Abstract:Theory of constraints is a management method aimedat enhancing revenue of the entire system. This thesis analyses the entiredistribution system from the overall angle, uses appropriate technology toolsto identify and resolve the root problem hidden behind the surface in order toenhance revenue of the entire distribution system. 

KeyWords:Theory of Constraints; Distribution System; Bottlenecks 

Theory of constraints (TOC) is amanagement method aimed at enhancing revenue of entire system. It believes thatthe maximum output of a system is the weakest link and also bottleneck in it.Only by continuously enlarging and eliminating these bottlenecks, revenue ofthe system can be enhanced. The optimization of non-bottleneck resources willonly result in excessive inventory or waste of resources, but not contribute toimprovement of the entire revenue. This article leads TOC into the research ofstatus quo and development of distribution system, which can find the keyfactors obstructing the development of China’s distribution industry andthen improve it, in order to promote the rapid development of logisticsenterprise and the operational efficiency of supply chain.

I.   GuidingIdeology of TOC 

TOC isdifferent from the traditional management theory which enhances enterprise’soutput through the local optimization. It emphasizes that “local optimization isn’tequal to global optimization” and “optimization is a process of continuousimprovement”. In manufacture enterprise, the improvement which increases outputmay not be feasible if it results in an increase of inventory in the next linkand the effective output has not increased at the same time. Similarly, themeasures which a distribution enterprise adopt to increase revenue will play aninhibitory role on its long-term development if they impair customers’ benefit.Therefore, the improvement of enterprises must be focused on the overalleffects and optimize individual links in the premise of global optimization.