Supply Chain Management - Dissertation Example

Theory of Constraints (TOC) and Lean concept have become popular in recent years. The objectives of these two are the same – to provide process optimizations and performance improvements. TOC focuses the attention of the management to avoid and eliminate the few present constraints in the system. The lean approach assists managers to improve performance by eliminating all the waste activities. The TOC concepts have proved to be quite profitable by reducing inventories and lead times, and enhancing the operations within a value chain, (Eric, et.al, 1995). Giving a brief about TOC, the TOC views organizations as a source of resources that are actually interlinked with the various activities and processes.

TOC further states a constraint as one that has the ability to limit the performance of the system. TOC is of the perspective that in fact there are only a few or maybe a single constraint in a system that limits the performance, unlike the contrary belief that there are hundreds of constraints present in a system. The TOC approach rest on five steps which include identifying the constraint / s present in the system, deciding on how to exploit the constraint, planning e future operations per the above two decision, then elevating the constraint and then break the constraint (Cox, et, al, 1996).

Relating the concept of TOC to logistics and value chain comprising of several companies, the basic is to create an efficient flow of inventory so as to promote greater availability and reduce all shortages and surplus. Eric (1995) mentions some TOC approaches to assist in efficient logistic management, some of them are described below:1. TOC instructs to keep the inventories at an aggregation point that may be near to the source. This makes sure that the demand is served in a smooth manner and requires less inventory maintenance.

This approach can be stated as a make to stock and ship approach rather than the conventional approach of make to order.