Theory of Constraints

The basic TOC is a commonsense way to understand a system. TOC says that any system must have a constraint that limits its output. You can prove it with critical discussion. If there were no constraint, system output would either rise indefinitely or would fall to zero. Therefore, a constraint limits any system with a nonzero output. Figure 2.7 shows that limiting the flow through any of the arrows can limit the total output of the system. That arrow would be the system constraint. People identify the constraint in physical systems as a bottleneck, a constriction limiting flow through the system.

The purpose of using the TOC is to improve a business system. In What Is This thing Called Theory of Constraints [22], Goldratt states, "before we can deal with the improvement of any section of a system, we must first define the system's global goal; and the measurements that will enable us to judge the impact of any subsystem and any local decision, on this global goal."

Deming noted in The New Economics [13], "We learned that optimization is a process of orchestrating the efforts of all components toward achievement of the stated aim."

System throughput limited by a constraint

Raw material from suppliers

Products to customers functions

Figure 2.7 TOC limits the output of a system by a constraint.

Products to customers

A physical chain provides the most commonly used prop to describe TOC (Figure 2.8). The goal of a chain is to provide strength in tension. Everyone accepts that the weakest link determines the strength of a chain. Anyone can see that improving the strength of links other than the weakest link has no impact on the strength of the chain.

The next step in understanding TOC is not so evident. TOC makes a leap to throughput chains, and poses the theory that for any chain, throughput (at any time) is limited by at most one constraint. Perhaps this is easier to see in the project world, where a project plan can have only one longest path. The only case where this would not be true is if two or more paths are exactly the same length. As soon as you start to perform the project, it is likely that one path will become the real constraint. The constraint (longest path) will seem to shift due to fluctuations in project activity performance. But at any time, only one controls the actual time to complete the project.

Applying the scientific method to this basic understanding of the TOC leads to many principles. Dettmer poses the following list in his book Eliyahu M. Goldratt's The Theory of Constraints, A Systems Approach to Continuous Improvement [23]:

1. System thinking is preferable to analytical thinking in managing change and solving problems.

2. An optimal system solution deteriorates after time as the system's environment changes. A process of ongoing improvement is required to update and maintain the effectiveness of a solution.

3. If a system is performing as well as it can, not more than one of its component parts will be. If all parts are performing as well as they can, the system as a whole will not be. The system optimum is not the sum of the local optima.

4. Systems are analogous to chains. Each system has a "weakest link" (constraint) that ultimately limits the success of the entire system.

Figure 2.8 A physical chain illustrates TOC in action: the weakest link constrains the strength of the chain.

5. Strengthening any link in the chain other than the weakest one does nothing to improve the strength of the whole chain.

6. Knowing what to change requires a thorough understanding of the system's current reality, its goal, and the magnitude and direction of the difference between the two.

7. Most of the UDEs within a system are caused by a few core problems.

8. Core problems are almost never superficially apparent. They manifest themselves through a number of UDEs linked by a network of effect^cause^effect.

9. Elimination of individual UDEs (undesired effects) gives a false sense of security while ignoring the underlying core problem. Solutions that do this are likely to be short-lived. Solution of a core problem simultaneously eliminates all of the resulting UDEs.

10. Core problems are usually perpetuated by a hidden or underlying conflict. Solution of core problems requires challenging the assumptions underlying the conflict and invalidating at least one.

11. System constraints can be either physical or policy-based. Physical constraints are relatively easy to identify and simple to eliminate. Policy-based constraints are usually more difficult to identify and eliminate, but they normally result in a larger degree of system improvement than the elimination of a physical constraint.

12. Inertia is the worst enemy of a process of ongoing improvement. Solutions tend to assume a mass of their own, which resists further change.

13. Ideas are not solutions.

TOC also undergoes continuous improvement. When Goldratt introduced the Thinking Process, the method to locate what to change in a system relied on discovering the core problem, as illustrated by the above list. The removal of a core problem will begin to cause the system to change UDEs into DEs (desired effects). In other fields, it is called the root cause. Goldratt later shifted to define a core conflict instead of a core problem. This is a significant step in the theory. It claims that most of the UDEs in a system flow from an unresolved, or at least unsatisfactorily resolved, conflict or dilemma. Substituting core conflict for core problem into the above list (except for item 10) makes it reflect present understanding. Item 10 in the list is the earlier statement of the previous understanding.

The idea of a core conflict underlying many system UDEs must rest on the thought that people would change the system to eliminate UDEs if they knew how and were able to make the changes. If UDEs persist in a system, then something is preventing the system designers or operators from changing the system to eliminate the UDE. The core conflict idea helps to identify that something.

TOC applies a tool called current Reality Tree (CRT) to logically link the core conflict to the UDEs.

For reasons I will detail later, I recommend getting as wide a range of perspectives as possible both when building and analyzing CRT. The review process within the organization will work to eliminate the mismatches between actual behavior and beliefs, so it will take concerted effort to communicate and correct the inevitable gaps.

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Project Management Made Easy

Project Management Made Easy

What you need to know about… Project Management Made Easy! Project management consists of more than just a large building project and can encompass small projects as well. No matter what the size of your project, you need to have some sort of project management. How you manage your project has everything to do with its outcome.

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