hedaoo.yuvraj

means one has to understand the default rule.

Both tools are focusing for improvements; however they are used in different approach. 80:20 principle is broadly applied, not limited to process but extends scope to statistical data as well. TOC is mainly focus on bottleneck in the processes. It is acceptable fact that both impact the bottom-line i.e. profitability of the company, however the way to utilization of tool is quite different. The following example depicts the way to use: 80:20 principle (Pareto principle): Example 1: 20 % of customers constitute 80% profit and 80% customers constitute 20% profit. For instance, company wants to launch new product or service for premium customer segment. This tool can easily demonstrate the 20% valuable customer. TOC: (Theory of constraints) In retail shop, all the processes are running smoothly except the billing process. So billing process is the bottleneck in system. Example 2: chocolate making process is going thorough 5 different steps and step 2 si followed by step 1 and so on. All the steps except 3 has the same capacity of production however process 3 has low capacity to produce, so process 3 will be bottleneck. As per my view both processes differentiate by its use. Those are not similar.

Both tools are focusing for improvements; however they are used in different approach. 80:20 principle is broadly applied, not limited to process but extends scope to statistical data as well. TOC is mainly focus on bottleneck in the processes. It is acceptable fact that both impact the bottom-line i.e. profitability of the company, however the way to utilization of tool is quite different. The following example depicts the way to use: 80:20 principle (Pareto principle): Example 1: 20 % of customers constitute 80% profit and 80% customers constitute 20% profit. For instance, company wants to launch new product or service for premium customer segment. This tool can easily demonstrate the 20% valuable customer. TOC: (Theory of constraints) In retail shop, all the processes are running smoothly except the billing process. So billing process is the bottleneck in system. Example 2: chocolate making process is going thorough 5 different steps and step 2 si followed by step 1 and so on. All the steps except 3 has the same capacity of production however process 3 has low capacity to produce, so process 3 will be bottleneck. As per my view both processes differentiate by its use. Those are not similar.