Theory Of Constraints
How to increase profits quickly
In a critical market scenario such as the current one, companies are also required to take new paths: those who succeed will certainly be rewarded by the possibility of acquiring a strong position in a time of general difficulty for many competitors.
Yes, but how can you turn a negative moment into an opportunity?
An effective model in this regard is proposed by the constraint theory (TOC).
WHAT IS THE THEORY OF CONSTRAINTS
The Constraint Theory was born in the early eighties from the studies of the Israeli physicist Eliyahu M. Goldratt and considers the enterprise as a single system, that is, as a chain of interdependent processes.
The origin of this theory stems from two scientific considerations: first of all that the results of a system are always determined by the performance of a limiting factor, called, precisely, constraint; secondly, in the presence of variability, a constrained system has greater capacity to generate value than a perfectly balanced system.
The constraint is the element that determines the rate at which the company generates money through the sale of what it produces. Since a limiting factor always exists in a system, the theory of constraints teaches us to identify and manage it in order to obtain the maximum possible value ».
The Toc is a methodology that allows companies to achieve significant economic improvements in a simple way, quickly and without destabilizing the corporate structure.
In this period of low liquidity for businesses, an interesting benefit is the obtaining of greater cash liquidity.
This result can be achieved after only three months from the activation of the system and is the consequence of a series of improvements obtainable from the application of the Toc such as: reduction of the WIP (work in process) and of the warehouse level, improvement of punctuality and reliability of deliveries, reduction of production time and elimination of “missing” products in external warehouses or by customers.
HOW TO IMPLEMENT THIS METHOD?
The answer lies in the activation method which uses predefined logical models and software programs that guarantee the success of the project.
It is therefore necessary to have an ERP software developed for Toc projects capable of recovering data from the various information systems, to analyze information and make decisions quickly and coherently with the Toc guidelines.
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