Theory of Constraints – Introduction

• Originally developed by Eliyahu M. Goldratt

and shared in his book ‘The Goal’.
His Theory of Constraints has enabled
many people to successfully rethink their
approaches to improving and managing their
production processes

• TOC applies the methods used by the “hard”

sciences to understand and manage the
material world of human-based systems
including the lives of individuals and
organizations
 Problem Definition

• The traditional definition of a problem is

a source of perplexity, distress or
irritation

• The TOC (hard science) definition of a

problem is a conflict between two
conditions / observations

• A basic belief in science is that

conflicts do not exist in reality; i.e.,
something is wrong in our understanding
 Theory of Constraints – Introduction

• A set of holistic processes and rules, all

based on systems approach

• Exploit the inherent simplicity within

complex systems, through focusing on the
few “leverage points”

• Synchronize parts to achieve ongoing

improvement in the performance of the
system as a whole
 Fundamental Principles of TOC

Production
Design SCM Packing Shipping

• The fundamental concept behind the TOC is

that every Process producing a product or
service is primarily a series of linked
Operations.

• Each operation has a specific capacity to

produce the given defined output in the
process, and in virtually every case there
is one operation that limits or constrains
the throughput from the entire process
Which System is less complex?

Or
A B
 Fundamental Principles of TOC

• The fundamental concept behind the TOC is

that every Process producing a product or
service is primarily a series of linked
Operations.

• Each operation has a specific capacity to

produce the given defined output in the
process, and in virtually every case there
is one operation that limits or constrains
the Throughput from the entire process
 Strength of a Chain – Weakest Link
• An Operation produces only as much as it’s
critically constrained resource

60 units70 units 40 units60 units 50 units

Per day Per day Per day Per day Per day
In This Case the Maximum Throughput = 40 units per Shift-as this is determined by the Constraint in
1 Operation
The Linked Process Pipe Analogy – Bottle necks
 Fundamental Principles of TOC

• A constraint, in its most general form, is anything

that limits the Firm from meeting it’s goal.

• For Firms, the goal is to make money, by increasing

Throughput, as determined by sales, not just
production (Solution would be-PULL Production
schedule based on TAKT time)

• Increased efficiency and utilization in any process

will, in fact, only increase inventory irrespective
of sales (This is an example of Over Production)

• The major measure for any operation should be on the

throughput of the process, in other words, the
matching up to sales
 Pictorial Presentation of Constraint

• So where is the Constraint ?

 Principles of TOC

• Identify the constraint

• Exploit the constraint

• Subordinate everything else

• Elevate the constraint

• Go back to step 1
 Identify the Constraint

• This implies the need to examine the entire

process to determine the operation which
limits the throughput

• Constraints are classified as 3MU’s – Muda,

Mura & Muri in Kaizen

• To identify a constraint, we need to map

the entire process (also called as Value
Stream Mapping)

• Each constraint limits the throughput with

respect to overall sales, not merely
production of inventory.
 De-Bottle Neck the Constraint

• From the VSM, identify the constraints

(3MUs) and decide Kaizen Bursts

• Find methods to maximize the reduction of

the constraint toward matching throughput to
the required Sales.

• For example, bottleneck operation in a

production process might prove to be a
constraint

• If that operation is a constraint, staggered

timings could resolve this Constraint…
Suggest Any Thing Else..?
 TOC Principles…

Identify everything that causes Constraint

Effective management of the constraint is
the critical issue. Everything else would
be secondary.

I.R.E. - the Constraint

Essentially this means to find ways to meet
the Throughput as required by Sales despite
the constraint, including removal of it.
 TOC Principles…

Once One constraint is not a constraint any

longer, find any other and repeat the steps

• As the constraint is overcome and effective

utilization increases, it may cease to be a
constraint as another operation becomes
next Target to tackle

• In that case the emphasis shifts to another

Operation which might be the constraint in
the process.

• It is also possible that a sales-related

change in the product mix could cause a
different operation to become the
constraint
 Reasons for Throughput Loss

• The constraint is “Rooted Out"

– Since capacity exists on a constraint, the loss
of capacity will directly result in a loss of
throughput for the entire business
• The constraint is starved
– The constraint is restricting the production, and
cannot produce without material to work on (e.g.-
no supply from upstream- solution could be Line
Organization)
• The constraint is Prevented
– In this condition, both Operatives and material
are available to work, but there is no physical
space in which to place the completed units (e.g.
downstream constraint –Solution Could be
Cellular layout, Adapt PULL System)
Drum-Buffer-Rope Soldiers’ Marching Analogy
 Drum-Buffer-Rope-understanding
Concepts !

• Drum – Synchronizes by beating a drum

keeping pace with slowest of the soldiers
• Buffer – The length of the rope provides
the buffer & manage the constraint within
range of fluctuation in speed of each
soldier
• Rope – Prevents the Troop from spreading
by tying other soldiers with slowest
soldier (bottleneck) by a rope
 Drum-Buffer-Rope- Now Apply to Prodn.
Process
• Drum - refers to the "drumbeat" or pace of
production as defined by Constraint
(similar to TAKT)

• Buffer – Is to prevent Famine or Feast in

upstream or downstream, a “time” buffer is
created in front of the constraint

• Rope – Analogy is that it pulls production

to the constraint for necessary processing
by Coordinated & Pitched release of
material at right time (Solution could be
KANBAN)
 Goldratt’s Rules of Production Scheduling

• Do not balance capacity. Balance the flow

• Bottlenecks cause adverse effects on -
Throughput and Inventory in the system
• An hour lost at a bottleneck is an hour
lost for the entire Process & the Entire
Enterprise
• An hour saved at a non-bottleneck is a
Misapplication
• The level utilization of a non-bottleneck
resource is not determined by it’s own
potential but by some other constraint in
the system
• Utilization and activation of a resource
are not the same
 Integrating - TOC, 6 Sigma,KAIZEN,

•Identify the Constraint: • Define

• R.& E. the Constraint • Measure
• Map the Value Stream • Analyze
• Eliminate MUDA • Improve
• Establish Flow • Control
• Create & Stabilise Pull • Prevent
• Sustain by the Constraint
empowering employees • Go Back to Step 1 and
Repeat
Thank You Dear Friends for Your Keen
Attention & Active Participation !
Sensei Rajen
rajenkaizen@gmail.com
Mobile : 9822041535