Theory of Constraints (TOC) - Application for Distribution
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Theory of Constraints (TOC) - Application for Distribution

About the Book

This eBook discusses the problems faced by Distribution system in most companies and shows the causes that are responsible for these problems. 

It explains in detail, TOC’s application for Distribution system.

The eBook contains several Figures, Tables, Diagrams, Pictures, Charts, Graphs, examples, Quotes, Exercises and Games as appropriate. Most chapters are summarized in “Points to Ponder” at the end of certain chapters.

The eBook has some Multiple Choice Self-assessment questions. These questions help you to assess yourself the knowledge gained by you by reading this eBook.

This eBooks series is an excellent guide for those who want to learn TOC and its applications.


About the Author

Rajeev Athavale
Rajeev Athavale

I am a TOC consultant. I teach and implement TOC. I have been studying and trying TOC over a decade.

I am an ardent fan of ToC. For past few years, reading about TOC has moved me from “I am impressed” to “I like it” to “I want to know more…”. I did not realize when it became a passion for me. Now, I eat, sleep, walk and breath TOC.

By sheer accident, I came across the famous book “The Goal” and that changed my life. I went on reading Goldratt’s next book “Its not luck” and thereafter I read all his books. Fortunately, Internet is a great source of information and it opened up the wealth of knowledge for me.

As I did more and more research on TOC, I felt the need for crystallizing and documenting the knowledge that I gained. I created my own training material and conducted a two-day workshop on TOC in my company. Thanks to Internet, I kept on enriching my Training material.

Apart from my own consulting, I had the opportunity to work on a large TOC implementation called "Viable Vision". The project was implemented by Goldratt Consulting.

As a part of the project, I had undergone training from various experts from Goldratt Schools such as Oded Cohen, Mickey Granot, Philip Wiljoen, Eli Schragenheim, Humberto Baptista, Kiran Kothekar and Martin Powell.

Apart from the training and on the job experience, study of Goldratt’s webcast, Strategy & Tactics Trees, TOC Insights, TOC Simulators (GSIM, MICSS, PM SIM, and Distribution), TOC Games and TOC SLPs have helped me to enrich his TOC related knowledge.

My passion for learning, experimenting, sharing knowledge and achieving results continues...

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Table of Contents

Copyright Information   3

This book is dedicated to              4

Preface                5

I am thankful to…             7

Introduction       8

The Vicious Cycle             8

How to reverse the vicious cycle – The Solution9

Characteristics of a Distribution System12

Another Scenario             14

The Problem      16

Replenishment Time      19

The Conflict        21

The Bullwhip Effect         24

What is Bullwhip Effect?               24

Example of the bullwhip effect  24

What contributes to Bullwhip Effect?      25

Shortages and Surpluses              27

Quantifying Impact         29

Shortages, Surpluses and Lost Sales        29

Impact of increase in sales           29

Impact of increase in average sales price               30

Impact of decrease in OE              30

Quantifying Lost Sales    32

Quantifying Surpluses    33

Quantifying the Impact of Reduced Replenishment Time              35

The Challenges36

Batching and its Ramifications    38

Batching at Retail Stores               38

Batching at Central / Regional Distribution Centers           38

Batching at Manufacturing Unit38

Solution               40

Structure and Functioning of Distribution Network           42

Dealing with Forecast     43

Determine Target Level Inventory for Each Product         46

Minimizing Replenishment Time               48

Buffer Zones      51

Buffer Management      54

How to Make the Solution Work?             57

Setting Good Criteria for Variety Decisions           59

Managing Variety            61

What is the impact of the TOC Replenishment System?63

Do the Basic Rules of Manufacturing also apply to Distribution?  65

Improving Flow in a Distribution System                65

Preventing over-production in a Distribution system       66

Taking care of possible negative outcomes of the solution            67

The New Mantras            69

Operational Measurements        70

Advantages of TOC’s Distribution Solution            72

Summary             74

A simple Example            74

Reversing the Vicious Cycle         74

Expected results              75

Self-Assessment Questions        76

eBooks published by Rajeev Athavale    80

Learner’s Guides              80

Article Repository            81

TOC Applications: Implementation Guidance for Small and Medium Size Enterprises        82

Bibliography       83

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