Theres been a strange sighting at ASB recently. Multiple students walking around with a copy of 'The Goal' by Eliyahu Goldratt. Your intrepid web team investigated and discovered the root of it all - Shijith P M, 2nd year MBA student and self styled acolyte of the Theory of Constraints or TOC . In this spotlight, Shijith takes us along for a brief sojourn into the vast world ofthe Theory of Constraints.
I am a second year MBA student specializing in operations management. Did my engineering specializing in Industrial Engineering & Management. My main interest areas are ERP, SCM and TOC. I am really passionate about TOC.
Well.. I am a hardcore learner of Dr. Eliyahu Goldratt’s “Theory of Constraints.” It was in one of the personality and communications seminars that I attended in Bangalore that I first heard about a book called – The Goal (‘a production management business novel, a must read for people interested in operations management’ – this is what I was told about the book). I got a copy of The Goal and read it during my final year in engineering. I just enjoyed the book. It was not a mere production management novel. The book questions and redefines the fundamentals of business like the treatment of inventory, some of the gimmicks used by the marketing and finance people like product/profit margin, product cost, etc, and the usage of some terms like batch or lot size, segmentation, etc. I could sense some kind of a philosophy behind the book. I found the style followed in the book - the Socratic approach to be unique and splendid and more importantly creative. This lead me to do a bit of exploration about this person called Dr. Goldratt. It did not take me much time to get a feel of that philosophy of modern management called Theory of Constraints. Before joining Amrita I got a chance to read the sequel to the Goal – It’s Not Luck. It was after I read this book that I could understand that there is a clear-cut systematic thinking process behind the concepts and ideas described in the book. And from here my search for more gyan on the TOC begins..
The library at Amrita has got everything that Dr. Goldratt has written under the sun. I just kept reading one by one – Critical chain, Necessary but not sufficient, The Race, Essays on the theory of constraints, Late night discussions on the TOC and The haystack syndrome. This gave me more insight into the management philosophy called TOC. Let me here say that Dr. Goldratt, an educator, scientist, philosopher and a business leader –a ‘phenom – a phenomenal thinker’ (the way I would like to call him) motivated me to think and made me reassess traditional business practices with a fresh new vision.
These books and some other books too, like The TOC and management accounting, Production-the TOC way, etc clearly explains the need to understand one key reality about business – “DEPENDENCY”. The failure to understand this fundamental truth which establishes the relation between cause and effect would not allow a business to even be in the race; winning the race would be a dream. TOC is a system improvement philosophy. All the continuous improvement philosophies focus primarily on improvement of processes. The unspoken, underlying assumption seems to be that if all the component processes are improved and refined to their maximum, the entire system will exhibit maximum improvement. Unfortunately, this assumption ignores the effects of interdependence between the processes. TOC sees business analogous to a chain of links and emphasizes that the performance is limited by the performance of the weakest link. This means, that no matter how much effort you put into processes of a system, only the improvements to the weakest link will produce any detectable system improvement.
I used the term management philosophy on purpose. TOC deserves to be called that as it is not just a production management concept (as many people believe) but it has wide application across Project management, Management accounting, Financial management, Marketing management, Logistics and supply chain, etc. TOC explains the devastating effect of the ‘student syndrome’ in project management and also comes out with a creative approach - the concept of critical chain replacing the traditional critical path. The ‘time buffer’ concept is essentially extended to project management. The concept of ‘Drum-Buffer-Rope’ (DBR) and time buffers is applicable to managing the processes across the supply chain and reducing the WIP and finished goods inventory by great extents. The financial aspect of TOC is what makes it a wholesome systems approach. Throughput costing radically redefines the traditional costing by simple common sense making costing simple, systematic and scientific. This essentially gives managers the right picture of the performance of his business.
We live in an environment where change is not an exception, rather the norm, and therefore Dr. Goldratt has developed a unique scientific methodology – the TOC thinking process and innovative tools which help in building widespread ownership to solutions to bring about change and overcome the biggest barricade to continuous improvement – resistance to change.
I am grateful to the almighty and Dr. Goldratt for providing me the opportunity to learn about the TOC philosophy. Currently I am learning about the usage of the powerful logical tools of the TOC thinking process. I am interested in this for a simple reason – I trust that these tools have the capability to change lives.
Shijith P M
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