theory of constraints: a review on its evolution and adoption

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The International journal of analytical and experimental modal analysis ISSN NO:0886-9367 1 Volume XII, Issue IX, September/2020 Page No: 954 Theory of Constraints: A Review on its Evolution and Adoption. Dr.Nishant Kumar 1 Mohammad Talha Siddiqui 2 Mohammad Suhail 3 1 Department of Business Administration, University of Lucknow, Lucknow, India. E-mail: [email protected]. 2 Department of Business Administration, University of Lucknow, Lucknow, India. E-mail: [email protected]. 3 Department of Building Engineering and Management, School of Planning and Architecture, New Delhi, India.E-mail: [email protected] Abstract This study attempts to present an analysis of the evolution of Theory of Constraints over last three decades.This work is based on analysis of various research papers, articles, books and testimonials of practicing consultants. From the studies it is found that TOC is in its evolution stage only. Starting from the production area it has spread to various other disciplines like supply chains, retail, marketing, services, strategy and other complex environments. The main contribution of the study are: (1)presenting the evolution of TOC through literature review.(2)discussing the various tools of TOC available for various disciplines(3) assessing the benefits of adoption of TOC by Indian firms. Keywords: Theory Of Constraints (TOC), Critical Chain Project Management (CCPM), Drum Buffer Rope (DBR), Thinking Process (TP) Introduction Theory of constraints(TOC) was conceived by an Israeli physicist Dr. Eliyahu M Goldratt. Theory of constraints is a management philosophy which focuses on removing the weakest point in the operation of the system. The concept started in the 1970's, when Goldratt and his team were working on a programming software to optimize the production systems, they called it Optimized Production Technology(OPT).(Goldratt et al., 1984) The name TOC slowly evolved and was put forth by Goldratt in the novel The Goal‖ in the year 1984. The book focused on some concepts and phenomena that were applicable in manufacturing and also proposed the concept of Process of ongoing improvement and decision making for organisations.(Goldratt et al., 1984) Since then, the application of TOC has broadened to various areas, such as supply chain,(Gupta & Andersen, 2018; S Rahman, 2002; Simatupang et al., 2004) projects,(Goldratt, 2001; Leach, 1999; Luiz et al., 2019; Steyn, 2001) marketing,(Lowalekar & Basu, 2019) services(Motwani et al., 1996)and retail(Gardiner, 1993; Goldratt, 1994). TOC philosophy considers all processes in system as rings of the same chain, they all are dependent on each other. As a weak ring can break the whole chain, similarly a weak process can put the

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Page 1: Theory of Constraints: A Review on its Evolution and Adoption

The International journal of analytical and experimental modal analysis ISSN NO:0886-9367

1

Volume XII, Issue IX, September/2020 Page No: 954

Theory of Constraints: A Review on its Evolution and Adoption.

Dr.Nishant Kumar1Mohammad Talha Siddiqui

2 Mohammad Suhail

3

1Department of Business Administration, University of Lucknow, Lucknow, India. E-mail: [email protected].

2Department of Business Administration, University of Lucknow, Lucknow, India. E-mail: [email protected]. 3 Department of Building Engineering and Management, School of Planning and Architecture, New Delhi, India.E-mail:

[email protected]

Abstract

This study attempts to present an analysis of the evolution of Theory of Constraints over last three decades.This work is based on

analysis of various research papers, articles, books and testimonials of practicing consultants. From the studies it is found that

TOC is in its evolution stage only. Starting from the production area it has spread to various other disciplines like supply chains,

retail, marketing, services, strategy and other complex environments. The main contribution of the study are: (1)presenting the

evolution of TOC through literature review.(2)discussing the various tools of TOC available for various disciplines(3) assessing

the benefits of adoption of TOC by Indian firms.

Keywords: Theory Of Constraints (TOC), Critical Chain Project Management (CCPM), Drum Buffer

Rope (DBR), Thinking Process (TP)

Introduction

Theory of constraints(TOC) was conceived by an Israeli physicist Dr. Eliyahu M Goldratt. Theory of

constraints is a management philosophy which focuses on removing the weakest point in the operation of

the system. The concept started in the 1970's, when Goldratt and his team were working on a

programming software to optimize the production systems, they called it Optimized Production

Technology(OPT).(Goldratt et al., 1984) The name TOC slowly evolved and was put forth by Goldratt in

the novel ― The Goal‖ in the year 1984. The book focused on some concepts and phenomena that were

applicable in manufacturing and also proposed the concept of Process of ongoing improvement and

decision making for organisations.(Goldratt et al., 1984) Since then, the application of TOC has

broadened to various areas, such as supply chain,(Gupta & Andersen, 2018; S Rahman, 2002;

Simatupang et al., 2004) projects,(Goldratt, 2001; Leach, 1999; Luiz et al., 2019; Steyn, 2001)

marketing,(Lowalekar & Basu, 2019) services(Motwani et al., 1996)and retail(Gardiner, 1993; Goldratt,

1994). TOC philosophy considers all processes in system as rings of the same chain, they all are

dependent on each other. As a weak ring can break the whole chain, similarly a weak process can put the

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system on hold.(Cox J.F. & Schleier, 2010)Therefore, TOC philosophy focuses on the weakest

ring(process) of the chain (system). The concept of Theory of Constraints can be summarised as follows:

● Every system has at least one constraint, i.e. there is no system without a constraint. If this was

not true, then system would make infinite profit which is impossible. A constraint therefore, ―is

anything that limits a system from achieving higher performance versus its goal‖ (Goldratt, 1988)

● Constraints are good for the system, seems ironic. But TOC considers it as positive not

negative.(Shams ur Rahman, 1998) Because of constraint there is always opportunity for

improvement in the system.

There are two major components in the Theory of Constraints. First component is the philosophy that is

behind the working of TOC. It consists of five steps that focus on ongoing improvement: DBR(drum-

buffer-rope) scheduling methodology and the buffer management information system usually called as

―logistics‖ paradigm. The second component of the TOC is the Thinking Process(TP), it is a generic

approach for investigating, analyzing and solving complex problems.(Shams ur Rahman, 1998)

Philosophy

The principle of TOC focuses on continuous improvement process. The system can be improved by

focusing on the constraints. There is a series of five focusing steps.(Goldratt, 1990b)The steps of TOC are

generic in nature, they can be applied to various areas like manufacturing, services, marketing etc. The

five focusing steps(5FS)of the principle are:

I. Identify the constraint(s) in the system. A system can only be improved after knowing the

problematic point. Therefore, the first step in the improvement process is to find the constraint

that is limiting the performance. Only when the constraint is known then only one can design the

control mechanism for the constraint.

II. Exploiting the system constraint. To have a constraint in the system is the opportunity to make

the system more efficient. After identifying the constraint the focus should be there to remove the

constraint so as to make increased throughput.

III. Subordinate everything to support the above change.Everything has to be aligned with the

decisions in the above step. Every other operation should be adjusted towards eliminating the

constraint. That means that all the non constraints should be centered towards optimizing the

constraint(thus entire system) ,not their individual performance.

IV. Elevate the constraint. At this point, after going through the above three steps if the constraints

still exists, it is the time to improve the constraint itself. This step is quite expensive as it requires

adding resources to remove the constraint. The resources can be like man, material, money,

machine, etc.

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V. Return to the first Step. After the aforementioned constraint is removed, new constraint may

develop in. So the quest is to remove the new constraint. To remove the new constraint the above

steps are repeated once again.

Literature Review

People are mistaken that theory of constraints can only be applied to production management but the case

is a bit different. Over the years TOC literature has seen many evolved concepts. The same TOC thinking

process that brought DBR( Drum-Buffer-Rope ) has created a whole new array of the TOC solutions,

such as critical chain project management(CCPM), Mafia offers, Simplified drum buffer rope(S-DBR)

management, Reliable Rapid replenishment and others(TOC Applications - Theory of Constraints

Institute, n.d.). Theory of constraints has quite a wide range of applications asit has beenused in many

management disciplines like project management(Goldratt, 2001; Leach, 1999; Luiz et al., 2019; Steyn,

2001), supply chain(Gupta & Andersen, 2018; S Rahman, 2002; Simatupang et al., 2004),

retailing(Gardiner, 1993; Eliyahu M Goldratt, 1994, process improvement and in other production

environments(Lambrecht & Segaert, 1990; Raban & Nagel, 1991), sales and marketing(Lowalekar &

Basu, 2019), research and development accounting(Şimşit et al., 2014) and so on.

There are various definitions of Theory of Constraints given by different researchers according to their

usage but the main idea of ToC is centric towards the constraint. The aim of any organisation is to

increase profits and anything that limits the profit of the organisation is a constraint. Studies have

suggested that TOC techniques could result in increased profits at the same time decreasing both

inventory and cycle time(Watson et al., 2007). Numerous studies have validated that systems using TOC

techniques have shown increased performance compared to those systems using Manufacturing Resource

Planning(MRP), Just-in-Time(JIT) approach Lean and Agile manufacturing(Dave et al., 1991; Davies et

al., 2005; Watson et al., 2007).

Many fortune 500 companies like 3M, Amazon, Ford motor company, Delta Airlines, Boeing, Lucent

technologies and general motors have disclosed publicly their improvements after deploying TOC. There

are many other companies who have not disclosed their improvement due to competitive reasons.

Applications of Theory of Constraints is not only limited to profit-organisations but they have also proved

equally beneficial for non-profit-organisations such British National Health Service, United Nations,

United States Department of Defence, NASA, Habitat for humanity.(Watson et al., 2007)

Despite great improvements in various organisations achieved by TOC, it is not widely accepted in

mainstream moreover implementation appears to be least mature as compared to other methodologies.

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Several authors - Davies et al., 2005; Ikeziri et al., 2019; Kim et al., 2008; Shams ur Rahman, 1998;

Watson et al., 2007; Xu & Xu, 2010; have given detailed review of published literature on TOC. In order

to comprehend the evolution of TOC, Watson et al.‘s five era structure has been used in the present paper.

1) The Optimised Production Technology Era

2) The Goal era

3) The Haystack Syndrome Era

4) The It's Not Luck Era

5) The Critical Chain Era

The Optimised Production Technology Era

The beginning TOC is quite unspectacular. It started with a small request for help. In late 1970‘s a

neighbour of Goldratt asked for assistance from him. Goldratt helped him by developing a program that

increased the production multifolds within a short period of time.

Goldratt introduced that solution as Optimised Production Timetables. Later it was renamed to optimised

production technology or OPT. The Process of OPT was first described by Fry et al in 1992. OPT

consisted of 4 components- BUILDNET, SERVE, SPLIT and OPT.

Although OPT was showing tremendous results in the firms where it was being applied but academicians

did not pay enough attention towards it. However there were several studies which talked about OPT. In

1983 Jacob explain how it can give good results in scheduling and production planning, in 1984 Fox

explained basics of OPT and investigated bottlenecks on the factory floor, in 1985 Harrison tried to

explain the concept of OPT in terms of goals of manufacturing organisations, in 1985 Agrawal

benchmarked MRP, JIT and OPT and discussed these inventory control systems. In that studies

comparative analysis was done and they tried to explain how these techniques can complement each

other. In 1990 Ronen and Starr discussed that OPT can be used with DBR.

The nine OPT rules(Goldratt & Fox, 1986) given by Goldratt are given below:

1. Balance flow, not capacity.

2. Level of utilization of a non-bottleneck is determined not by its own potential but by some other

constraint in the system.

3. Utilization and activation of a resource are not synonymous.

4. An hour lost at a bottleneck is an hour lost for the total system.

5. An hour saved at a non-bottleneck is just a mirage.

6. Bottlenecks govern both throughput and inventory in the system.

7. A transfer batch may not, and many times should not, be equal to the process batch.

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8. The process batch should be variable, not fixed.

9. Schedules should be established by looking at all of the constraints simultaneously. Lead times are a

result of a schedule and cannot bepredetermined.

The Goal Era

As discussed earlier Goldratt was not getting much response from the industry practitioners. To attract the

attention of the practitioners, Goldratt made change in his strategy and wrote a book ―The Goal‖ with Jeff

and Cox in the year 1984. The Goal was a manufacturing novel about how Alex with the help of Jonah

saves his plant. The Goal was written to educate workers about employing OPT in the manufacturing

facilities. The strategy of Goldratt worked and soon ―The Goal‖ became the business best seller. This

elevated response from the practitioners as many of them tried to implement the concept found in the

book.

The Goal was the forerunner of TOC. It explained the heuristics and techniques that later became

foundation of Theory of Constraints. The Goal outlines 5 focusing steps of TOC. These 5 focusing

steps(5FS) later evolved as POOGI( Process Of On-Going Improvement). POOGI consists of 7 steps- five

of which are 5FS, which are discussed earlier and two prerequisites of implementation(Goldratt et al.,

1984). These two preliminary steps are:-

1. The Goal of the system.

2. Determination of global measures to achieve the goal.

In the same book the concepts of Drum Buffer Rope(DBR) is also discussed. DBR is a scheduling

technique of Theory of Constraints. It is focused on increasing the flow by identifying and leveraging the

Drum(Constraint).

The concept of DBR is explained in Goal with the example of boy scouts going on a hike. Later in the

book Race also, Goldratt explained this concept with the help of soldiers marching on the drum beat.

In DBR, Drum is the constraint. A constraint is something that limits the pace of the operation just like a

drum which controls the marching soldiers. It becomes very important to handle the constraint, as the

output of the system is just the output off constraint. DBR ensures that the constraint is 100% utilized, it

should not remain idle. To ensure that constraint is working on its full limit, additional buffers are

assigned to it.Buffer makes sure that that the constraint is not in ―starving‖ condition.

The concept of rope is like giving the one end of rope to the slowest soldier and other end to the first

soldier. It will ensure that all the soldiers will move with the same speed. This concept is also applied in

organisations.All the processes should be aligned with the speed of the most limiting constraint. In

facilities, this rope concept will help to keep an eye over unwanted work -in- process inventory, as all the

processes/machines are working with speed of constraint(Drum).

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Therefore, DBR ensures that facility/machines are working on the beat of the Drum i.e. constraint.

DBR methodology can be summarised as follows(Cox J.F. & Schleier, 2010):

1. Developing MPS(Master Production Schedule) compatible with the constraint.

2. Safeguard the throughput of the system from fluctuations by using buffers at the critical

points(Constraint).

3. Restrict the production of each facility to the Drumbeat(Rope).

Haystack Syndrome Era

The book ‗Haystack Syndrome‘ by Goldratt was written in 1990. The issue of data and information

incongruency has always been a critical issue for any company. In this book Goldratt examined data in a

new way and presented it very beautifully that how misinterpretation of these concepts can affect the

quality of decision making.

Most companies measure performance on ROI and Net Profit but there is also another measure which is

important-data found in the cash statements. Goldratt focused upon removing the overlap between

inventory and operating expenses. Traditional view on inventory is that it is considered as an asset but

Goldratt had a different view on this. According to Goldratt, cost accounting is enemy to the

productivity(Watson et al., 2007). TOC always called for change in the standard absorption cost

accounting systems. Goldratt said that when traditional cost accounting principles are applied to estimate

local performance measures, capital investment and product cost decisions provide deceiving outcomes

which may result in implementation of some policies that can result in fatal strategic misfit.(Goldratt,

1990a)

Goldratt was not the only one who opposed traditional cost accounting.Authors like Kaplan, and Johnson

have also felt that traditional accounting principles do not fit in highly flexible manufacturing systems. To

remove this incongruence Kaplan and Johnson developed activity based costing.(Johnson & Kaplan,

1987; Kaplan, 1983, 1986).On the other hand to remove this incongruence between TOC and Cost

accounting principles, Goldratt with others led to the development of process centered performance

measurement called Throughput Accounting (TA).

The goal of the TOC system is to make money now and also in the future. In order to examine whether

the company is achieving that goal or not, three global measures are used- Net Profit(NP), Return on

Investment(ROI) and cash flow(CF). TOC also uses these measures for global performance.But at

subsystem levels/plant levels Goldratt and Cox have introduced different measures - Throughput(T),

Inventory(I) and Operating Expense(OE). Goldratt also introduced three measures at the process level -

Throughput dollar days(T$D), Inventory dollar days(I$D) and local operating expense. Apart from these

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nine measures, another important concept of TOC also evolved,e.g, Contribution Per Constraint Per

Minute(CPCM). CPCM has wide use in make or buy decisions(Watson et al., 2007).

It’s not luck era.

‗It‘s not luck‘ is a book written by Goldratt in the year 1994. This book is the sequel to ―The Goal‖. In

this book Goldratt proposed a way and a set of logical tools for analysing the situation and handling

constraints. This logical tool was called Thinking Process(TP). Thinking process consists of five logical

tools which act as a framework for the decision making process. TP focuses on the three basic questions

of TOC: What to change? What to change to? How to cause the change? The tools which help in

answering these questions are: Current Reality Tree(CRT), Conflict Resolution Diagram(CRD) or

Evaporating Cloud(EC), Future Reality Tree(FRT), Prerequisite Tree(PRT) and Transition

Tree(TRT)(Dettmer, 2007; Goldratt, 1994)

Figure 1. Thinking Process. Source: Dettmer, 2007

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Current Reality Tree

CRT is a series of cause and effect relationships that start from undesirable effects down to few root

causes. CRT helps to identify what in the system needs to be changed.

Conflict Resolution Diagram

After CRT the next step in the TP is Conflict Resolution Diagram(CRD) or Evaporating Cloud. It is a

necessity-logic tool. As the name suggests CRD is used to resolve conflicts. The purpose of EC is to

surface the conflict and provide ideas of what can be changed to resolve the problem and create a win-win

situation.

Future Reality Tree FRT

It begins with the outputs from CRT and EC. FRT provides a blueprint to eliminate deviations identified

in CRT(Dettmer, 2007)Unlike CRT, FRT is a bottom up approach. It begins with the identification of the

actions and conditions that lead to the desired outcomes(Cox J.F. & Schleier, 2010; Dettmer, 2007)and to

check whether or not new UDEs(Undesirable Effects) arise from the actions(Kendall, 1998)

PRT and TRT

PRT seeks to identify obstacles or conditions that may hinder the achievement of desired outcomes and to

create new Intermediate Objectives(IO) to overcome identified obstacles. On the other hand TRT is a step

by step sequence of implementing the change. It is used to identify the tasks and actions needed to meet

the Intermediate objectives of PRT(Cox J.F. & Schleier, 2010)

Critical Chain Era

In 1990 at International Jonah Conference, a method based on TOC called critical chain project

management(CCPM) was introduced.(Watson et al., 2007) This method has time management focus to

schedule and control projects. The concept of CCPM is based on two premises. The first basic premise is

that better time management offers benefits to scope and cost management. The second premise is that

adding safety time at the end of each activity is the root of the problem(Goldratt, 2001). As a solution to

this problem, safety elements(buffers) in CCPM are allocated at the last of task(Raz et al., 2003).

According to CCPM projects fail due to some behaviour of the teams. These behaviours are student

syndrome, Parkinson‘s Law and poor multitasking(Robinson & Richards, 2010).CCPM starts with the

network diagram of various tasks-activities with their estimated durations. CCPM identifies the critical

chain(set of activities that take the longest time). Critical chain provides project conclusion date(Rand,

2000). CCPM manages uncertainity by allocating buffers at the end of the critical path. Buffers proposed

by CCPM are project buffers, feeding buffers, resource buffers(Herroelen & Leus, 2001; Leach, 1999).

CCPM controls project progress using buffer management(BM). When the actual time of the project

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exceeds the forecasted time the surplus is used from the buffer. The evolution of the CCPM can be

categorized into three stages(Luiz et al., 2019). The first stage is the ―Conceptual‖stage, evolved over the

period 2000-2005. In this stage various articles were published that focused on the basic foundation of

CCPM and its comparision with other traditional project management approaches. The second stage is

―Deepening of Applications‖ stage, evolved over the period of 2006-2010. In this stage most of the

studies addressed buffer management. Also CCPM was used for emperical studies in various

sectors(Bevilacqua et al., 2014) like construction(Rogalska & Hejducki, 2007) and electronics(Kuo et al.,

2009). The era after 2011 is called as ―Methodological Maturity‖stage. In this stage the application of

CCPM has expanded to multiprojects management. Various mathematical modelling techniques for

CCPM evolved in this stage like-Multi Objective Optimization method(Wang et al., 2014), Evidence

Reasoning approach(Yang & Fu, 2014), algorithms based on Multi-agent systems(Zhang et al., 2014) and

Fuzzy theory(Roghanian et al., 2017)

Application of Theory Of Constraints by Indian Firms

In India many organisations have benefitted by using TOC in their organisations. There are very few

consulting firms in India that are working on TOC with their clients. Among the very few firms-Goldratt

India and Vector Consulting have worked with many organisations and have helped them to grow both

top line and bottom line with the help of TOC.

Companies like Jindal Steel and Powers, Godrej, Paharpur, Airtel, Eicher and many more have

overhauled their operations with the help of TOC. These companies have substantially improved their

operations by reducing lead times, reducing work in process, reducing finished goods inventory, and also

reducing receivables.

According to Goldratt India, their clients have achieved some or all of the following after implementing

TOC (Theory of Constraints Consulting | Goldratt India, n.d.-a):

● Quantum improvement in On Time In Full (OTIF): Clients have been able to improve their

On Time Delivery from less than 10% to over 95%.

● Substantial Reduction in lead-time: Clients are able to shrink their lead-time by a factor of 2 to

6.

● Reduction in Finished Goods Inventory: Finished Goods reduction achieved ranges from 20%

to 50%.

● Reduction in Work-In-Process (WIP): Clients have reported WIP Reduction in the range of

30% to 80%.

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● Reduction in receivables: Typical reduction achieved in receivables is 20% to 30%.

TOC applications are not confined to manufacturing or operations only, they have wide applications in

other streams also. Mishra & Palo, 2014in their research paper have discussed the applications of Theory

of Constraints in the realm of Indian Administrative Services. The writers have discussed how constraints

figured out using cause and effect relationships and also discussed the course of action taken by the

officers to eliminate the constraints.

To have the actual picture of how organisations in India havebenifitted after applying Theory of

Constraints, testimonials of various top level executives was analysed. These testimonials were written by

Chairmans,CEOs and Directors of organisations to the consulting firm that helped them to implement

TOC tools in their oraganisations. In the present study, data from select testimonials written for Goldratt

Indiais taken. After content analysis of the testimonials, the key points are summarized in the table-1.

Table 1. Improvements in various organisations after implementing TOC.

S.No. Company/Year Outcomes of the Implementation of TOC Tools

1) Jindal Steel & Powers ● Improved cash through reduction in receivables,

inventories, export incentives etc.

● Reduction in gross working capital by Rs 2500 in 2015-

16.

● Reduction in gross working capital by Rs 1100 in 2016-

17.

● Overall reduction of gross working capital by 56%

● EBITDA increased by 16% in 2015-16 and 17% in 2016-

17.

2) Paharpur Cooling

Towers

● OTIF(On Time In Full) helped in increasing timely

despatches.

● Weekly review concept helped a lot.

● TOC solution DBM helped in reducing blocked money

and maintained efficient inventory levels.

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3) Airtel ● Used the concept of Conflict Cloud to make processes

customer friendly.

● Performance increased manifold in areas of project

delivery.

4) Flexistuff ● Month end syndrome was reduced.

● Weekly planning was helpful in production planning,

dispatch scheduling and receivable collection.

5) Samtel Color ● Procurement, inventory management, payment terms with

customers were improved.

● Cash blocked in receivables and inventories was reduced

to 43 crores from 89 crores in the span of 9 months.

6) Sheela Foam(2008) ● In the financial year 2007-08 the company grew by more

than 30% on the top line and more than 70% in the bottom

line.

7) Godrej ● Significant improvement in online delivery, lead times and

despatches.

● Increased customer satisfaction.

8) Indo Asian ● The turnover in the second half of the financial year

increased by 30%.

● Cash generation and profits increased.

● TOC encouraged teamwork and changed the attitudes of

the members of Indo Asian.

9) Salora International ● Reduction in Lead time from 5 days to 1 day.

● Reduction in WIP inventory by 80%.

● Reduction in finished goods inventory by 30%.

● Reduction in raw material inventory by 10%.

10) Nat Steel ● Ontime deliveries increased from 5% to 95%.

● Lead times reduced from 13 weeks to 2 weeks.

● Order inflow rate increased by 25%.

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● Sales up by 25%,

● Receivables down by 33%.

● Inventories down by 33%.

● Suppliers payments from over 3 months to 1 month.

● Bank Borrowing reduced by 40%

11) Eicher(2003) ● In the first half of the year grew by 29% of the last year.

● Planning and cash control improved.

● Better teamwork.

12) Eicher(2004) ● 57% increase in net sales in one year.

● 43% increase in throughput.

● Operating expenses were under control with only 1% rise.

13) Hari Machines(2005) ● Company undergoing heavy losses became profit making

company.

● In 2004-05 Hari Machines achieved a turnover of 125

crores, which is about 30 times the turnover of 1999-2000.

14) Fleetguard(2006) ● Throughput increased by 35% and profit doubled within 6

months of using TOC.

● The company achieved the performance without any

additional investment or any increase in fixed expenses.

15) Natsteel(2007) ● Manufacturing despatches increased by 53%.

● Ontime despatches.

● Weekly throughput increased by 48%.

● Profits increased by 200% over the last year.

16) Natsteel(2008) ● Manufacturing despatches increased by 72%.

● Ontime despatches.

● Weekly throughput increased by 96%.

● Profits increased by 400% over the last year.

17) Paharpur 3P(2007) ● Within 3 months of implementing TOC, loss making firm

started earning profits.

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● Within 13 weeks throughput increased by 30%.

● Weekly review process was very helpful.

18) Paharpur 3P(2008) ● Throughput increased by 27%.

● Delivery period and on time delivery improved

significantly.

● Inventories decreased substantially despite increase in

volume by 25%.

19) Sona Okegawa(2009) ● Throughput increased by 41%.

● Receivables days reduced from 157 days to 48 days.

● Profit increased by 129%.

● OTIF tool was very helpful in planning.

20) Paharpur(2016) ● OTIF was very helpful in increasing the timely

despatches.

● Weekly review system has reduced month end syndrome

for factory despatches.

● TOC supply chain solution-DBM improved the quality of

inventory while reducing the blocked money.

Source:Theory of Constraints Consulting | Goldratt India, n.d.-b

Conclusion

Through research and analysis of various research papers, articles and books, the present study has tried

to analyse various transitional stages of TOC. Although TOC started with a production scheduling

software but now it has evolved as an integrated management philosophy that is being used in various

disciplines.

Various practitioners and researchers have empirically observed the benefits of implementing TOC in

theirorganisations. These benefits are not only confined to operational and financial performance

enhancement onlybut also reflect in ameliorated teamwork and motivational levels of workers. As the

implementation of TOC has not been universally adopted by business firms, there are some gaps in its

usage across industries. There are few practitioners who have not accepted TOC concepts. They argue

that TOC only gives feasible solutions, not the optimal solutions. Practitioners are also not able to

associate TOC concepts with the newly emerging areas like Internet of Things, Industry 4.0, Smart

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Factory, etc.But in the bigger context, results of TOC implementation present a positive evolutionary

trend. Implementation of TOC in firms has shown notable improvements. One thing that need to be

highlighted is that these notable improvements have come in those systems which were already very

efficient in nature. Organisations like Ford, NASA, Godrej, Jindal Steels and others were already using

other scheduling and controlling tools for years and had made their systems effective and efficient and yet

application of TOC tools in these firms made their systems more efficient.

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