The theory of constraints, which is sometimes abbreviated to TOC is an exciting philosophy and outlook within the field of business management. It was first proposed in the mid 1980’s by Dr Goldratt, in a book entitled The Goal, which aims to help businesses and organisations achieve their goals; despite the constraints that they may face. His argument is that you need to identify and acknowledge the constraint(s) and then restructure around it or them through using a process which is known as the Five Focusing Steps.
Firstly it is necessary to define a constraint. Within this context, it is defined as anything that inhibits the organisation or system from achieving its full potential or goals. The constraints can be numerous and are not only internal, but can be external as well.
So a business can set its goal, but then it needs to identify the constraint and effectively work around the constraint, so that it does not impede the goal.
If a company decides that its goal is to increase sales then it will use the 5 steps to make this happen.
Step 1 Identify. This step identifies the constraint that the company or organisation faces.
Step 2 Exploit it! This is the process of deciding how that constraint can be exploited. Within this context, exploitation means how the company can get more out of the existing capacity of the processes and structures, so that the production is more efficient. A simple example of this is making sure that breaktimes etc are staggered, so that machines are not switched off during the working day.
Step 3 Subordinate. Subordination in TOC means changing practices and processes to circumvented the constraint and lessen the impediment or disabling effect of the constraint. This step usually has an impact on supplies/stocks or resources.
Step 4 Elevate. Step 4 is not always required. Effectively the process of elevating the constraint is about making sure that the demand will be met, but at the same time working hard to ensure that there is no overproduction. This step may also impact on the requirements for stock or components and there may be a need to ‘buy more’ components or parts.
Step 4 is not required if the previous steps will solve the problem of the constraint and there is sufficient production levels, that will meet demand, without leading to over production.
Step 5 Return to Base! Step 5 is a step which requires the analysts to return to step 1 and analyse whether the constraint is still impeding the goals of the company being reached.
Step 5 is usually accompanied by the warning that intertia and lethargy cannot become constraints in themselves. In other words, do not simply assume that going through the steps will be successful and even if the constraint has been circumvented, there are various other constraints that need to be subjected to this process, so the whole cycle does have to start again!
This cyclical approach to TOC makes it very much a process of ongoing improvement, but at the same time it is important to note that this is not an ever ongoing process. Fundamental to the principles of TOC is the concept that there will always be constraints upon any organisation, business or production line.
Perfection will never be reached and the most rational way of dealing with this is to recognise that there will be constraints and that if they are left untouched or to ‘roam around’ they will create something akin to chaos or at the very least, a lack of balance. Using the 5 Steps process on the other hand, will ensure that this balance is reached.
