🚚 Logistics Challenges in TOC
In supply chain management, especially in transportation logistics, companies frequently face conflicting demands between cost, efficiency, and customer service. The Theory of Constraints (TOC) provides a powerful tool to address such conflicts: the Evaporating Cloud (EC) method.
This article demonstrates how to apply the Evaporating Cloud to a practical conflict: selecting 5 transportation vehicles to move goods from a manufacturer to retail markets.
What is the Evaporating Cloud (EC)?
The Evaporating Cloud, also called the Conflict Resolution Diagram, is a TOC Thinking Process used to:
- Identify underlying assumptions behind a conflict
- Find a win-win solution
- Break the deadlock without compromise
The Problem Scenario: Transportation Vehicle Conflict
A logistics manager needs to select 5 vehicles for delivering goods from the manufacturer to multiple retailers across different regions.
However, there’s a conflict:
➤ The operations team wants large-capacity trucks to reduce trips and costs.
➤ The sales/distribution team wants smaller, faster vehicles for quicker deliveries and urban access.
Step-by-Step: Constructing the Evaporating Cloud
Let’s break down the conflict into an Evaporating Cloud diagram using TOC’s 5-box structure:
Box A (Common Objective):
Ensure timely and cost-effective delivery of goods from the manufacturer to retailers.
Box B (Need 1):
Minimize transportation costs by reducing the number of trips.
Box C (Action 1):
Use large-capacity trucks (e.g., 18-wheelers or heavy-duty vehicles).
Box D (Need 2):
Ensure fast and flexible delivery, especially to congested urban retail locations.
Box E (Action 2):
Use small and medium-sized vans that can navigate traffic and tight delivery windows.
The Conflict:
- Large trucks are cost-efficient but slow and may not access certain urban retail outlets.
- Small vans are fast and flexible but require more trips, increasing costs.
Step 2: Identifying Hidden Assumptions
- Large trucks cannot be optimized for mixed-route delivery.
- Smaller vehicles always result in higher per-unit delivery cost.
- Both vehicle types must be chosen exclusively (either/or).
- Urban delivery must be handled the same way as rural delivery.
Step 3: Breaking the Conflict (Evaporating the Cloud)
Let’s challenge the either/or assumption.
What if we combine both vehicle types in a hybrid logistics plan?
Win-Win Solution: Hybrid Fleet Allocation Strategy
New approach: Assign large trucks to centralized drop points near urban clusters. Then use smaller vans for last-mile delivery.
- Large trucks → Deliver bulk loads to regional hubs or warehouses.
- Small vans → Handle urban/rural split-deliveries, optimizing based on route and time windows.
Example in Action
A manufacturer located in Jaipur must deliver products to retailers in Delhi NCR:
- Large truck carries consolidated shipments to Gurgaon and Noida warehouses.
-
Fleet of 5 small vans is dispatched from these hubs to:
- Urban stores in Delhi (timed to avoid traffic)
- Local retailers in Noida and Ghaziabad (zone-wise scheduling)
Result:
- Lower fuel and trip costs for long haul
- Faster and on-time deliveries in congested areas
- No compromise between speed and cost
TOC Learning: The Power of EC in Logistics
Using the Evaporating Cloud helped:
- Make assumptions visible
- Resolve a conflict without compromise
- Align all departments to a shared objective
In complex supply chains, using TOC's Evaporating Cloud allows decision-makers to tackle conflicts systemically. By visualizing the root of the conflict and challenging assumptions, organizations can arrive at innovative, win-win logistics solutions—such as combining large and small vehicles for optimal transportation.
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