Theory of Constraints: Definition & Examples

Instructor: Martin Gibbs

Martin has 16 years experience in Human Resources Information Systems and has a PhD in Information Technology Management. He is an adjunct professor of computer science and computer programming.

Improving output and productivity is a goal of manufacturing. This lesson will discuss the theory of constraints, a methodology used to improve production and profit. Examples will be discussed.

Theory of Constraints

If you hear the term Theory of Constraints, you may imagine that we're going to dive into some heavy concepts and complex terms. Far from it. The Theory of Constraints, or TOC, is really a methodology used for process/quality improvement. Its main goal is to remove barriers, or constraints, which we also like to call bottlenecks.

Think of a bottle of water you find on a lakeshore. As you try to pour out the water, nothing comes out. It turns out there's a pebble blocking the bottle. You remove the pebble and try again. Then you find a clump of leaves. You repeat the process until the water is flowing again.

In a real production environment, it's not always that simple, but the basic processes are the same. You need to find a single bottleneck and work until it is removed (the rock), then move to the next (the leaves). This careful, step-by-step approach ensures that we improve throughput (in this case, the flow of the water), and eventually our profit.

Let's take a look at a specific method for identifying and and fixing constraints.

The Five Focusing Steps

Production improvements are rarely one-time fixes. We need to continuously remove bottlenecks and improve production. One approach is called the Five Focusing Steps. Even though we call them steps, it's really a cycle to identify and improve upon constraints within production processes.

The Five Focusing Steps of the Theory of Constraints
TOC Five Focusing Steps

  1. Identify the bottleneck. Is it a pebble or a boulder?
  2. Exploit the bottleneck. This means that we make quick changes (e.g., remove the rock from the water bottle).
  3. Subordinate. We'll see this with a later example, but at this step you shift other people/resources around to support removing the bottleneck.
  4. Elevate. If you are still stuck, figure out what else can be done. You might need to get a vacuum and suck out the leaves from the bottle!
  5. Repeat! This is a continuous process; true quality/production improvement is never done.

Examples: What are Constraints?

In our example, the rock in the water bottle is technically a bottleneck/constraint. But what about real-life constraints? What are the items that cause issues in production environments? Some of them are listed in the table below.

Bottleneck Example
Physical Drill press, employee resources, space crunch
Policy Regulations, contracts, procedures
Paradigm 'We always let the presses run for 10 minutes after every 500th mold.' (A mindset/culture that can be tough to break)
Market Sales are slow, and the production line keeps putting out more goods

TOC in Action

Let's look at a real-world example. A manager has discovered a bottleneck in the process of building molds; she sets down her water and begins the investigation, using the Five Focusing Steps as a guide.

Step 1: Where Is the Constraint?

In this case, the machines are humming and producing. The bottleneck is actually a detailed procedure that all technicians follow at a certain step in the process; the problem is that it contains extra steps that result in delay of production. This is a policy constraint.

Step 2: Exploit the Constraint

The idea here is to try to increase the output from the constraint using what's already available. Idle time in the bottleneck reduces overall output, so what can we do? We need to remove non-value added work, limit interruptions, provide great tools and materials, or prioritize work.

We can't make people read faster, and completely eliminating the manual is probably out of the question. Could we shift workers around so that the work doesn't slow down at this point in the process?

In our case, we noticed that there was a natural downtime for a specific team member during this step, which didn't impact throughput. This employee was tasked with reading the steps aloud to the other employee.

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