TOC Successes

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TOC Successes

Before TOC Implementation

A midsize company manufacturing equipments used in Hospitals and Pharmaceutical companies

Situation when we started:

»  High lead time promised to the market – 3 months

»  Even with this, 90% of the orders were delayed

»  Delayed Deliveries up to 3 months over the promised lead time

»  Unrecorded high inventories at the plant

»  Heavy borrowings by the company

»  Company loosing its market to competition

»  The company was still making money, but the situation fast was slipping out of hand


Where did we start

»  There was no prioritisation in the company
    a. There were no priorities for the sales order
    b. There were no production priorities of machines

»  The measurement of performances was almost missing in the company

»  We set a clear goal for the organisation and started weekly measurement of the company performance
    a. Throughput
    b. Cash Generation

»  We implemented choking mechanism, now only three orders were allowed inside the shop

»  Production priorities were set – one single priority mechanism across the company

»  We implemented full kit rule: Only those orders will be released to the shop floor which has all the drawings, material, components ready


Results were amazing

»  The lead time shrunk to 5 days

»  WIP reduced by 70%

»  Due date performance increased to 95%

»  Overall inventory shrunk dramatically

»  The capacity release was to the tune of around 50%

»  Finished machines inventory became zero

In short, the cash started flowing back fast, customers were happy, order book started swelling, working capital reduced significantly, no more fire fighting and chaos



Price was the next target

»  Once the due date performance improved and customers were happy, we decided to increase price (over and above the material cost increase) by 50%

»  Priorities for high throughput machines were created for both Sales and Operations

»  Full drum buffer rope was implemented

»  Top management review meeting every fortnight

»  Throughput based accounting was introduced



Results were staggering

»  Manufacturing despatches increased by 75% without investing in capacity – there was a another capacity release of around 40%

»  The DDP remained at 95%

»  Throughput doubled

»  Profits increased by 400%

»  All this was achieved without increasing a single resource- no additional manpower nor additional investment in plant & machinery!