issues in engineering are those factors that govern the patenting and intellectual property rights. Major topics here are trademarks, copyright, patenting and trade secrets. This topic is applied in the field of manufacturing and enforcement of copyright law. I do not see any session that should be removed from ES 4910 course. All the courses are important as far as this unit is concerned. The topic of leadership and management is so brief. The heighted topics are good but there is need for addition of the topics on leadership process and the similarities between leadership and management. This will help in providing a distinction between the two confusing topics. Questions on the slides. Topic: overview quality. Slide 10 Question: No process then no opportunity for improvement. Slide 14 Question: Life is a summary of place and date of birth, education and career development, employment history and awards achieved in the entire career life as well as date of death. Slide 17 Question: TQM is universal. Everybody must have used and heard TQM. Close to everybody uses TQM. In the manufacturing product quality is the prime objective of every organization. For example in manufacturing of cars, the quality of a car and its ability to minimal brake down is very important. Works Cited Davona Douglass.Office of Research & Economic Development Research Products Center Director.10 Feb. 2013 Eliyahu M. Goldratt, Jeff Cox .The Goal: A Process of Ongoing Improvement. North River Press, 1992. Financial Management, Cash Flow and Accounting Principles: ES-4910 Survey of Engineering Management. 25 Sep. 2013. 11 Nov. 2013 Mark Hynes . Management vs. Leadership. hynz@aol.com Mark Hynes. An Introduction to Marketing, Sales, and Business Development. hynz@aol.com Mark Hynes. An Introduction to Theory of Constraints. hynz@aol.com. Mark Hynes. An Overview of Quality. hynz@aol.com Rhonda K Young. Engineering Decision Making and Risk. rkyoung@uwyo.edu Read More