Why Theory of Constraints?

Gokul Krishnamurthy Updated - November 15, 2017 at 07:20 PM.

‘The way supply chains are run, one has to forecast future demand in a large span of time. While people have built their careers on forecasting, the problem is that forecasts are never accurate.

Relatively accurate forecasts are possible in smaller horizons. The quest should be to see how one can bring down the lead time from four to two months. One needs to attack all the components of lead time so that the accuracy of forecasts does not matter.

Typically, with auto spares, dealers order once or twice a month. The other constraint is the ability to supply. Lack of bulk inventory holding also releases capital to hold a much wider range of products. Shorter lead times give companies the ability to deal with change in demand.

In TACSA's case, now, dealers order every day. The (ship cargo) container filling time used to be two to four weeks when they ordered once or twice a month; today, it is one week. The entire supply chain has been re-oriented to shorten lead times to move towards 100 per cent availability.

According to TOC, the ‘elevation' will happen when the positive rub-off on on-time availability of spares adds to TACSA's sales numbers. In the case of spares, the target is to increase sales by 50 per cent. We're getting there.'

— Puneet Kulraj, Vector Consulting

Published on January 8, 2012 14:59