The Theory of Constraints, presented by Dr. Eliyahu M. Goldratt, suggests that productivity is limited by bottlenecks in a system. His five-step process aims to improve efficiency, productivity, and profitability by managing or circumventing these constraints. The process involves identifying the most restrictive bottleneck, examining its activities, subordinating non-constraint features, and determining whether productivity has increased. If not, more drastic changes may be needed.
The Theory of Constraints is a business philosophy first presented in 1984 by Dr. Eliyahu M. Goldratt. In his novel The Goal, Goldratt suggests that productivity in any system is hampered by limitations or bottlenecks that slow down some key processes. Goldratt refers to these bottlenecks as constraints, from which his theory derives its name, and claims that every system has at least one constraint that limits its maximum capacity. His theory of constraints offers a five-step procedure designed to improve efficiency, productivity, and profitability by managing or circumventing these constraints, thereby increasing the capability of the entire system.
Goldratt’s Theory of Constraints takes a logical approach to problem solving and relies on measurable data to determine objectives. The three measures that attract their focus are throughput – usually defined in terms of sales, operating expenses and inventory. He suggests that by following his five-step process, throughput can increase while operating expenses and inventory decrease, making the entire operation more profitable.
Implementing the theory of constraints is a fairly straightforward process. Obviously, the first step is to identify a single constraint, ideally the most restrictive bottleneck in the entire system. Then, in a process Goldratt calls “constraint exploration,” the activities of the chosen constraint element are examined, with special attention paid to that element’s dedication to maximum efficiency by focusing entirely on a single primary function, thereby ensuring that efforts related to the constraint are on task and not wasted on any nonessential activity.
In the next step, the focus shifts from constraint to lagging activities and processes, or to non-constraint features. Rather than slowing down these elements to match the pace of the constraint, the downtime of these other resources is subordinated to help overcome the limitations of the constraint. Under this system, previously left idle elements would switch to a secondary task, which helps to reduce constraint constraints. So, for example, warehouse crews waiting for finished product can help with manufacturing or packaging to speed up production.
After this tying is completed, it is necessary to determine whether productivity has been increased sufficiently. Otherwise, more drastic changes may be needed to increase the capacity of the constraint. Once the bottleneck is overcome and no longer slows down the rest of the system, it is no longer a constraint. The final step in using the Theory of Constraints is to go back to the first step and identify a new constraint.
Asset Smart.
Protect your devices with Threat Protection by NordVPN
