This case study addresses the issue of inventory problems in the aerospace industry using the theory of constraints. This article is jointly authored by three management scholars from the Republic of China. The case study focuses on the aerospace industry because of its management and time-based demands.
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According to the authors, management efficiency is cause for concern in various operational scenarios and the aerospace industry in particular. The case study uses a current reality tree to examine management objectives in the aerospace industry’s environment.
The authors hypothesize that if ‘conflicting inventory management activities’ are eliminated, this would positively impact the whole managerial system (Chou, Lu & Tang 2012).
The authors of this article begin by noting the unique scenarios that make the aerospace industry a high-stakes management arena. The authors note that the uncertainties that face the supply and demand of aerospace-related products make the management of these organizations a complex affair.
The theory of constraints is identified as the main solution to the complex management and decision-making processes that burden various organizations.
The authors term the theory of constraints “as a thinking process that can be applied to help organizations to identify the problems, find strategies to solve them, and eventually implement these strategies successfully” (Chou, Lu & Tang 2012).
The literature review section of this case study gives various definitions and further additional research concerning the theory of constraints (TOC). Some of the factors that have a direct influence on TOC include ‘material requirements planning, supply chain management, and enterprise resource planning’.
The case study reveals that the success of TOC is based on three separate assertions including the small number of constraints that limit performance and the goals that must be met in a particular management scenario. The authors also offer readers a step-by-step approach of the TOC process.
Another section of literature review in this article focuses on the ‘thinking’ element of the TOC. According to the authors, logic is a major element of TOC. In addition, logic is the central premise in scenarios that witness a positive change in management.
The authors of this article clarify to the readers that the TOC approach primarily answers three questions namely; “What must be changed? What is the goal of this change? How does one implement this change?” (Chou, Lu & Tang 2012).
Nevertheless, the case study notes that using logic and achieving sufficiency is important when utilizing TOC to solve management issues.
The authors continue their case study by outlining the current status of the company that is analyzed in this article. The company in this case study (Company A) uses a software program to cater to all its management needs. Most of the management issues that apply to Company A have to do with the efficiency of the SAP software.
The authors of the article outline all the problems that are encountered by the company that is outlined in the case study.
According to the case study, the material division that Company A is experiencing comes from several managerial problems including lack of a proper method of disposing ‘extra procured materials’ and false economic forecasts.
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The procurement section of the addressed company is also experiencing several problems including constraints of pre-ordering materials in advance and lack of negotiating power.
Another problem in management applies to the production division of the addressed company, where estimation and forecasting issues destabilize the company’s operations. After analyzing all these problems, the article proceeds to offer a conflict resolution diagram.
The conflict resolution diagram indicates that for management to be streamlined, all divisions of the aerospace industry have to ‘maintain turnover-related inventory’ (Chou, Lu & Tang 2012).
The goal of these changes in inventory is to decrease the inventory-related problems that are faced by the aerospace company. On the other hand, these changes will result in fewer losses for the company.
The article continues by outlining the undesirable effects that result from changes in the procurement and material divisions. The undesirable effects include creation of instability in the company’s supply chain. The article offers a thorough analysis of the identified management problem in respect to a TOC-based analysis.
The findings of this case study indicate that the aerospace company has put useful measures in place and these developments are supposed to improve the organization’s performance. In addition, the article reveals that implementing the TOC also leads to problems in other areas of Company A’s operations.
The authors of this article have offered several proposals that can eliminate the conflict between the two divisions in Company A. Most of these proposals seek to streamline the scheduling processes in Company A.
The case study also proposes that Company A puts together a quality control strategy that would put checks and balances in the procurement procedures. The authors of this article conclude by noting that production scheduling is a major factor in the operations of Company A.
The article concludes by noting that this research “provides valuable insights into the prerequisites for success of TOC implementations” (Chou, Lu & Tang 2012).
Chou, Y. C., Lu, C. H., & Tang, Y. Y 2012, “Identifying inventory problems in the aerospace industry using the theory of constraints”, International Journal of Production Research, vol. 50 no. 16, pp. 4686-4698.