Scribd
Upload
357 views

Theory of Constraints PDF

The Theory of Constraints (TOC) identifies that every organization has at least one constraint that limits its ability to achieve more of its goals. The TOC process seeks to identify this constraint and restructure the organization around it. It involves five focusing steps - identify the constraint, exploit it, subordinate everything else to it, elevate the constraint if needed, then identify the next constraint. A key TOC operations concept is Drum-Buffer-Rope, where the drum is the constraint, buffer protects it, and rope controls work release.

Uploaded by

Agust
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
357 views

Theory of Constraints PDF

The Theory of Constraints (TOC) identifies that every organization has at least one constraint that limits its ability to achieve more of its goals. The TOC process seeks to identify this constraint and restructure the organization around it. It involves five focusing steps - identify the constraint, exploit it, subordinate everything else to it, elevate the constraint if needed, then identify the next constraint. A key TOC operations concept is Drum-Buffer-Rope, where the drum is the constraint, buffer protects it, and rope controls work release.

Uploaded by

Agust
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 19

THEORY OF CONSTRAINTS

INTRODUCTION

“A chain is no stronger than its weakest link”

Organizations are vulnerable because the weakest


person or part can always damage or break them or at
least adversely affect the outcome
INTRODUCTION (2)

 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.
 TOC process seeks to identify the constraint and
restructure the rest of the organization around it
 Approach  Five Focusing Steps
ULTIMATE GOAL OF TOC

MAKE MONEY!!
Make Money Now AND in The Future
MEASUREMENT

Organizations can be measured and controlled by variations


on three measures:
 Throughput  the rate at which the system generates
money through sales
Calculation: (Sales Rev – Var Exp) / Time
 Operational Expense  all the money that the system has
invested in purchasing things which it intends to sell
 Inventory  all the money the system spends in order to
turn inventory into throughput
MEASUREMENT

Performance is measured as the achievement of:


 Increased throughput
 Lower operational expense
 Minimal inventory level
Financial measures:
 Profit
 Return on Investment
 Cash Flow
KEY ASSUMPTIONS

 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
 Usually applicable ONLY in manufacturing or trading
KEY ASSUMPTIONS

 Convergence - Inherent Simplicity; The more


complex a system is to describe, the simpler it is to
manage
 Consistency - There are no conflicts in nature; If two
interpretations of a natural phenomenon are in
conflict, one or possibly both must be wrong
 Respect - People are not stupid; Even when people
do things that seem stupid they have a reason for
that behavior
CONSTRAINTS

 A constraint is anything that prevents the system


from achieving more of its goal
 Constraints can be internal or external to the system
 Only a few elements (constraints) in a business
control the results of the entire organization
 In TOC, the constraint is used as a focusing
mechanism for management of the system
INTERNAL vs EXTERNAL
CONSTRAINT

 An internal constraint is in evidence when the market


demands more from the system than it can deliver
 focus on: discovering that constraint and following the
five focusing steps to open it up (and remove it)
 An external constraint exists when the system can
produce more than the market will bear
 focus on: mechanisms to create more demand for its
products or services
TYPES OF CONSTRAINT

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
OTHER TYPES OF CONSTRAINT

 A Loose Constraint is evident when limited resources


are not fully used by the product mix
 A Binding Constraint is evident when available
resources are used at their full capacity
TOC APPLICATION:
Five Focusing Steps

 Step 1: Identify the system constraint.


In the first step, an organization identifies the part of the
system that constitutes the weakest link. Then determine
whether it is a physical constraint or a policy-related issue
 Step 2: Decide how to exploit the constraint.
Organizations “exploit”the constraint by utilizing every bit
of the constraining component without committing to
potentially expensive changes and/or upgrades
TOC APPLICATION:
Five Focusing Steps

 Step 3: Subordinate everything else.


With a plan in place for exploiting the constraint, the
organization adjusts the rest of the system to enable the
constraint to operate at maximum effectiveness.

Evaluate the results to see if the constraint still holds back


system performance. If it is, the organization proceeds to
Step 4. It not, the constraint has been eliminated and the
organization skips ahead to Step 5
TOC APPLICATION:
Five Focusing Steps

 Step 4: Elevate the constraint.


If an organization reaches Step 4, it means that Steps 2
and 3 were not sufficient in eliminating the constraint.
At this point, the organization elevates the constraint by
taking whatever action needed to eliminate it.
This may involve major changes to the existing system,
such as reorganization, divestiture, or capital
improvements.
TOC APPLICATION:
Five Focusing Steps

 Step 5: Go back to Step 1.


After a constraint is broken, the organization repeats the
steps all over again, looking for the next thing constraining
link. At the same time, the organization needs to monitor
how the changes related to subsequent constraints impact
the already improved constraints
TOC OPERATIONS:
DRUM – BUFFER – ROPE (1)

THE DRUM
 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.
TOC OPERATIONS:
DRUM – BUFFER – ROPE (1)

THE BUFFER
 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.
TOC OPERATIONS:
DRUM – BUFFER – ROPE (1)

THE ROPE
 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.

You might also like