IMPLEMENTATION OF THE THEORY OF CONSTRAINTS IN THE AREA OF STOCK

MANAGEMENT WITHIN THE SUPPLY CHAIN

Abstract

Manufacturing companies like Bajaj is on pressured to improve productivity in the face of growing
demand, limited budgets, and poor availability of labor. Capacity is already perceived to be short, and
the ensuing stress experienced by staff is a common cause of concern. Still, productivity is typically
low, suggesting that available capacity is not used to its full potential.
This dissertation seeks to explore the mechanisms and practices that inhibit the ability of home care
providers to make better use of available resources, and to provide general templates for resolving
these issues. Productivity in home care is analyzed using the Theory of Constraints (TOC). It is a
management philosophy that focuses improvement efforts on the few constraints that have the
greatest impact on overall performance. Originally developed for the process-centric environments of
manufacturing and distribution, TOC offers an assortment of tools for translating its principles into
practice. These tools have been researched, adopted for, and implemented in a variety of service
industries, including Manufacturing , with very persuasive results. In most cases so far, the structure of
the service processes has resembled manufacturing closely enough to render the tools almost directly
applicable.. The successful adoption of TOC in field services requires these structural differences to be
identified, and the tools modified accordingly. This dissertation examines the distinctive
characteristics of field service processes, and discusses the implications for the applicability of TOC. It
is argued that the differing structure of processes renders certain production management tools
inapplicable, while other tools originally designed for distribution management are highly relevant in
this context. The study demonstrates that TOC can provide home care with a systematic framework
for identifying and resolving factors that limit productivity. The application of TOC to Manufacturing
reveals several policies and practices which, intuitively, may seem logical and efficient, but in reality
are counter-productive. These policy constraints artificially accumulate demand in the morning. As a
consequence, a disproportionately high level of capacity is needed to satisfy
demand, while also reinforcing caregiver stress during peak hours. A resource constraint during peak
hours promotes the emergence of shortages, leading to a reliance on external leased labor. As a result
of the investigation, the home care unit that was studied was able to significantly reduce its use of
leased labor, the savings of which are estimated at 20-30%.
Purpose of the study

The main purpose of this study is to develop a conceptual framework and an implementation
methodology for supply chain complexity management with an emphasis on supporting the decision-
making process. To accomplish this purpose the following objectives are established:
1. To define supply chain complexity and to review generic approaches to deal with this complexity,
2. To provide a picture of how current supply chain management initiatives that companies
undertake are related to supply chain complexity management efforts,
3. To develop a framework which provides context and guidance to decision-makers in dealing with
supply chain complexity,
4. To develop an implementation methodology which will facilitate decision-making when dealing
with problems related to complexity in the supply chain.
In order to achieve these objectives, this study is guided by four main research questions,
all of which involve embedded questions:
1. What is supply chain complexity? What is complexity from a systems thinking perspective?
What are the characteristics of complex systems? How can we deal with complexity from a systems
thinking perspective? What are the characteristics of supply chain as a complex system? What are the
drivers of supply chain complexity? How can we deal with supply chain complexity? What
is the focus of the current literature on supply chain complexity?
2. How do supply chain management initiatives support supply chain complexity
management efforts? How do supply chain management activities (e.g., integration, coordination,
visibility) support supply chain complexity management? How do supply chain management tools,
techniques, and methods contribute to dealing with complexity? How do supply chain enabling
technologies support supply chain complexity management? What are the current experiences of
companies with regard to management and complexity of their supply chain? What are the obstacles
the companies are facing in their effort to manage complexity in the supply chain? How do they
overcome these obstacles?
3. What are the elements that are important for the success of supply chain complexity

management? How are they related? supply chain are more important? Which flows and interactions
add to complexity in the supply chain? What kind of uncertainties and conflicts exist when making a
supply chain related decision?
4. What is an efficient and effective way of implementing the framework ? What kind of
complexity related problems are being faced? How is it possible to improve the efficiency of the
decision-making process when dealing with supply chain complexity related problems? Which tools
and techniques can be employed?
Methodology of the study
The research methodology is primarily determined by the purpose of the study and the research
questions (Strauss &Corbin 1998, p. 39). Since this study intends to develop a deeper understanding of
supply chain complexity management and since the focus of research questions is on “what” and
“how” questions, qualitative research methods are preferred.
The methodology used in this study involves a variety of qualitative interpretive approaches. The idea
behind adopting interpretive approaches is that, they are most appropriate for understanding
practical worlds, with which this study is dealing.
Significance of the study
The significance of this study comes through its contributions to the theory and the body of
knowledge on supply chain complexity management. The major contributions take the form of:
• Definitions of various aspects of supply chain complexity such as static, dynamic,
and decision-making complexity.
• The insight that supply chain management initiatives (such as integration, coordination, visibility,
supply chain management tools, technologies) have a positive effect on the success of supply chain
complexity management efforts.
• The development of a conceptual framework defining the elements of complexity management in
the supply chain.
• The development of a useful and transferable methodology for the practical implementation of the
framework.
In brief, this study intends to advance the theory of supply chain complexity management
that will be utilized in both research and practice.
Organization of the study
In any research, a particular framework of ideas are used in a methodology to investigate an area of
concern and as a result, the chosen methodology yields significant learning about the area of concern
as well as the adequacy of the framework and the methodology itself. In this research, the framework
of ideas covers ideas from systems thinking and supply chain management research and practice. The
methodology involves a spectrum of qualitative interpretive methods used for conducting the
research and ensuring its quality. And the area of concern is “how to deal with complexity in the
supply chain” with a special emphasis on supporting the decision-making process.

The design of this study has followed an iterative process that evolved over time, movingback and
forth between the area of concern, framework of ideas, and methodology; rather than following a pre-
established plan for carrying out the study. This iterative process of collecting, categorizing, analyzing,
interpreting, and documenting information has yielded considerable insight into dealing with supply
chain complexity.

About Company

Bajaj Electricals Ltd (BEL) is an Indian consumer electrical equipment manufacturing company based
in Mumbai, Maharashtra. It is a part of the ₹380 billion (US$5.8 billion) Bajaj Group. It has diversified
with interests in lighting, luminaries, appliances, fans, LPG based Generators,[7] engineering and
projects. Its main domains are lighting, consumer durables, engineering and projects. Lighting includes
lamps, tubes and luminaires. Consumer durables include appliances and fans. Engineering and
projects include transmission line towers, telecommunications towers, highmast, poles and special
projects, and others include die casting, wind energy &solar energy. Some notable project includes
lighting works at the Commonwealth Games stadium and the Bandra Worli Sea Link It has 19 branch
offices spread in different parts of the country with a chain of about 1000 distributors, 4000
authorised dealers, over 400,000 retail outlets and over 282 Customer Care centres.