Business Performance Improvement Technologies - an Introduction

Theory of Constraints

Context

The advocates of an improvement technology often become passionate about its value; not only its absolute value, but also its value in comparison to other "competing" technologies. Theory of Constraints is no different, especially with regard to comparisons with Lean and Six Sigma. There is naturally a certain amount of "mine is better than yours" dialogue in many forums, each having its advocates.

Some of us are strong Theory of Constraints advocates but even so our philosophy, based on more than 60 years of combined industrial experience, is that each technology carries at the very least a nugget of gold; and many nuggets of gold are more valuable than just one. The key lies in fitting the solution (technology) to the problem, rather than taking the position elegantly described in the phrase "when you have a hammer, everything looks like a nail." It's amazing to me that some companies actually define themselves in terms of the hammers they have chosen - "we're a Six Sigma company," for example.

There's room for common sense, surely. If you don't have enough sales, and your competition is beating you up with shorter lead times and better on-time delivery, and your sales people can literally tell you exactly which accounts they could win if you improved lead time and on-time delivery ... then CRM isn't your solution. Nor is a reduction in variability. Or outsourcing your IT. You need a technology that reflects a deep understanding of scheduling the flow of material through a bunch of resources where statistical fluctuation exists and there are dependent events.

Theory of Constraints has no equal in its characteristics - fast, massive improvements with relatively low effort - but another characteristic is that it pulls-in and focuses almost ALL other technologies to best effect; TOC is truly an inclusive, not an excluding, technology.

 

What is the Theory of Constraints (TOC)?

The TOC is something of a chameleon because it includes both a mechanism for generating solutions to complex problems of widely differing types, and the solutions themselves. The official definition of TOC as “The Thinking Processes and their applications” is accurate but not very informative.

Essentially, TOC is a methodical and powerful approach to continuously improving the performance of an organization (or a system).

It is based around a philosophy of systematically identifying and appropriately dealing with the few genuine constraints that limit an organization’s overall performance relative to it’s goal. This provides management with a small number of focal points for improvement efforts with the assurance of great leverage from those efforts. Results are typically fast, direct, and often massive.

Constraints can be physical, and relatively easy to identify; or, they can be an organization’s policies, procedures, measurements, even a way of thinking. These are much more difficult to identify than physical constraints and a set of tools – known as the Thinking Processes – had to be invented in order to provide a methodical way to do so.

At the heart of the TOC is this tool-set of “Thinking Processes” that enable people (not only managers) to analyze a complex problem or situation in their environment, and systematically construct and implement a practical and effective solution – often, an “outside the box” solution.

The solutions to some complex problematical situations are case specific – they apply to that situation, for that organization, that one time only.

The solution to other situations are generic – the details of the solution can be applied to any organization with the same problems. Such solutions are known as TOC Applications.

TOC applications include:

  • Synchronous Manufacturing.
  • Throughput Accounting
  • Critical Chain Project Management.
  • Distribution.
  • Supply Chain.
  • Sales
  • Marketing.
  • Strategic Planning
  • Management skills  

These applications are, of course, continually being refined and expanded; for example, the most fundamental application to production (Drum Buffer Rope, or DBR) has now been joined by a variation, sDBR (simplified DBR).

Several Theory of Constraints applications do not need software for implementation; others are more easily implemented with the support of software, and one - Critical Chain Project Management - is really not practical without software. You'll find a discussion on Theory of Constraints software.here.

 
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