Theory of Constraints

The theory of constraints (TOC) is a management paradigm that views any manageable system as being limited in achieving more of its goals by a very small number of constraints. There is always at least one constraint, and TOC uses a focusing process to identify the constraint and restructure the rest of the organization around it. TOC adopts the common idiom "a chain is no stronger than its weakest link". This means that processes, organizations, etc., are vulnerable because the weakest person or part can always damage or break them or at least adversely affect the outcome (Wikipedia).

Theory of Constraints (TOC) was introduced by Dr. Eliyahu M. Goldratt in his 1984 book titled The Goal, that is geared to help organizations continually achieve their goal. The title comes from the contention 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 (Wikipedia).

The five focusing steps in the Theory of Constraints are:

1. Identify the constraint (the resource or policy that prevents the organization from obtaining more of the goal)
2. Decide how to exploit the constraint (make sure the constraint's time is not wasted doing things that it should not do)
3. Subordinate all other processes to above decision (align the whole system or organization to support the decision made above)
4. Elevate the constraint (if required or possible, permanently increase capacity of the constraint; "buy more")
5. If, as a result of these steps, the constraint has moved, return to Step 1. Don't let inertia become the constraint.

Constraints

A constraint is anything that prevents the system from achieving 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, but at most only 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 (Wikipedia).

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 behaviour that becomes a constraint.
• Policy: A written or unwritten policy prevents the system from making more.

In TOC, the constraint is used as a focusing mechanism for management of the system.