Theory of Constraints
The Theory of Constraints is a methodology for identifying the most important limiting factor (i.e. constraint) that stands in the way of achieving a goal and then systematically improving that constraint until it is no longer the limiting factor. In manufacturing, the constraint is often referred to as a bottleneck.
The Theory of Constraints takes a scientific approach to improvement. It hypothesizes that every complex system, including manufacturing processes, consists of multiple linked activities, one of which acts as a constraint upon the entire system (i.e. the constraint activity is the “weakest link in the chain”).
So what is the ultimate goal of most manufacturing companies? To make a profit – both in the short term and in the long term. The Theory of Constraints provides a powerful set of tools for helping to achieve that goal, including:
- The Five Focusing Steps (a methodology for identifying and eliminating constraints)
- The Thinking Processes (tools for analyzing and resolving problems)
- Throughput Accounting (a method for measuring performance and guiding management decisions)
Dr. Eliyahu Goldratt conceived the Theory of Constraints (TOC), and introduced it to a wide audience through his bestselling 1984 novel, “The Goal”. Since then, TOC has continued to evolve and develop, and today it is a significant factor within the world of management best practices.
One of the appealing characteristics of the Theory of Constraints is that it inherently prioritizes improvement activities. The top priority is always the current constraint. In environments where there is an urgent need to improve, TOC offers a highly focused methodology for creating rapid improvement.
A successful Theory of Constraints implementation will have the following benefits:-
- Increased profit (the primary goal of TOC for most companies)
- Fast improvement (a result of focusing all attention on one critical area – the system constraint)
- Improved capacity (optimizing the constraint enables more product to be manufactured)
- Reduced lead times (optimizing the constraint results in smoother and faster product flow)
- Reduced inventory (eliminating bottlenecks means there will be less work-in-process)
Overview of TOC Applications
Eli Goldratt developed specific applications or tools to assist in specfic industry situations:
- Availability in Supply & Distribution: Reliable Rapid Replenishment
- Availability in Finished Goods: Simplified Drum-Buffer-Rope (S-DBR) for make-to-stock of make-to-availability
- On-Time Production: Simplified Drum-Buffer-Rope (S-DBR) for make-to-order
- On-Time Assembly: Full Kit
- On-time Projects: Critical-Chain Project Management
- Turnaround of Sick Units: Evaporating Cash Constraint
- Increasing Customer Demand: Un-Desirable Effect, Unrefusable “Mafia Offer”
- Reducing Demand Risk: Customer Segmentation
- Causing Change: 6 Layers of Resistance/Buy-In
- Sound Financial Decision-Making: Operational measurements T/I/OE.
Synchronous manufacturing assists management to determine the impact of proper inventory planning and controlling methods as well as the utilization of advanced manufacturing techniques on productivity.
Competing in today’s market-place requires organizations to adopt the concept of a global economy. The challenges of global competition and rapidly changing technology encourage management to obtain a better understanding of the total manufacturing process. The synchronous manufacturing concept discussed in this paper presents a state-of-the-art manufacturing control system that focuses primarily on the key constraints and control points in the plant. The objective of this system is to maximize throughput while minimizing inventory and controlling operating expenses.
Original Content: Theory of Constraints (TOC) | Lean Production
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