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Theory of Constraints By:
Eka Darmadi L – 3094802
May Eka S – 3094814
Steven Auryn H - 3105812
Introduction
What is TOC ?
Introduction
• What is TOC ??
Introduction
• TOC Focus on 3 Activities
– Throughput
– Inventory
– Operating Expense
Introduction
• In TOC we Increase
– Throughput
Introduction
• In TOC we Minimizing
– Inventory
Introduction
• In TOC we Decreasing
– Operating Expense
Introduction
• After we …
Throughput Inventory Operating Expense
Introduction
• After we …
The Result …
1. Financial Performance Profit
2. Return on Investment
3. Cash Flow
Introduction
• Traditional View point
– Pressing in Increasing Throughput
– Decreasing Operating Expense
– Minimize inventory are not important
Introduction
• TOC Recognize lowering Inventory Help:
– Better Product
– Lower Price
– Responsiveness to Customer needs
TOC Steps
(Preview Only)
TOC Step by Step
• TOC Step:
1) Identify the organization Constraint(s)
2) Exploit the binding Constraint(s)
3) Subordinate everything (step 2)
4) Elevate the binding Constraint(s)
5) Repeat the process
TOC Step by Step
1. Identify the organization Constraint(s)
– External Constraints
– Internal Constraints
– Loose Constraints
– Binding Constraints
TOC Step by Step
2. Exploit the binding Constraint(s)
TOC Step by Step
3. Subordinate everything (step 2) “We are no longer think about efficiency”
“Assume that the grinding process by the maximum of it’s capacity”
it will add number of work in process to the drilling process, since the capacity of processing in the drilling process is lower than the grinding process.
TOC Step by Step
4. Elevate the binding Constraint(s)
“We Try to continue to improve”
“Adding more production can be solved by adding more shift in the drilling process.”
TOC Step by Step
5. Repeat the process
“Try to evaluate the whole process”
“Because the TOC objective is to continually improve the performance by manage the constraint”
TOC
Illustration of Constraints
(Video)
Illustration of “Constraints”
Theory of Constraints
Case Study
Background
Background
• Founded in :1970
• Company Type : Manufacturing
• Product : Semiconductor, Fiber Optic, Fiber Cable.
The Problem
1. How Lucent become more productive ?
2. How Lucent improve their performance ?
3. How Lucent can Increase their profit ?
Case Study
Problem Simulation
TOC Implementation
Source: Tocca.com
TOC Implementation
TOC Implementation
TOC Implementation
TOC Implementation
TOC Implementation
TOC Implementation
TOC Implementation
TOC Implementation
TOC Implementation
TOC Implementation
TOC Implementation
TOC Implementation
TOC Implementation
TOC Implementation
Step 1: Identify Constraints
TOC Implementation
Step 2: Squeeze or exploit the constraint
TOC Implementation
Step 3: Subordinate to the constraint “Remove all excessive WIP”
TOC Implementation
Step 3: Subordinate to the constraint
TOC Implementation
Step 4: Elevate the constraint
TOC Implementation
Step 5: Repeat the process
TOC Implementation
After Implementing TOC Throughput from : 10 / Day
Become : 14 / Day
TOC Result “Lucent”
1. The Product can developed twice Fast 2. The Project can be completed on time 3. Increase in profit
TOC
Summary
TOC Summary
–“Theory of Constraints” (TOC) is good theory for factory .
– TOC main idea is buffer and rope
Question
and Answer
Thank You
For Your
Attention
