Implications of TOC on TCE Sourcing-Based Decision

Title: Implications of TOC on TCE Sourcing-Based Decision.

Abstract: A significant group of works and authors presents different methods and criteria for taking sourcing decisions. The Theory of Transactions-Cost-Economics (TCE) appeared as one of the main approaches to base each sourcing decision. However, decisions based on cost transactions not taking in account the service system perspective may lead to not intuitive results. The Theory of Constraints proposes a whole system analysis since it considers that cost reductions reflect systemically only when improvements are made in the constraint of the system. This paper presents the contributions of the Theory of Constraints (TOC) for taking sourcing decisions and its implications for TCE. The TOC approach reflects not only on sourcing decisions but also on managing and continually improving the whole service provision. Our approach consists on reviewing and analyzing TCE and TOC in what refers to implications for sourcing operations and presenting simulation using the two different approaches for taking a decision. After that the results are discussed for illustrating the TOC implications. The analysis shows that better sourcing decisions can be achieved through the synergetic application of Theory of Constraints and Theory of Transactions-Cost-Economics.

Journal: International Journal of Business and Management Tomorrow, v. 2, p. 1-14, 2012.

Authors: Daniel Pacheco Lacerda, Luis Henrique Rodrigues, Ricardo Augusto Cassel, Secundino L.H. Corcini Neto.

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