Eli Goldratt’s Theory of Constraints (TOC) is a successful business management methodology which looks to increase flow and capacity in organisations. Goldratt articulated his philosophy in a series of books – the most famous of which being his bestseller ‘The Goal’, which is still featured on many university reading lists. ‘The Goal’ is highly recommended by business leaders; endorsed by Jeff Bezos, Times Magazine, and Forbes.

The name of the book hints at the most crucial question a business manager should be asking: what is the goal of your business?

In short, the answer should be to make more money. The Theory of Constraints focuses on identifying and managing business Constraints – points in the system which limit a business from achieving its goal.

Historically, some of the best TOC implementations have been carried out in manufacturing organisations. ‘The Goal’ follows a Plant Manager as he seeks to save his manufacturing plant. The story makes the theory feel tangible to manufacturing management teams.

Goldratt UK often run promotions offering free copies of ‘The Goal’. If you would like a free (no obligation) copy, you can request one here.

Typical results from a TOC implementation within manufacturing operations include:

• An increase in delivery performance up to 99%.
• A reduction in lead-times up to 75%.
• Reduced internal costs by 15-20%.
• An increase in capacity by 30-50%.
• Increasing profitability by 100%.

You can read some of Goldratt UK’s success stories here.

So, what does implementing TOC in a production environment look like?

A useful framework to guide your operations transformation is Goldratt’s Five Focusing Steps for Continuous Improvement.

The first step dictates that you should accurately identify your Constraint within operations. This is commonly referred to as your bottleneck operation. You may already be aware of where your bottleneck lies – if not, a helpful hint is to look for the queues… Your bottleneck operation is the one limiting the output of the entire plant. It will always be heavily loaded, often with a physical queue of WIP sitting behind it.

Once you have identified your Constraint, it is important to keep it running at as close to 100% capacity as possible. In Goldratt’s Five Focusing Steps framework, this is Step 2 – ‘Exploit the Constraint’.

At Goldratt UK we encourage you to adopt the mindset of ‘Constraint Obsession’. The reason for this is simple – for every minute your Constraint sits idle, your business loses money. In other words, the rate at which your Constraint operates dictates the rate at which the entire system can produce goods. Increasing the output of the Constraint will increase the output of the whole system. Consider a metal chain made up of individual links – the chain is only as strong as the weakest link. To increase the overall strength of the chain, you must increase the strength of that weakest link.

There are various tactics you can employ to become Constraint obsessed:

• Introduce a Constraint schedule and set up a key measure to monitor schedule adherence. This will make sure that the Constraint is working on the right jobs, at the right time.
• Subordinate all other operations to the Constraint – i.e., align other operations. Make sure non-Constraint resources and processes support and synchronise with the Constraint to avoid negative results such as overproduction.
• Set up a Full Kit point before the Constraint operation to ensure jobs are ready to be worked on by the Constraint. A Full Kit should comprise of everything needed to finish the job being available from the beginning. Setting up a Full Kit point before the Constraint will prevent delays and avoid wasting the Constraint’s valuable capacity.
• Consider setting up a quality check prior to the Constraint operation to avoid wasting capacity working on faulty product.
• Make sure the Constraint is properly resourced – i.e., cover worker breaks.
• Working to a single priority system will prevent frequent expediting, therefore reducing the need to waste time on different setups or programme changes.

Once you have attempted the above methods to increase the capacity of your Constraint, you may discover that you have uncovered enough capacity to achieve your goal – without spending a penny! Often organisations find overall manufacturing ouptut increases dramatically after implementing these simple changes.

However, if your Constraint still isn’t processing enough to achieve your goal to grow your business, then you still have the option to invest. You can now purchase additional resource, upgrade your technology, or enhance your equipment to further increase your output.

An exciting benefit to adopting a TOC approach is that this is a continuous improvement philosophy. Once you have broken your business Constraint through implementing the techniques above, you can look for the next most limiting process (your new Constraint) and direct improvement towards that area.

TOC is often implemented alongside other manufacturing methodologies such as Lean or Six Sigma to further enhance efficiency and effectiveness. Focusing on the most significant Constraints, TOC helps manufacturers maximise Throughput, reduce lead-times and optimise resource utilisation. Ultimately, TOC will help you to achieve the goal.

Take the first step in your TOC journey by requesting your free copy of ‘The Goal’ today.

^{_{By Lauren Wiles, ©Goldratt UK, 2024.}}