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Applying the Theory of Constraints to Management Problems

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Assignment Two: Applying Theory of Constraints (TOC) and Critical Chain (CC) Tools to Management Problems MGMT206: Systems Thinking and Decision Making Victoria Management School Lecturers: Garoon Pongsart and Garry Tansley Submitted by: Benjamin Pringle Student ID: 301023129 Tutor: Hannah Tutorial: 2.30 Weds Date Submitted: Friday 29 May 2009, 2pm Part One: Introduction The theory of constraints (T.O.C) is a framework put forward by Eliyahu Goldratt in his book "The Goal", to describe the holistic approach to systems management The T.O.C. model provides managers with an approach to running a profitable and efficient organisation, which reflects the decisions and actions undertaken (i.e. cause and effect relationship). A common way of looking at an organisation under Goldratt's model is to envision a 'chain', in which each part of a production process is inter-linked with the tasks around it. The speed and efficiency of the entire process (throughput) can only be as fast as the slowest part (the bottleneck). Bottlenecks are an extremely common constraint that occur all around us; from waiting in traffic at peak-hour to buying groceries, bottlenecks limit the speed of the entire process. In an organisational context, bottlenecks could be out-of-date machinery, poorly trained staff, or myriad other problems. If the 'whole is greater than the parts', then the opposite can certainly be true - "the weakest link determines the speed of the system" (Mabin, Daniell and Hislop, 2008), and every organisation must focus on identifying and removing these constraints. To fix an organisation we must know what to change, what to change to and, most importantly, how to make the change occur. The T.O.C's allows us to do so via several important and basic models, namely; the five focusing steps, evaporating cloud, negative branch and prerequisite tree frameworks. Each of these allows us to move towards an organisational solution that will alleviate the underlying problems that constrain efficiency. Five Focusing Steps Allow us to identify the system constraint and determine how to work the system around the constraint for maximum throughput. ...read more.


Exposing these assumptions will make it easier to solve the dilemma and achieve both goals. Students need to pass in order to achieve terms and pass MGMT399 in this case, irrespective of how the assignment is carried out. These assumptions are in the grey boxes on We must then identify any possible injections in the Evaporating Cloud analysis, which will break the assumptions. These injections serve as leverage points from which the conflict may be eventually solved, making them vital to our investigation. Three possible injections are listed below: 1. (C) - (D`): To prevent certain members from doing a disproportionate amount of work (without reward), the inclusion of an evaluation form that all team members must fill out will prevent social loafing. 2. (B) - (D): Appoint team leader to keep the assignment progressing and distribute tasks (B) - (D): Hold meeting to distribute tasks to ensure each member has an equal workload. Negative Branch Method The Negative Branch Method addresses the question 'What to change to?' and will expand one of the above injections and evaluate whether it will be a feasible strategy to implement. This Negative Branch is untrimmed and provides a holistic view of the negative externalities of completing the assignment in groups. This Negative Branch includes the positive effects of enforcing the proposed injections. It shows how the injections (shown in red boxes) work to break the negative externalities of group assignments and lead to the overall objective (A) complete the assignment to MGMT 399. The final Negative Branch illustrates how the proposed injection of holding a team meeting, appointing a team leader and evaluating the process will assist the group in achieving objective (A): The Negative Branch reads as: "If the assignment can be completed in a group and workload shared, the assignment can be started." "If the group appoints a leader (to prevent social loafing) and a meeting is held to distribute tasks, the group members can be kept on task, and the workload can be kept even." ...read more.


The project is functional in design. This is because various resources from different systems in the organisation come together to work cohesively on the project, but remain in their own process and work on other jobs too. Ie forklift drivers who unload trucks are also involved with moving pallets off the floor, restocking the pallet/bin machine etc. Bulk selectors also help clean the warehouse, pick tobacco orders and wrap pallet orders in dispatch etc. Part Four: Conclusion and Reflection The T.O.C. framework provides us with insights into decisions and the resulting consequences (i.e. cause and effect). It helps us (via the Five Focusing Steps) identify the constraint within a system, know what to change it to, and most importantly how to implement these changes. This simple yet effect framework can be applied to every organisational and systems context, from a small group assignment to a large company. The other tools in the T.O.C complement the focusing steps well, allowing us to identify and break assumptions, and maximise the positive outcomes of a scenario. Even though they are used in different circumstances, the outcomes of these models are often similar; for example assigning tasks based on the skills of each team member, a solution that emerged in both. This strengthens the solutions, showing that we can find the same outcomes in two different ways. Senge's archetypes are similar to the tools used in the T.O.C., because of the way they relate to cause and effect analysis. The negative branch is possibly the most similar, dealing with the negative consequences of implementing any changes. The archetypes can be used as models to complement the T.O.C. tools to see how an injection will affect the rest of the system and to decide whether or not it is worth introducing a change. Systems thinking should not only be considered when looking at a system holistically, but when thinking about systems thinking; which in itself requires a macro-thinking outlook. All the tools and methods used complement each other, due to the sharing of a common purpose; achieving set goals and improving a system. ...read more.

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