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TOC Strategies for Firms

Service and manufacturing firms differ in that manufacturing firms deal with inventory while inventory is not important for service firms. For manufacturers, a goal of Theory of Constraints is to reduce inventory levels since large inventories indicate bottlenecks. For service firms, Theory of Constraints aims to identify bottlenecks where customer service delivery is stalled, such as forms waiting for a clerk or patients waiting to see a doctor. However, the overall application of Theory of Constraints is the same for both - to get the service or product to the customer as quickly and efficiently as possible.

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56 views1 page

TOC Strategies for Firms

Service and manufacturing firms differ in that manufacturing firms deal with inventory while inventory is not important for service firms. For manufacturers, a goal of Theory of Constraints is to reduce inventory levels since large inventories indicate bottlenecks. For service firms, Theory of Constraints aims to identify bottlenecks where customer service delivery is stalled, such as forms waiting for a clerk or patients waiting to see a doctor. However, the overall application of Theory of Constraints is the same for both - to get the service or product to the customer as quickly and efficiently as possible.

Uploaded by

alisagasa
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPT, PDF, TXT or read online on Scribd

TOC for Service and Manufacturing Firms

A difference between service and manufacturing firms is the presence of inventory in the manufacturing setting. An objective of TOC for a manufacturer is to reduce inventory levels; the presence of large quantities of inventory is evidence of bottlenecks for a manufacturer. In contrast, inventory is not an important matter in the service firm. Rather, it is important to identify people/processes where the delivery of the service to the customer is stalled, that is, the bottleneck. This might be a stack of forms waiting to be processed by a clerk, a waiting room of patients waiting to be seen by a doctor, etc. The application of the concept of TOC is however, the same. That is, how to get the service to the customer as quickly and with as little waste as possible. Retail and auto repair businesses are among the good examples.

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