Management Dilemmas - Part Two

I've made a very little amount of headway on the book I'm reading now, Management Dilemmas: The Theory of Constraints Approach to Problem Identification and Solutions. Time has been tight with work, school, and family but I'm trudging through slowly.


The case studies continued in the chapters I've read since the first post about this book. One concerns a situation with a purchasing manager who is trying to deal with a complete product change that has an uncertain implementation date. There are constraints around how much can/should be ordered, and the premiums required for smaller batches. The problem here is to not fall short of materials for production of the old product, and at the same time not have a huge amount of waste after the change, because all the existing materials will be obsolete when the change occurs. Upper management is incenting conflicting actions, and traditionally the purchasing manager has to try and 'balance' them. I like the TOC approach.

Another chapter goes into a scenario where a company founder split his company into profit centers in order to incent his managers to perform. The case study analyzes the situation and some of the resulting problems that have come to light over a period of two years. The plants have fixed transfer costs built into their outputs when they are provided to the other plants, and again this is a question of whether or not the right things are being incented, in the right way. The TOC solution presented resolves the conflict and acheives the founder's original vision.

I will do another post on this book when I've completed it. Cheers!

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