In 1000 words, explain how the theory of constraints applies to a supply chain as opposed to a manufacturing facility. Include:
- The four key drivers of any supply chain strategy are inventory, technology, information, and logistics. Select one of the drivers, and elaborate how the theory of constraints could be used in this area of the supply chain.
- Cite an example of a company that has applied the theory of constraints to its supply chain and how it affected the company's competitive advantage. If that is not yet known, explain how you would expect it to affect the company's competitive advantage.
The response addresses the queries posted in 1145 words with references.
// In this paper, there will be a discussion on the theory of constraints and its application in the supply chain management. Along with this, there will also be a description about the application of theory of constraints in different areas of supply chain. An example is cited of a company that has used the theory of constraints in its supply chain in order to gain competitive advantage. //
Theory of constraints is management philosophy and a model which is used in the organizations in order to analyze the manageable system that is facing problems in achieving the goals because of few constraints (Stein, 2003). The theory of constraints makes use of a focusing process that helps in identifying the constraint and reorganizes the organization that is surrounded by it. According to this theory, vulnerability exists in the processes and organizations because there is a presence of the weakest person or part that has a damaging effect on the processes and an adverse impact on the outcome.
The theory of constraints provides various solutions for solving the dilemmas faced in the management of supply chain. There are various components that are applied depending upon the nature of relationship between the components of supply chain (Wright, 2004). The approach of theory of constraints presets to be a powerful tool for managing the supply chain in an effective manner for the purpose of gaining competitive advantage. This approach leads to an increase in the sales of the company, along with an increase in the rate of interest of each unit in the supply chain.
The benefit of using this approach implies an increase in the output from the availability of the same resources, reduction in the inventories, and improvement in the time of delivery and reduction in the lead time. In this manner, the theory of constraints leads to the improvement in the supply chain by focusing upon the constraint that prevents the system from accomplishing a higher level of ...
The theory of constraints and the supply chain are examined.