Theory of Constraints

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Theory of Constraints (TOC). What is TOC? In this brief video, we talk about Eli Goldratt's Theory of Constraints. What is the basic 5-step approach to TOC? Opex Minute 35 Presented by EMS Consulting Group, Inc.:

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Welcome to today’s edition of the OpEx Minute, presented by EMS Consulting Group. Today we will be talking about Theory of Constraints, a widely used Operational Excellence Methodology.
Theory of Constraints (TOC) is a system based philosophy which asserts that the constraint(s) determine the performance of the system. It was developed by Eli Goldratt and originally popularized through the best selling novel “The Goal.” A constraint is anything that blocks us from obtaining our goal.
What are some examples of constraints? They can be people/staffing, materials, information, machines, policies, measurements, or even the market for your product or service. Under Theory of Constraints, we take a simple approach to dealing with constraints.
1. We identify the constraint.
2. Decide how to exploit the constraint.
3. Sub-ordinate all else to this decision.
4. Elevate the constraint.
5. If in any step the constraint is broken or eliminated go back to step 1.

Let’s take a simple example. Let’s suppose we have 3 production processes A, B, and C. Customer demand is 300 units per day, and the units have to go through all 3 processes in order. Process A has a capacity of 350 units/day, Process B has a capacity of 250 units/day, and Process C has a capacity of 400 units/day. Based on this, Process B is a constraint. Our approach would be to increase the capacity of Process B to match customer demand. If B could handle 300 units per day, it would no longer be a constraint since this would equal demand. We would then find the next constraint – which might be the market- we need to sell more!
There is much more to TOC than what we have discussed here in this OPEX minute. If you have an interest in learning more about Theory of Constraints, visit our website at www.emsstrategies.com and contact us. We would be happy to help.