BUS730A2

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Feb 20, 2024

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Planning and Decision Making 1 Real World Application: Planning and Decision Making Faizan Malik Liberty University April 10 th , 2022

Planning and Decision Making 2 Introduction The Theory of Constraints (TOC) is a management approach that states that, at any given time, an organization can be limited from achieving its goals by a single constraint. TOC can be utilized under three assumptions: throughput or the rate at which an organization can generate revenue through sales, operational expenses or the money spent converting inventory to throughput, and inventory or the money spent purchasing items that are then sold. According to Rahman, TOC is governed by two main principles. First, every system within an organization must have at least one constraint, with a constrained being defined as “anything which limits a system from achieving higher performance” (Rahman, 1998). Second, the mere existence of constraints represents avenues for organizations to improve, with TOC viewing these constraints as positive rather than negative. Constraints, which can either be external when an organization can produce a product or service than is demanded by the market or internal when an organization cannot meet the demands of the market, are typically classified into four main categories:  Physical – such as the availability of material or physical space needed to produce goods  Equipment – such as the availability, efficiency, and maintenance of equipment  People – such as the availability of talent and associated costs  Policy – such as organizational policies which may hinder throughput The key objective of TOC is not only to identify constraints within an organization but to make the necessary adjustments for the respective constraints. Organizations must identify what is needed to be changed for a constraint, what it needs to be changed to, and how to change it to maximize throughput. To maximize throughput, organizations must manage these constraints both effectively and efficiently. “Constraint management’s basic premise is that companies exist

Planning and Decision Making 3 to sell their products for a profit and that constraint management can help a company achieve this goal by improving the company’s competitive position through the better scheduling and utilization of all of its productive resources” (Fawcett & Pearson, 1991). To have proper constraint management, an organization can follow a five-step approach which includes: 1. Identifying constraints that influence throughput 2. Exploiting constraints to maximize throughput 3. Subordinate organizational processes to be aligned with the pace of the constraints 4. Eliminate the identified constraints 5. Repeat as constraints change Within TOC exists a scheduling process that focuses on increasing throughput while simultaneously synchronizing organizational operations to constraints, while. Known as the Drum Buffer Rope (DBR), this process functions by “identifying the system’s primary resource constraint and then developing a schedule for it that ensures a high utilization rate while simultaneously leaving some amount of excess capacity at all other resources” (Chakravorty & Atwater, 2005). Within the DBR, the “drum” is considered as the control point for a system that has a constraint, and the “rope” is the communication feedback from the resources associated with the constraint, as such that they can only produce only the amount a particular constraint allows. “The central part of the DBR technique involves inserting buffers in front of the constraint resources and assembly operations to protect the production system from the inevitable fluctuations that are usually caused by the internal disruptions that occur in the production of processing time” (Ye & Han, 2008). This paper will apply the TOC approach to Credible Behavioral Health Inc. (CBH), a behavioral health electronic health record (EHR) software company, which is my current

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Planning and Decision Making 4 employer. CBH is one of the largest and most sought-after behavioral health EHRs by medical practices, hospitals, counseling facilities, and non-profits throughout the nation. The cloud-based software includes a plethora of user-friendly functionalities for means of documenting patient interactions, developing treatment plans, prescribing medications, and a variety of other behavioral health-related capabilities. CBH recently merged with another behavioral health EHR, Qualifacts, and has acquired smaller EHR vendors since then as well. For this paper, we will divide CBH into three main categories and apply the TOC approach to each category respectively. Within each category exists multiple departments and roles, with the categories including sales, support, and technical. Theory of Constraints Sales The sales department at CBH is responsible for meeting the organizational sales goal by identifying potential customers, selling the software and add-on functionalities to those customers, and extending contracts of existing customers. One potential constraint for the sales department includes having sales department members having little to no knowledge of the software, which can be classified as a people constraint. Following the five-step approach, we have identified a potential bottleneck for the sales department, as a lack of knowledge of the software can prevent salesmen from answering customer questions, prevent customers from purchasing additional add-on features, or even cause sales to fall through. After the constraint has been identified, we must utilize existing resources within the organization to exploit the identified constraint. As stated by Simatupang et al., “Organization’s “exploit” the constraint by utilizing every bit of the constraining component without committing to potentially expensive changes and/or upgrades.” For this, the sales department can utilize other departments and

Planning and Decision Making 5 resources within the organization to better their understanding of the software. For example, the Learning and Development offer training sessions for various features of the software to both internal and external shareholders. Additionally, the technical department demos new features to internal stakeholders before their release to the customers. If the sales team became active participants in either training or demos, their overall understanding of the software will improve by using internal resources alone. When subordinating organizational processes, CBH should look to provide new sales team members with ample training in the software when they are onboarded to the organization. This can be done alongside new support and technical team members to further exploit the constraint with existing resources and will allow alleviating, if not eliminating, of the constraint for the sales department. As with anything in life or business, the only constant is change. As such, the process of constraint management is a continuous process as constraints often vary and change within an organization. Management should look continuously optimize constraints based on priority and maximize throughput. Support The support team at CBH is responsible for assisting existing customers with various aspects of the software and includes a variety of positions including support technicians, configuration specialists, customer liaisons, etc. This can include configuring the software for specific needs, troubleshooting issues with the software, assisting with new functionalities of the software, and a myriad of other responsibilities. As the role of the support team centers around the customer, the team’s constraints often are focused on their interaction with customers. One potential constraint is related to customers who are angry with the performance and usability of the software. With behavioral health being a relatively smaller market when compared to other healthcare domains, having an angry customer base can be detrimental to even the largest

Planning and Decision Making 6 organization. Although the support team cannot directly control the software or the customer’s complaints, the respective constraint would focus on how the support team handles these angry customers. If not handled correctly, angry customers may refrain from renewing contracts and may deter others from using the software. To exploit this constraint, CBH can again look to existing resources within the organization such as the Learning and Development team which can provide soft-skill training to all customer-facing team members to help resolve escalated situations with customers. As stated by Oghenekaro, “The ability to transform or change a tough situation into something better in the workplace cannot be overemphasized. A positive attitude will help individuals take difficult situations and find ways to empower themselves to turn negative thinking into positive thinking.” By providing the proper training to handle difficult situations, the support team can quickly deescalate customers, which in return can maintain throughput for other departments within the organization. In terms of subordinating organizational processes to match the constraint, CBH should look to develop metrics dedicated to customer satisfaction that measure a customer’s potential “anger level.” This two-pronged approach provides the support team continuous monitoring of their customer's perception of the software and the organization as a whole, with an eye kept on any customers that are escalated or have the potential to become escalated. By having a more proactive approach, CBH can escalate or resolve issues quickly and prevent sustained anger from their customers. Unfortunately, eliminating this constraint is all but impossible, as is the nature of customer support. However, CBH can look to develop improvement plans for escalated customers which can help mitigate such issues and could potentially lead to cross-functional change within the organization and, in return, can be used as a means to repeat the constraint management across multiple customer issues.

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Planning and Decision Making 7 Technical The technical team is responsible for developing, testing, and maintaining CBH’s software and includes roles such as product managers, software developers, quality assurance testers, etc. With the competitive nature of the market, customers expect new features on a frequent and regular basis. However, the process to release new and high-quality features takes a significant effort across the organization and are not limited to the technical team. One constraint often seen at CBH included the concept of backlog or inventory, which is a list of items that need to be either corrected or added to the software to meet customer requirements. Having a large backlog or inventory acts as a constraint due to their perishable nature, with requirements often changing due to market changes, policy changes, or the needs of customers changing (Anderson, 2003). A potential solution to exploit constraints surrounding requirements is to change several practices currently utilized at CBH. This includes having a smaller inventory, breaking inventory down into smaller and more manageable pieces, and introducing automated efforts where applicable. By implementing these simple measures, CBH can avoid situations where requirements become invalid, which in return requires additional requirement finding and can further frustrate their customers. To subordinate organizational processes, CBH can look to follow several software development best practices such as regular grooming of inventories to ensure requirements remain valid and setting priority of items in the inventory. To assist with eliminating such constraints, the organization should look into hiring offshore technical team members, specifically developers and testers. By utilizing offshore resources, specifically, those located in different time zones, CBH can maximize throughput by having around-the-clock development and testing. By implementing software development best practices across both on-

Planning and Decision Making 8 and offshore teams, CBH can repeat the respective improvements across other portions of the technical team such as those responsible for maintenance of the software. Conclusion The implementation of the theory of constraints at Credible Behavioral Health will be extremely helpful to the sales, support, and technical teams, as well as the organization as a whole. It will allow the respective teams to improve their capacity through optimization of constraints, increase throughput by eliminating bottlenecks, and can increase profits by offering a better product to their customers. Given the rapid nature of TOC and by stressing continual improvement, the organization can become more agile and helps provide greater value to their customers, which is needed in the rapidly expanding market of behavioral health EHRs.

Planning and Decision Making 9 References Anderson, D. J. (2003). Agile management for software engineering: Applying the theory of constraints for business results . Prentice Hall Professional. Chakravorty, S. S., & Atwater, J. B. (2005). The impact of free goods on the performance of drum-buffer-rope scheduling systems. International Journal of Production Economics, 95 (3), 347-357. Fawcett, S. E., & Pearson, J. N. (1991). Understanding and Applying Constraint Management in Today's. Production and Inventory Management Journal , 32 (3), 46. Oghenekaro, A. P. (2018). Deployment of Soft Skills for Effective Customer Service in the 21 st Century Library. Journal of Computer and Communications , 6 (03), 43. Rahman, S. U. (1998). Theory of constraints: a review of the philosophy and its applications. International journal of operations & production management . Simatupang, T. M., Wright, A. C., & Sridharan, R. (2004). Applying the theory of constraints to supply chain collaboration. Supply chain Management: an international journal. Ye, T., & Han, W. (2008). Determination of buffer sizes for drum–buffer–rope (DBR)-controlled production systems. International Journal of Production Research , 46 (10), 2827-2844.

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