Theory of constraints (TOC) is about thinking in logical, systematic, or structured processes similar to the PDCA learning loop and also about analyzing cause and effect, verifying basic assumptions, exploring alternatives and process improvement. The goal of TOC is to maximize the efficiency of a process selectively at the most critical points (constraints) and thereby maximize profitability. The purpose of this paper is to provide a comprehensive descriptive study on applying “Theory of Constraint” principles in improving the effectiveness of the service process that was limiting the entire service system. We have studied based on Schmenner’s classification of service ...view middle of the document...
The major cause of bottleneck in an information-only organization is the prevalence of insufficient information to make an informed choice.
In the manufacturing context, throughput, operational expense and inventory play a major role. But, in and information-only organization, productivity, can be best defined as creating value as best suitable for the customers. So, the definitions changes as below –
For a service level organization, the TOC concept can be extrapolated to include –
* Start by redefining the three core concepts as above then analyze the demand hitting the organization
* Create an inventory of demand types and their frequency, you’re looking for predictable patterns
* Then assess the capacity to meet the value creating demand, turnaround times are a useful measure here.
* Next, look for blockages in the flow (missing information) of value creation.
* Finally, fix accordingly
TOC Pitfalls with respect to Service organizations –
* First, TOC is concerned with inventory, but what constitutes inventory in a services business can be harder to pin down
* Second, services in general are less repeatable than industry, and Professional, Scientific, and Technical Services are the most customized of all
* Third, many services markets are moving away from services as available to services on demand. Even services businesses that historically operated with an internal constraint more often face a market constraint as technology and competition make alternatives plentiful and flexible.
* Finally, the degrees of freedom in delivering services can be greater than in manufacturing—particularly when the services depend on creativity
Based on the degree of customization and labor intensity, service organizations can be characterized into:
* Service Factory
* Service Shop
* Mass Service
* Professional Service
TOC implementation in Service Factory
Service organizations under this category are categorized by relatively low labor intensity and low degree of customer interaction and customization. The service process tends to have limited varieties and the introduction of new services is very infrequent, so it is a very stable environment. The competitive advantages are in the area of price, speed and the personal touch. The challenges faced managers in this category are Capacity decisions, managing demand to avoid peaks and promote off-peaks, and scheduling on-time service delivery. Here we have explained application of Theory of Constraint’s principles with an Airline Industry.
For an airline industry the most important success factor is its aircraft turnaround time. Here we have focused on applying TOC principles for the services involved in Aircraft turnaround. The turnaround process, simply put, consists of all those activities that must be performed to complete service for one flight and begin another: passengers must deplane from inbound flight and luggage must be offloaded the...