Many times, an organization will put a quality improvement initiative is place to only achieve disappointing results. The problem is the constraint was never identified. When seeking to improve throughput, the entire system must be examined and only the constraint need be improved. Once the constraint moves to a new machine, process, etc., the new constraint is the focus of the next improvement.
Theory of Constraints (TOC) is an overall management philosophy introduced by Dr. Eliyahu M. Goldratt in 1984. Dr. Goldratt discovered that any manageable system is limited in achieving more of its goal by a very small number of constraints, and that there is always at least one constraint. The TOC process seeks to identify the constraint and restructure the rest of the organization around it, through the use of the Five Focusing Steps.
- Identify the Constraint
- Decide How to Exploit the Constraint
- Subordinate All Other Processes to Above Decision
- Elevate the Constraint
- If the Constraint Has Moved, Return to Step 1
A constraint is anything that prevents the system from achieving more of its goal. There are many ways that constraints can show up, but a core principle within TOC is that there are not tens or hundreds of constraints. There is at least one and at most a few in any given system. Constraints can be internal or external to the system. An internal constraint is in evidence when the market demands more from the system than it can deliver. If this is the case, then the focus of the organization should be on discovering that constraint and following the five focusing steps to open it up (and potentially remove it). An external constraint exists when the system can produce more than the market will bear. If this is the case, then the organization should focus on mechanisms to create more demand for its products or services. However, in most cases, constraints are internal.
Types of (internal) constraints
- Equipment: The way equipment is currently used limits the ability of the system to produce more salable goods/ services.
- People: Lack of skilled people limits the system. Mental models held by people can cause behavior that becomes a constraint.
- Policy: A written or unwritten policy prevents the system from making more.
Bagley Consulting utilizes TOC to assist clients in order to increase net profits, reduce chaos in operations, decrease production lead time, reduce inventory (especially work-in-process), improve on-time delivery, and give the staff the ability to analyze and resolve day-to-day conflicts.