Case Study - Theory of Constraints - Business Wide Application

A brewer was considering his future business planning. The graph right shows sales of various packaged formats for the past five years and projected for next five years.

Sales of kegged beer were declining for the past
five years and are projected to do so.
Canning sales and bottled beer sales continued to
increase steadily.
There was capacity to brew 3rd party beer for other
brewers which they then would package off themselves.
There was a small sale of craft beers which production
struggled to handle in large production plant.
It was agreed that these would be outsourced to
a micro brewery who were far better sorted to handle them.

The brewer had two production sites - Site A and Site B.

Site A was smaller and older and needed investment in brewing, fermentation and processing.
Site B was larger and newer and already had sufficient processing and bright beer capacity.
The packaging assets at both sites were relatively new.

Using Theory of constraints in its entirety, the following was agreed:-

a) Increase the brewing capacity by 33% at Brewery B by adding a new brewstream.

b) Increase fermentation and maturation capacity at Brewery B using multi purpose vessels that can carry out both duties.

c) Move the canning and bottling plant from Brewery A to Brewery B.

d) Adjust traffic flow at Brewery B to one way to compensate for increase traffic flow.

e) Close Brewery A and dispose of the site.

This had significant investment but payback was circa four years. It also avoided need to invest in site A brewing, fermentation and processing