1. Theory of Constraints
By:
Eka Darmadi L – 3094802
May Eka S – 3094814
Steven Auryn H - 3105812

2. Introduction
What is TOC ?

3. Introduction
• What is TOC ??

4. Introduction
• TOC Focus on 3 Activities
– Throughput
– Inventory
– Operating Expense

5. Introduction
• In TOC we Increase
– Throughput

6. Introduction
• In TOC we Minimizing
– Inventory

7. Introduction
• In TOC we Decreasing
– Operating Expense

8. Introduction
• After we …
Throughput Inventory Operating Expense

9. Introduction
• After we …
The Result …
1. Financial Performance Profit
2. Return on Investment
3. Cash Flow

10. Introduction
• Traditional View point
– Pressing in Increasing Throughput
– Decreasing Operating Expense
– Minimize inventory are not important

11. Introduction
• TOC Recognize lowering Inventory Help:
– Better Product
– Lower Price
– Responsiveness to Customer needs

12. TOC Steps
(Preview Only)

13. 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

14. TOC Step by Step
1. Identify the organization Constraint(s)
– External Constraints
– Internal Constraints
– Loose Constraints
– Binding Constraints

15. TOC Step by Step
2. Exploit the binding Constraint(s)

16. 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.

17. 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.”

18. 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”

19. TOC
Illustration of Constraints
(Video)

20. Illustration of “Constraints”

21. Theory of Constraints
Case Study

22. Background

23. Background
• Founded in :1970
• Company Type : Manufacturing
• Product : Semiconductor, Fiber
Optic, Fiber Cable.

24. The Problem
1. How Lucent become more productive ?
2. How Lucent improve their performance ?
3. How Lucent can Increase their profit ?

25. Case Study
Problem Simulation

26. TOC Implementation
Source: Tocca.com

27. TOC Implementation

28. TOC Implementation

29. TOC Implementation

30. TOC Implementation

31. TOC Implementation

32. TOC Implementation

33. TOC Implementation

34. TOC Implementation

35. TOC Implementation

36. TOC Implementation

37. TOC Implementation

38. TOC Implementation

39. TOC Implementation

40. TOC Implementation
Step 1: Identify Constraints

41. TOC Implementation
Step 2: Squeeze or exploit the constraint

42. TOC Implementation
Step 3: Subordinate to the constraint
“Remove all excessive WIP”

43. TOC Implementation
Step 3: Subordinate to the constraint

44. TOC Implementation
Step 4: Elevate the constraint

45. TOC Implementation
Step 5: Repeat the process

46. TOC Implementation
After Implementing TOC
Throughput from : 10 / Day
Become : 14 / Day

47. TOC Result “Lucent”
1. The Product can developed twice Fast
2. The Project can be completed on time
3. Increase in profit

48. TOC
Summary

49. TOC Summary
–“Theory of Constraints” (TOC) is good
theory for factory .
–TOC main idea is buffer and rope

50. Question
and Answer

51. Thank You
For Your
Attention