Theory of Constraints
Encyclopedia
The theory of constraints (TOC) adopts the common idiom "A chain is no stronger than its weakest link" as a new management paradigm. This means that processes, organizations, etc., are vulnerable because the weakest person or part can always damage or break them or at least adversely affect the outcome.
The analytic approach with TOC comes from the contention that any manageable system is limited in achieving more of its goals by a very small number of constraints, and that there is always at least one constraint. Hence the TOC process seeks to identify the constraint and restructure the rest of the organization around it, through the use of five focusing steps.
in his 1984 book titled The Goal, that is geared to help organizations continually achieve their goals. Goldratt adopted the concept with his book Critical Chain, published 1997. The concept was extended to TOC with respectively titled publication in 1999.
An earlier propagator of the concept was Wolfgang Mewes in Germany with publications on power-oriented management theory (Machtorientierte Führungstheorie, 1963) and following with his Energo-Kybernetic System (EKS, 1971), later renamed Engpasskonzentrierte Strategie as a more advanced theory of bottlenecks. The publications of Wolfgang Mewes are marketed through the FAZ Verlag, publishing house of the German newspaper Frankfurter Allgemeine Zeitung. However, the paradigm Theory of constraints was first used by Goldratt.
The goal itself is to make money. All other benefits are derived, in one way or another, from that single primary goal.
Assuming the goal of the organization has been articulated (e.g., "Make money now and in the future") the steps are:
The five focusing steps aim to ensure ongoing improvement efforts are centered around the organization's constraints. In the TOC literature, this is referred to as the process of ongoing improvement (POOGI).
These focusing steps are the key steps to developing the specific applications mentioned below.
Types of (internal) constraints
The concept of the constraint in Theory of Constraints differs from the constraint
that shows up in mathematical optimization
. In TOC, the constraint is used as a focusing mechanism for management of the system. In optimization, the constraint is written into the mathematical expressions to limit the scope of the solution (X can be no greater than 5).
Please note: organizations have many problems with equipment, people, policies, etc. (A breakdown is just that – a breakdown – and is not a constraint in the true sense of the TOC concept) The constraint is the thing that is preventing the organization from getting more throughput (typically, revenue through sales).
) before and behind the constraint.
Buffers can be a bank of physical objects before a work center, waiting to be processed by that work center. Buffers ultimately buy you time, as in the time before work reaches the constraint and are often verbalized as time buffers. There should always be enough (but not excessive) work in the time queue before the constraint and adequate offloading space behind the constraint.
Buffers are not the small queue of work that sits before every work center in a Kanban
system although it is similar if you regard the assembly line as the governing constraint. A prerequisite in the theory is that with one constraint in the system, all other parts of the system must have sufficient capacity to keep up with the work at the constraint and to catch up if time was lost. In a balanced line, as espoused by Kanban, when one work center goes down for a period longer than the buffer allows, then the entire system must wait until that work center is restored. In a TOC system, the only situation where work is in danger, is if the constraint is unable to process (either due to malfunction, sickness or a "hole" in the buffer – if something goes wrong that the time buffer can not protect).
Buffer management therefore represents a crucial attribute of the theory of constraints. There are many ways to do it, but the most often used is a visual system of designating the buffer in three colours: green (okay), yellow (caution) and red (action required). Creating this kind of visibility enables the system as a whole to align and thus subordinate to the need of the constraint in a holistic manner. This can also be done daily in a central operations room that is accessible to everybody.
For non-material systems, one can draw the flow of work or the flow of processes and arrive at similar basic structures. A project, for example is an A-shaped sequence of work, culminating in a delivered project.
, project management
, supply chain/distribution generated specific solutions. Other tools (mainly the "thinking process") also led to TOC applications in the fields of marketing
and sales
, and finance
. The solution as applied to each of these areas are listed below.
, the solution seeks to pull materials through the system, rather than push them into the system. The primary methodology use is drum-buffer-rope (DBR) and a variation called simplified drum-buffer-rope (S-DBR).
Drum-buffer-rope is a manufacturing execution methodology, named for its three components. The drum is the physical constraint of the plant: the work center or machine or operation that limits the ability of the entire system to produce more. The rest of the plant follows the beat of the drum. They make sure the drum has work and that anything the drum has processed does not get wasted.
The buffer protects the drum, so that it always has work flowing to it. Buffers in DBR have time as their unit of measure, rather than quantity of material. This makes the priority system operate strictly based on the time an order is expected to be at the drum. Traditional DBR usually calls for buffers at several points in the system: the constraint, synchronization points and at shipping. S-DBR has a buffer at shipping and manages the flow of work across the drum through a load planning mechanism.
The rope is the work release mechanism for the plant. Orders are released to the shop floor at one "buffer time" before they are due. In other words, if the buffer is 5 days, the order is released 5 days before it is due at the constraint. Putting work into the system earlier than this buffer time is likely to generate too-high work-in-process and slow down the entire system.
The TOC distribution solution is effective when used to address a single link in the supply chain and more so across the entire system, even if that system comprises many different companies. The purpose of the TOC distribution solution is to establish a decisive competitive edge based on extraordinary availability by dramatically reducing the damages caused when the flow of goods is interrupted by shortages and surpluses.
This approach uses several new rules to protect availability with less inventory than is conventionally required. Before explaining these new rules, the term Replenishment Time must be defined. Replenishment Time (RT) is the sum of the delay, after the first consumption following a delivery, before an order is placed plus the delay after the order is placed until the ordered goods arrive at the ordering location.
Once inventory is managed as described above, continuous efforts should be undertaken to reduce RT, late deliveries, supplier minimum order quantities (both per SKU and per order) and customer order batching. Any improvements in these areas will automatically improve both availability and inventory turns, thanks to the adaptive nature of Buffer Management.
A stocking location that manages inventory according to the TOC should help a non-TOC customer (downstream link in a supply chain, whether internal or external) manage their inventory according to the TOC process. This type of help can take the form of a vendor managed inventory (VMI). The TOC distribution link simply extends its buffer sizing and management techniques to its customers’ inventories. Doing so has the effect of smoothing the demand from the customer and reducing order sizes per SKU. VMI results in better availability and inventory turns for both supplier and customer. More than that, the benefits to the non-TOC customers are sufficient to meet the purpose of capitalizing on the decisive competitive edge by giving the customer a powerful reason to be more loyal and give more business to the upstream link. When the end consumers buy more the whole supply chain sells more.
One caveat should be considered. Initially and only temporarily, the supply chain or a specific link may sell less as the surplus inventory in the system is sold. However, the immediate sales lift due to improved availability is a countervailing factor. The current levels of surpluses and shortages make each case different.
. Throughput accounting suggests that one examine the impact of investments and operational changes in terms of the impact on the throughput of the business. It is an alternative to cost accounting
.
The primary measures for a TOC view of finance and accounting are: throughput, operating expense and investment. Throughput is calculated from sales minus totally variable cost. Totally variable cost is usually calculated as the cost of raw materials that go into creating the item sold.
. For effective sales management one can apply Drum Buffer Rope to the sales process similar to the way it is applied to operations (see Reengineering the Sales Process book reference below). This technique is appropriate when your constraint is in the sales process itself or you just want an effective sales management technique and includes the topics of funnel management and conversion rates.
are a set of tools to help managers walk through the steps of initiating and implementing a project. When used in a logical flow, the Thinking Processes help walk through a buy-in process:
TOC practitioners sometimes refer to these in the negative as working through layers of resistance to a change.
Recently, the current reality tree (CRT) and future reality tree (FRT) have been applied to an argumentative academic paper.
, has shown that the TOC approach to establishing an optimal product mix is unlikely to yield optimum results, as it would imply that P=NP.
says that TOC borrows heavily from systems dynamics
developed by Forrester in the 1950s and from statistical process control
which dates back to World War II. And Noreen Smith and Mackey, in their independent report on TOC, point out that several key concepts in TOC "have been topics in management accounting textbooks for decades."
People claim Goldratt's books fail to acknowledge that TOC borrows from more than 40 years of previous management science research and practice, particularly from PERT
/CPM
and JIT. A rebuttal to these criticisms is offered in Goldratt's "What is the Theory of Constraints and How Should it be Implemented?", and in his audio program, "Beyond The Goal". In these, Goldratt discusses the history of disciplinary sciences, compares the strengths and weaknesses of the various disciplines, and acknowledges the sources of information and inspiration for the thinking processes and critical chain methodologies. Articles published in the now-defunct Journal of Theory of Constraints referenced foundational materials. Goldratt published an article and gave talks with the title "Standing on the Shoulders of Giants" in which he gives credit for many of the core ideas of Theory of Constraints. Goldratt has sought many times to show the correlation between various improvement methods. However, many Goldratt adherents often denigrate other methodologies as inferior to TOC.
The analytic approach with TOC comes from the contention that any manageable system is limited in achieving more of its goals by a very small number of constraints, and that there is always at least one constraint. Hence the TOC process seeks to identify the constraint and restructure the rest of the organization around it, through the use of five focusing steps.
History
The theory of constraints (TOC) is an overall management philosophy introduced by Eliyahu M. GoldrattEliyahu M. Goldratt
Eliyahu Moshe Goldratt was an Israeli physicist who became a business management guru. He was the originator of the Optimized Production Technology, the Theory of Constraints , the Thinking Processes, Drum-Buffer-Rope, Critical Chain Project Management and other TOC derived tools.He authored...
in his 1984 book titled The Goal, that is geared to help organizations continually achieve their goals. Goldratt adopted the concept with his book Critical Chain, published 1997. The concept was extended to TOC with respectively titled publication in 1999.
An earlier propagator of the concept was Wolfgang Mewes in Germany with publications on power-oriented management theory (Machtorientierte Führungstheorie, 1963) and following with his Energo-Kybernetic System (EKS, 1971), later renamed Engpasskonzentrierte Strategie as a more advanced theory of bottlenecks. The publications of Wolfgang Mewes are marketed through the FAZ Verlag, publishing house of the German newspaper Frankfurter Allgemeine Zeitung. However, the paradigm Theory of constraints was first used by Goldratt.
Key assumption
The underlying premise of theory of constraints is that organizations can be measured and controlled by variations on three measures: throughput, operational expense, and inventory. Throughput is the rate at which the system generates money through sales. Inventory is all the money that the system has invested in purchasing things which it intends to sell. Operational expense is all the money the system spends in order to turn inventory into throughput.The goal itself is to make money. All other benefits are derived, in one way or another, from that single primary goal.
The five focusing steps
Theory of constraints is based on the premise that the rate of goal achievement is limited by at least one constraining process. Only by increasing flow through the constraint can overall throughput be increased.Assuming the goal of the organization has been articulated (e.g., "Make money now and in the future") the steps are:
- Identify the constraint (the resource or policy that prevents the organization from obtaining more of the goal)
- Decide how to exploit the constraint (get the most capacity out of the constrained process)
- Subordinate all other processes to above decision (align the whole system or organization to support the decision made above)
- Elevate the constraint (make other major changes needed to break the constraint)
- If, as a result of these steps, the constraint has moved, return to Step 1. Don't let inertiaSocial inertiaSocial inertia is a term that applies the concept of inertia to psychology and sociology. It is used to describe the resistance to change presented by societies or social groups, usually due to habit...
become the constraint.
The five focusing steps aim to ensure ongoing improvement efforts are centered around the organization's constraints. In the TOC literature, this is referred to as the process of ongoing improvement (POOGI).
These focusing steps are the key steps to developing the specific applications mentioned below.
Constraints
A constraint is anything that prevents the system from achieving more of its goal. There are many ways that constraints can show up, but a core principle within TOC is that there are not tens or hundreds of constraints. There is at least one and at most a few in any given system. Constraints can be internal or external to the system. An internal constraint is in evidence when the market demands more from the system than it can deliver. If this is the case, then the focus of the organization should be on discovering that constraint and following the five focusing steps to open it up (and potentially remove it). An external constraint exists when the system can produce more than the market will bear. If this is the case, then the organization should focus on mechanisms to create more demand for its products or services.Types of (internal) constraints
- Equipment: The way equipment is currently used limits the ability of the system to produce more salable goods/services.
- People: Lack of skilled people limits the system. Mental models held by people can cause behaviour that becomes a constraint.
- Policy: A written or unwritten policy prevents the system from making more.
The concept of the constraint in Theory of Constraints differs from the constraint
Constraint (mathematics)
In mathematics, a constraint is a condition that a solution to an optimization problem must satisfy. There are two types of constraints: equality constraints and inequality constraints...
that shows up in mathematical optimization
Optimization (mathematics)
In mathematics, computational science, or management science, mathematical optimization refers to the selection of a best element from some set of available alternatives....
. In TOC, the constraint is used as a focusing mechanism for management of the system. In optimization, the constraint is written into the mathematical expressions to limit the scope of the solution (X can be no greater than 5).
Please note: organizations have many problems with equipment, people, policies, etc. (A breakdown is just that – a breakdown – and is not a constraint in the true sense of the TOC concept) The constraint is the thing that is preventing the organization from getting more throughput (typically, revenue through sales).
Buffers
Buffers are used throughout the theory of constraints. They often result as part of the exploit and subordinate steps of the five focusing steps. Buffers are placed before the governing constraint, thus ensuring that the constraint is never starved. Buffers are also placed behind the constraint to prevent downstream failure to block the constraint's output. Buffers used in this way protect the constraint from variations in the rest of the system and should allow for normal variation of processing time and the occasional upset (MurphyMurphy's law
Murphy's law is an adage or epigram that is typically stated as: "Anything that can go wrong will go wrong". - History :The perceived perversity of the universe has long been a subject of comment, and precursors to the modern version of Murphy's law are not hard to find. Recent significant...
) before and behind the constraint.
Buffers can be a bank of physical objects before a work center, waiting to be processed by that work center. Buffers ultimately buy you time, as in the time before work reaches the constraint and are often verbalized as time buffers. There should always be enough (but not excessive) work in the time queue before the constraint and adequate offloading space behind the constraint.
Buffers are not the small queue of work that sits before every work center in a Kanban
Kanban
, also spelled kamban, and literally meaning "signboard" or "billboard", is a concept related to lean and just-in-time production. According to Taiichi Ohno, the man credited with developing Just-in-time, kanban is one means through which JIT is achieved.Kanban is not an inventory control system...
system although it is similar if you regard the assembly line as the governing constraint. A prerequisite in the theory is that with one constraint in the system, all other parts of the system must have sufficient capacity to keep up with the work at the constraint and to catch up if time was lost. In a balanced line, as espoused by Kanban, when one work center goes down for a period longer than the buffer allows, then the entire system must wait until that work center is restored. In a TOC system, the only situation where work is in danger, is if the constraint is unable to process (either due to malfunction, sickness or a "hole" in the buffer – if something goes wrong that the time buffer can not protect).
Buffer management therefore represents a crucial attribute of the theory of constraints. There are many ways to do it, but the most often used is a visual system of designating the buffer in three colours: green (okay), yellow (caution) and red (action required). Creating this kind of visibility enables the system as a whole to align and thus subordinate to the need of the constraint in a holistic manner. This can also be done daily in a central operations room that is accessible to everybody.
Plant types
There are four primary types of plants in the TOC lexicon. Draw the flow of material from the bottom of a page to the top, and you get the four types. They specify the general flow of materials through a system, and they provide some hints about where to look for typical problems. The four types can be combined in many ways in larger facilities.- I-plant: Material flows in a sequence, such as in an assembly line. The primary work is done in a straight sequence of events (one-to-one). The constraint is the slowest operation.
- A-plant: The general flow of material is many-to-one, such as in a plant where many sub-assemblies converge for a final assembly. The primary problem in A-plants is in synchronizing the converging lines so that each supplies the final assembly point at the right time.
- V-plant: The general flow of material is one-to-many, such as a plant that takes one raw material and can make many final products. Classic examples are meat rendering plants or a steel manufacturer. The primary problem in V-plants is "robbing" where one operation (A) immediately after a diverging point "steals" materials meant for the other operation (B). Once the material has been processed by A, it cannot come back and be run through B without significant rework.
- T-plant: The general flow is that of an I-plant (or has multiple lines), which then splits into many assemblies (many-to-many). Most manufactured parts are used in multiple assemblies and nearly all assemblies use multiple parts. Customized devices, such as computers, are good examples. T-plants suffer from both synchronization problems of A-plants (parts aren't all available for an assembly) and the robbing problems of V-plants (one assembly steals parts that could have been used in another).
For non-material systems, one can draw the flow of work or the flow of processes and arrive at similar basic structures. A project, for example is an A-shaped sequence of work, culminating in a delivered project.
Applications
The focusing steps, this process of ongoing improvement, have been applied to manufacturingManufacturing
Manufacturing is the use of machines, tools and labor to produce goods for use or sale. The term may refer to a range of human activity, from handicraft to high tech, but is most commonly applied to industrial production, in which raw materials are transformed into finished goods on a large scale...
, project management
Project management
Project management is the discipline of planning, organizing, securing, and managing resources to achieve specific goals. A project is a temporary endeavor with a defined beginning and end , undertaken to meet unique goals and objectives, typically to bring about beneficial change or added value...
, supply chain/distribution generated specific solutions. Other tools (mainly the "thinking process") also led to TOC applications in the fields of marketing
Marketing
Marketing is the process used to determine what products or services may be of interest to customers, and the strategy to use in sales, communications and business development. It generates the strategy that underlies sales techniques, business communication, and business developments...
and sales
Sales
A sale is the act of selling a product or service in return for money or other compensation. It is an act of completion of a commercial activity....
, and finance
Finance
"Finance" is often defined simply as the management of money or “funds” management Modern finance, however, is a family of business activity that includes the origination, marketing, and management of cash and money surrogates through a variety of capital accounts, instruments, and markets created...
. The solution as applied to each of these areas are listed below.
Operations
Within manufacturing operations and operations managementOperations management
Operations management is an area of management concerned with overseeing, designing, and redesigning business operations in the production of goods and/or services. It involves the responsibility of ensuring that business operations are efficient in terms of using as little resources as needed, and...
, the solution seeks to pull materials through the system, rather than push them into the system. The primary methodology use is drum-buffer-rope (DBR) and a variation called simplified drum-buffer-rope (S-DBR).
Drum-buffer-rope is a manufacturing execution methodology, named for its three components. The drum is the physical constraint of the plant: the work center or machine or operation that limits the ability of the entire system to produce more. The rest of the plant follows the beat of the drum. They make sure the drum has work and that anything the drum has processed does not get wasted.
The buffer protects the drum, so that it always has work flowing to it. Buffers in DBR have time as their unit of measure, rather than quantity of material. This makes the priority system operate strictly based on the time an order is expected to be at the drum. Traditional DBR usually calls for buffers at several points in the system: the constraint, synchronization points and at shipping. S-DBR has a buffer at shipping and manages the flow of work across the drum through a load planning mechanism.
The rope is the work release mechanism for the plant. Orders are released to the shop floor at one "buffer time" before they are due. In other words, if the buffer is 5 days, the order is released 5 days before it is due at the constraint. Putting work into the system earlier than this buffer time is likely to generate too-high work-in-process and slow down the entire system.
Supply chain / logistics
In general, the solution for supply chains is to create flow of inventory so as to ensure greater availability and to eliminate surpluses.The TOC distribution solution is effective when used to address a single link in the supply chain and more so across the entire system, even if that system comprises many different companies. The purpose of the TOC distribution solution is to establish a decisive competitive edge based on extraordinary availability by dramatically reducing the damages caused when the flow of goods is interrupted by shortages and surpluses.
This approach uses several new rules to protect availability with less inventory than is conventionally required. Before explaining these new rules, the term Replenishment Time must be defined. Replenishment Time (RT) is the sum of the delay, after the first consumption following a delivery, before an order is placed plus the delay after the order is placed until the ordered goods arrive at the ordering location.
- Inventory is held at an aggregation point(s) as close as possible to the source. This approach ensures smoothed demand at the aggregation point, requiring proportionally less inventory. The distribution centers holding the aggregated stock are able to ship goods downstream to the next link in the supply chain much more quickly than a make-to-order manufacturer can. #:Following this rule may result in a make-to-order manufacturer converting to make-to-stock. The inventory added at the aggregation point is significantly less than the inventory reduction downstream.
- In all stocking locations, initial inventory buffers are set which effectively create an upper limit of the inventory at that location. The buffer size is equal to the maximum expected consumption within the average RT, plus additional stock to protect in case a delivery is late. In other words, there is no advantage in holding more inventory in a location than the amount that might be consumed before more could be ordered and received. Typically, the sum of the on hand value of such buffers are 25–75% less than currently observed average inventory levels.
- Once buffers have been established, no replenishment orders are placed as long as the quantity inbound (already ordered but not yet received) plus the quantity on hand are equal to or greater than the buffer size. Following this rule causes surplus inventory to be bled off as it is consumed.
- For any reason, when on hand plus inbound inventory is less than the buffer, orders are placed as soon as practical to increase the inbound inventory so that the relationship On Hand + Inbound = Buffer is maintained.
- To ensure buffers remain correctly sized even with changes in the rates of demand and replenishment, a simple recursive algorithm called Buffer Management is used. When the on hand inventory level is in the upper third of the buffer for a full RT, the buffer is reduced by one third (and don’t forget rule 3). Alternatively, when the on hand inventory is in the bottom one third of the buffer for too long, the buffer is increased by one third (and don’t forget rule 4). The definition of “too long” may be changed depending on required service levels, however, a general rule of thumb is 20% of the RT. Moving buffers up more readily than down is supported by the usually greater damage caused by shortages as compared to the damage caused by surpluses.
Once inventory is managed as described above, continuous efforts should be undertaken to reduce RT, late deliveries, supplier minimum order quantities (both per SKU and per order) and customer order batching. Any improvements in these areas will automatically improve both availability and inventory turns, thanks to the adaptive nature of Buffer Management.
A stocking location that manages inventory according to the TOC should help a non-TOC customer (downstream link in a supply chain, whether internal or external) manage their inventory according to the TOC process. This type of help can take the form of a vendor managed inventory (VMI). The TOC distribution link simply extends its buffer sizing and management techniques to its customers’ inventories. Doing so has the effect of smoothing the demand from the customer and reducing order sizes per SKU. VMI results in better availability and inventory turns for both supplier and customer. More than that, the benefits to the non-TOC customers are sufficient to meet the purpose of capitalizing on the decisive competitive edge by giving the customer a powerful reason to be more loyal and give more business to the upstream link. When the end consumers buy more the whole supply chain sells more.
One caveat should be considered. Initially and only temporarily, the supply chain or a specific link may sell less as the surplus inventory in the system is sold. However, the immediate sales lift due to improved availability is a countervailing factor. The current levels of surpluses and shortages make each case different.
Finance and accounting
The solution for finance and accounting is to apply holistic thinking to the finance application. This has been termed throughput accountingThroughput accounting
Throughput Accounting is a principle-based and comprehensive management accounting approach that provides managers with decision support information for enterprise profitability improvement. TA is relatively new in management accounting...
. Throughput accounting suggests that one examine the impact of investments and operational changes in terms of the impact on the throughput of the business. It is an alternative to cost accounting
Cost accounting
Cost accounting information is designed for managers. Since managers are taking decisions only for their own organization, there is no need for the information to be comparable to similar information from other organizations...
.
The primary measures for a TOC view of finance and accounting are: throughput, operating expense and investment. Throughput is calculated from sales minus totally variable cost. Totally variable cost is usually calculated as the cost of raw materials that go into creating the item sold.
Project management
Critical Chain Project Management (CCPM) is utilized in this area. CCPM is based on the idea that all projects look like A-plants: all activities converge to a final deliverable. As such, to protect the project, there must be internal buffers to protect synchronization points and a final project buffer to protect the overall project.Marketing and sales
While originally focused on manufacturing and logistics, TOC has expanded lately into sales management and marketing. Its role is explicitly acknowledged in the field of sales process engineeringSales process engineering
Sales process engineering has been described as “the systematic application of scientific and mathematical principles to achieve the practical goals of a particular sales process". Selden pointed out that in this context, sales referred to the output of a process involving a variety of functions...
. For effective sales management one can apply Drum Buffer Rope to the sales process similar to the way it is applied to operations (see Reengineering the Sales Process book reference below). This technique is appropriate when your constraint is in the sales process itself or you just want an effective sales management technique and includes the topics of funnel management and conversion rates.
The TOC thinking processes
The thinking processesThinking processes (Theory of Constraints)
This page is about thinking processes in the Theory of constraints. Wikipedia also has a list of thought processes.Thinking processes in Eliyahu M...
are a set of tools to help managers walk through the steps of initiating and implementing a project. When used in a logical flow, the Thinking Processes help walk through a buy-in process:
- Gain agreement on the problem
- Gain agreement on the direction for a solution
- Gain agreement that the solution solves the problem
- Agree to overcome any potential negative ramifications
- Agree to overcome any obstacles to implementation
TOC practitioners sometimes refer to these in the negative as working through layers of resistance to a change.
Recently, the current reality tree (CRT) and future reality tree (FRT) have been applied to an argumentative academic paper.
Development and practice
TOC was initiated by Goldratt, who until his recent death was still the main driving force behind the development and practice of TOC. There is a network of individuals and small companies loosely coupled as practitioners around the world. TOC is sometimes referred to as "constraint management". TOC is a large body of knowledge with a strong guiding philosophy of growth.Claimed suboptimality of drum-buffer-rope
While TOC has been compared favorably to linear programming techniques, D. Trietsch from University of Auckland argues that DBR methodology is inferior to competing methodologies. Linhares, from the Getulio Vargas FoundationFundação Getúlio Vargas
Fundação Getulio Vargas is a Brazilian higher education institution founded on December 20, 1944. It offers regular courses of Economics, Business Administration, Law, Social Sciences and Information technology management...
, has shown that the TOC approach to establishing an optimal product mix is unlikely to yield optimum results, as it would imply that P=NP.
Unacknowledged debt
Duncan (as cited by Steyn)says that TOC borrows heavily from systems dynamics
System dynamics
System dynamics is an approach to understanding the behaviour of complex systems over time. It deals with internal feedback loops and time delays that affect the behaviour of the entire system. What makes using system dynamics different from other approaches to studying complex systems is the use...
developed by Forrester in the 1950s and from statistical process control
Statistical process control
Statistical process control is the application of statistical methods to the monitoring and control of a process to ensure that it operates at its full potential to produce conforming product. Under SPC, a process behaves predictably to produce as much conforming product as possible with the least...
which dates back to World War II. And Noreen Smith and Mackey, in their independent report on TOC, point out that several key concepts in TOC "have been topics in management accounting textbooks for decades."
People claim Goldratt's books fail to acknowledge that TOC borrows from more than 40 years of previous management science research and practice, particularly from PERT
Program Evaluation and Review Technique
The Program ' Evaluation and Review Technique, commonly abbreviated PERT, is a statistical tool, used in project management, that is designed to analyze and represent the tasks involved in completing a given project...
/CPM
Critical path method
The critical path method is an algorithm for scheduling a set of project activities. It is an important tool for effective project management.-History:...
and JIT. A rebuttal to these criticisms is offered in Goldratt's "What is the Theory of Constraints and How Should it be Implemented?", and in his audio program, "Beyond The Goal". In these, Goldratt discusses the history of disciplinary sciences, compares the strengths and weaknesses of the various disciplines, and acknowledges the sources of information and inspiration for the thinking processes and critical chain methodologies. Articles published in the now-defunct Journal of Theory of Constraints referenced foundational materials. Goldratt published an article and gave talks with the title "Standing on the Shoulders of Giants" in which he gives credit for many of the core ideas of Theory of Constraints. Goldratt has sought many times to show the correlation between various improvement methods. However, many Goldratt adherents often denigrate other methodologies as inferior to TOC.
See also
- Linear programmingLinear programmingLinear programming is a mathematical method for determining a way to achieve the best outcome in a given mathematical model for some list of requirements represented as linear relationships...
- List of Theory of Constraints topics
- Systems thinkingSystems thinkingSystems thinking is the process of understanding how things influence one another within a whole. In nature, systems thinking examples include ecosystems in which various elements such as air, water, movement, plants, and animals work together to survive or perish...
— Critical systems thinkingCritical systems thinkingCritical systems thinking is a recent systems thinking framework, that wants to bring unity to the diversity of different systems approaches and advises managers how best to use them....
— Joint decision traps - Twelve leverage pointsTwelve leverage pointsThe twelve leverage points to intervene in a system were proposed by Donella Meadows, a scientist and system analyst focused on environmental limits to economic growth...
by Donella MeadowsDonella MeadowsDonella H. "Dana" Meadows was a pioneering American environmental scientist, teacher and writer. She is best known as lead author of the influential book The Limits to Growth, which made headlines around the world.- Life :Born in Elgin, Illinois, Meadows was educated in science, receiving a B.A... - Constraint (disambiguation)
- Thinklets
- ThroughputThroughput (business)Throughput is the movement of inputs and outputs through a production process. Without access and assurance of a supply of inputs, a successful business enterprise would not be possible....
Further reading
- John Tripp TOC Executive Challenge A Goal Game. ISBN 0-88427-186-2
External links
- What is TOC? – In a video Goldratt Explains the definition of Theory of Constraints.
- An Online Guide To The Theory Of Constraints – Fundamentals, Thinking Process, Production, Projects, Supply Chain,
- The Theory of Constraints in Plain English – A simple example of constraint identification.
- Theory of Constraints – Short Term Capacity Optimization A PowerPoint presentation about the Theory of Constraints and its process.
- TOC Journey blog – a blog collecting Theory of Constraints resources, presenting ideas and sharing experience