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2015 TOCICO International Conference

Transforming Businesses Track

Guy Drori
Product Manager,
Inherent Simplicity
TOC Based Software vs. Common ERP Systems
September 8, 2015

Learning Objectives:    

  1. Understanding common organizational software’s (ERP)
  2. Understanding the main objectives and concepts of common ERP software
  3. Understanding how TOC concepts may enhance contemporary ERP systems
Questions audience will ask at the end:
  1. How come traditional ERP systems are still successful?
  2. Why does management believe that traditional ERP might be beneficial for them?
  3. What is the main obstacle for adopting a TOC oriented ERP software systems?


Traditional organizational software commenced in 1964 with the introduction of the MRP - Material Requirement Planning, by Joseph Orlicky. In 1983, Oliver Wight introduced the MRP II – Manufacturing Resource Planning.  During the 90's, ERP packages (Enterprise Resource Planning) began to emerge and today this market’s sales cover more than 30B USD annually ( Yet, all of the major ERP systems focus on planning, as suggested by their names. 

Planning is the key concept used in current business practices to presumably control the organization’s logistic level. However, in most business environments, ‘planning’ is mainly related to the overall business plan, whereas ‘execution’ is associated with the day to day decisions making. 

The inherent inaccuracy in forecasting algorithms is a major shortcoming as the business reality is subject to many variables that can’t be anticipated. Therefore, any detailed planning is doomed to fail and is a subject to frequent changes. This is why re-planning is common in ERP packages – sometimes even daily re-planning. Most ERP systems providers are recommending their clients to make frequent re-planning, labeling this process as ‘Dynamic Forecasting’. Frequent re-planning is in many ways destructive to the daily management of a business. Any minor change in priorities may lead to vast changes in daily decisions. Hence, using frequent re-planning results in driving the system to become erratic and unstable. 

This is why Dr. Goldratt came to the conclusion that it’s impossible to manage an organization based on planning, and proposed using an execution layer on top of planning. Buffer management is the alternative TOC tool that was developed to manage execution, whereas planning is limited to a minimal number of factors set in advance. The buffers, in TOC, provide the necessary flexibility to manage the goals and are set using planning. Hence, buffer-management is the execution tool to decide how to optimally manage the unpredictability of business environments.

The research and applications that have been done in TOC dictate developing an ERP that enables not only flagging planning exceptions, but also displaying real priorities and making decisions based on them, such as "Dynamic Buffer Management.” Yet, the paradox is the fact that businesses are often using common ERP re-planning algorithms that are less effective than TOC "Dynamic Buffer Management.”

GUY DRORI is a product manager at Inherent Simplicity, a software company focusing on TOC solutions. Guy holds a BSc degree in computer science from the Technician – Israeli Institute of Technology, and a psychology doctor degree from MSPP Boston. Guy has been focusing, in the past ten years, on developing and assimilating ERP solutions for large scale organizations and uses his psychology background to make his work with colleagues and clients rewarding and enjoyable.

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