Comparison of Toc vs Lean Essay Example for Free

Comparison of Toc vs Lean Essay Even though each improvement methodology contributes valuable concepts, ideas and techniques to every organization not all of them serve to the needs of organization if leadership doesn’t actively involve to the efforts of the improvement teams. Theory of Constraints (TOC) At his book Goldratt (2004) defines the primary goal as to make money. This can be achieved by simply identifying and eliminating the constraints that limits the output of the entire system. As a result of the organizational change, he aims to see an increase on throughput and decrease on operational expense and inventory. Theory of constraints (TOC) is based on the premise that the rate of goal achievement is limited by at least one constraining process. Only by increasing flow through the constraint can overall throughput be increased where throughput is the rate at which the system generates money through sales. Inventory is all the money that the system has invested in purchasing things which it intends to sell. Operational expense is all the money the system spends in order to turn inventory into throughput. He recommends a five step process: 1. Identify the constraint. 2. Exploit the constraint. 3. Subordinate other processes to the constraint. . Elevate the constraint. 5. Repeat the cycle. Line Manufacturing (Thinking) Lean is a total operating system for manufacturing plants and has broad application in product or service businesses. On the contrary to TOC, Lean focuses to create a value to customer by the removal of waste, which is defined as anything not necessary to produce the product or se rvice. Lean manufacturing measure the performance of the company by using three dimensions, cost, lead time and value-added percentage. As Reid (2007) says, Lean initiates metric improvement by assessing the system using Value Stream Mapping (VSM). VSM has a standard set of icons and instructions for documenting material and information flows based on actual shop floor observation. Value stream observation starts at the process closest to the customer and follows upstream step-by-step to raw material receiving. Similar to TOC, there are five essential steps in lean: 1. Identify which features create value. 2. Identify the sequence of activities called the value stream. 3. Make the activities flow. 4. Let the customer pull product or service through the process. 5. Perfect the process. Lean involves many people in the value stream. Lean sees an organization as a collection of parts and aims a local optimization system where TOC focuses on a local action with holistic optimization for the organization. The Theory of Constraints (TOC) is a relatively new managerial philosophy that has been steadily evolving since the early 1980s. TOC does advocate buffers at inventory at selected points to ensure that neither the constraint nor the customer is left waiting. Lean aims to reduce lead time and inventory and thus costs by eliminating waste; TOC aims to reduce lead time and inventory in order to gain capacity, increase Throughput (i. . the rate at which money is generated through the sale of products) and provide a competitive edge – thus enabling the business to grow. Thus it is evident that TOC methodology can provide Lean techniques with a high degree of focus which is both in tune with reality and achievable on a practical level, effectively bridging the knowledge gap that can exist between Lean in theory and Lean in practice. Because the bottom line benefits to be gained from increasing Throughput are greater than those likely to be realised via Lean waste/cost reduction alone, TOC provides Lean Manufacturing with a forward-thinking framework which not only directs improvement efforts where they will be most beneficial, but which is also an excellent platform for future growth.