The core idea at the centre of this work is that every system, organization or department has at least one constraint - a weak link in the chain that limits the effectiveness of the whole. Identifying and strengthening the weakest link is the surest way of improving performance. But how well does TOC work in practice? What problems are encountered? What success stories are there to tell? And what about Goldratt's thinking process, his call to bring systematic logic to fundamental organizational problems? This text provides ...
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The core idea at the centre of this work is that every system, organization or department has at least one constraint - a weak link in the chain that limits the effectiveness of the whole. Identifying and strengthening the weakest link is the surest way of improving performance. But how well does TOC work in practice? What problems are encountered? What success stories are there to tell? And what about Goldratt's thinking process, his call to bring systematic logic to fundamental organizational problems? This text provides evaluation of TOC in practice, showing that it has application for entire companies and is not, as often supposed, purely a production tool. It draws on the experience of 21 US and European companies, who were the subjects of an independent report sponsored by the US Institute of Management Accounting and by Price Waterhouse, Paris. Seven of those companies appear as case studies in the book. It shows that TOC and traditional management accounting are simply incompatible. The latter assumes inventory (through absorption costing, and standard cost variance reporting), and TOC, like JIT, does not. The report found that most companies successfully using TOC had applied it also to their management accounts, using a variation of variable costing in which direct materials are assumed to be the only variable cost. The result was that the accounts were much easier to understand and related much more directly to the real activities of the company.
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