Theory of Constraints
Organizations that have implemented the Theory of Constraints (ToC) continue to thrive and grow in difficult times, continuing to achieve real bottom line growth, whether by improving productivity or increased revenues.
Since 1985, the Theory of Constraints has been delivering startling results to organizations around the world.Lead Times Reduced 69% Cycle Times Reduced 66% Due Date Performance Improved 60% Inventory Levels Inventory Levels Reduced 50% Revenue / Throughput Increased 68%
The Theory of Constraints consists of the Jonah Thinking Processes and an established set of logistical solutions:
- Critical Chain Project Management
- Drum-Buffer-Rope (DBR & SDBR) Scheduling
- Constraint-based Strategy
- Supply Chain Management
- Distribution Systems
- Throughput Accounting
- Jonah Thinking Processes
The Theory of Constraints is a set of holistic processes and insights, based on a systems approach that simplifies the improving and managing of complex organizations by focusing on the few physical and logical constraining leverage points. It provides a tool set to build and implement the levers (holistic rules) that synchronize the parts to achieve an order of magnitude improvement in the performance of the system as a whole.
The crucial insight of the Theory of Constraints is that only a few elements (constraints) in a business control the results of the entire organization. Theory of Constraints tools identify these constraints, and focus the entire organization on simple, effective solutions to problems that seemed insurmountably complex and unsolvable.
The theory of constraints has three underlying assumptions:
Convergence – Inherent Simplicity; The more complex a system is to describe, the simpler it is to manage.
Consistency– There are no conflicts in nature; If two interpretations of a natural phenomenon are in conflict, one or possibly both must be wrong
Respect – People are not stupid; Even when people do things that seem stupid they have a reason for that behavior
Eliyahu Goldratt originated the idea in his book The Goal as a way of managing organizations to increase profits. The Theory of Constraints is a proven method that can be used by existing personnel to increase throughput (sales), reliability, and quality while decreasing inventory, WIP, late deliveries, and overtime. Successful organizations also adopt the Theory of Constraints to help make tactical & strategic decisions for continuous improvement.
The Theory of Constraints is not just a tool to manage bottlenecks. In fact, the scope of tools and breadth of application of Theory of Constraints is substantial.