3 Examples of the Theory of

Constraints and How to Use

Them
No matter the operation, there are always constraints that
limit how much you can produce, deliver, or sell. And in the
case of manufacturing, where every action and department
is interconnected, the ability to recognize and ultimately
alleviate constraints within a system is too good of an
opportunity to pass up. One of the best ways to help you
recognize and fix bottlenecks within an operation is to
review examples of the Theory of Constraints.
By: Ben Baldwin | February 14, 2023

When investing time and money into lean methodologies, the Theory of
Constraints is a crucial process improvement tool that enables businesses
to identify, exploit, subordinate, and elevate bottlenecks within their
system.
No matter the operation, there are always constraints that limit how much
you can produce, deliver, or sell. And in the case of manufacturing, where
every action and department is interconnected, the ability to recognize and
ultimately alleviate constraints within a system is too good of an
opportunity to pass up.
If your business had zero constraints, there would be no limit to how fast
or how much you could accomplish.
However, constraints are always with us. But one of the best ways to help
you recognize and fix bottlenecks within an operation is to review
examples of the Theory of Constraints.
First, What is the Theory of
Constraints?
The Theory of Constraints is an improvement methodology that
encourages businesses to identify limiting factors (constraints) within their
operation. Once a constraint is identified, the goal is to utilize it to its
maximum potential and/or elevate its capacity so that it is no longer a
limiting factor.
Every manufacturing operation consists of multiple interconnected
processes. The weakest link in the process will ultimately set the pace of
the production line because the whole operation cannot exceed the
limitations of the constraint.
Think of it like a chain. When a chain breaks, it breaks in one spot:
the weakest link. This means that while other links may have been
able to hold more weight, the entire chain could never hold more than
the weight capacity of its weakest link.
It is the same with constraints in a manufacturing operation. While there
may be varying degrees of strengths and weaknesses in each department,
process, or team, your entire manufacturing operation is only as strong as
your weakest link. According to the Theory of Constraints, you can never
remove every weak link in a process, but you can progressively exploit or
break them to move forward and grow.
For a preliminary example of the Theory of Constraints, imagine you are
building electric cars. You have all the pieces except for one key
component: the batteries. Due to a material shortage, your company will
need to wait an extra month to receive them.
Waiting for the next shipment of batteries is the largest limiting factor
within your operation. Even though your cars are practically finished, not
one product can be delivered until you receive the batteries and install
them.

How to Maximize Constraints: 5

Simple Steps
 Applying the Theory of Constraints methodology is surprisingly simple
using the following five-step process.

Step 1: Identify the Constraint

Before you can begin maximizing the capabilities of your constraint,
you’ll need to find it first. Luckily, there are several telltale signs that point
to a constraint within your business.

 Accumulations of inventory before the constraint

 More work in progress than reasonably needed
 Excessive hand holding and oversight are needed to ensure particular
processes are performed correctly
 Excessive and/or consistent periods of waiting and machine downtime

To help identify a constraint, perform one or more of the following.

 Perform Gemba walks/audits inspections to visually see signs of the

constraint in action.
 Gather data from your work instruction software to review performance
data and where slowdowns occur. Look at metrics like lead time, takt time,
cycle times, and material usage.
 Look at metrics like Overall Equipment Effectiveness and Overall Labor
Effectiveness to pinpoint the exact moment or factor of the constraint.
 Conduct a root cause analysis on the effects of the constraint to find it.
 Ask operators where they see constraints. Your operators are working with
constraints every day, so hearing from them is an essential practice.
Step 1 Pro Tip: Quickly gather employee feedback using manufacturing
smart forms. Operators can identify issues or make process improvement
suggestions straight from their workstations.

Step 2: Exploit the Constraint

Once you’ve found the constraint, the next step is rather simple.
Exploit the constraint to ensure it functions at 100% capacity using
your current resources.
An example of this Theory of Constraint step is to imagine a production
line where the final assembly takes longer than fabricating the individual
parts. While assembly may be the limiting factor on how fast the whole
operation can be, you’ll want to make sure that assembly operators are
never without the materials they need to keep working.
If assembly workers are waiting for the necessary parts, then the
throughput of the constraint will be slower than optimal, resulting in a
slower operation overall.
 Step 2 Pro Tip: Notice how we’re not yet talking about widening the
bottleneck or alleviating the constraint. That will come in step 4. In this step,
it is imperative to use current resources to discover and test the maximum
capacity of the constraint.

Step 3: Subordinate all Non-Constraints

Step 3 is to ensure that all resources are subordinated to the constraint and
facilitate keeping the constraint working at 100% capacity.
In other words, it’s time to look at the factors outside of the
constraint.
Since you’ve identified the constraint, it logically implies that non-
constraint factors possess a certain degree of excess. Or in other words,
they produce more than the constraint since they are not the limiting
factor. Without intervention, the excess capabilities of non-constraints
would produce buildups of products and potentially contribute to more
constraints and bottlenecks within the system.
While this excess of capability may point to an imbalance, it is actually a
good thing since they are not limiting the operation. You simply need to
enact a measure of control.
We can use this excess to our advantage to apply a drum-buffer-rope
system that subordinates everything to the rhythm dictated by the
constraint (drum).

 Drum: a constraint that determines the production's tempo and rhythm.

 Buffer: an extra period of time before the drum.
 Rope: when the work order is scheduled to be released.

By carefully planning when work orders are released (rope),

manufacturers can ensure that there is a materials/parts buffer that enables
the drum (constraint) to always be working. If there is ever a problem in
the production line before the drum, you still have a few hours or days'
worth of inventory to maintain the constraint's maximum output.
 Step 3 Pro Tip: Keep in mind, you don’t want to create too much of a buffer
before the assembly process. While a small buffer can be a good idea, a
significant pile-up of pre-fabricated parts might cause space and safety issues
in your facility, contributing to another constraint. Better to employ Just-in-
Time (JiT) with as small a buffer as possible to facilitate departments
receiving their resources.

Step 4: Elevate Constraint Performance

Now, in step 4, we can go further than maximization and take action to
elevate and/or break the constraint. However, this process often requires
serious changes like the redistribution of resources or investment in new
technologies.
When making a change to your operation or investing in new technology,
it is important to stick to the goal of increasing the throughput of the
operation. If not, you may make changes that benefit other areas but do
nothing to elevate the performance of your constraint.
Now while the changes you make will be specific to the problem at hand, a
few key methods will help you maintain your goal. Use the following
measures to break your constraints and monitor your goals.

 Establish repeatable best practices: Ensure that every operator is

performing their tasks and responsibilities the right way. Standardization is
crucial when trying to pinpoint areas for improvement.
 Analyze Key Performance Indicators: Further, pinpoint the key
contributors to the constraint by looking at the performance of specific
metrics and calculations that accurately represent the performance of the
constraint.
 Perform Time Studies: Create timestamps with the process to track the
exact times that certain actions are performed within the constraint.
 Evaluate Resources: Sometimes, our current equipment and tools could
be lacking the necessary capabilities to sufficiently break a constraint. For
instance, if you have a high turnover within your workforce, investing
in training software that actively guides workers through the process can
make all the difference.
The goal of this step is to increase the performance of the constraint so that
the identified area is no longer the weakest link.
 Step 4 Pro Tip: Use work instruction software to perform the above 4
crucial steps. Create standardized procedures, analyze KPIs, perform time
studies, and more within one system.

Step 5: Repeat
Like all other lean methodologies, the Theory of Constraints is an
improvement plan that needs to be implemented and then repeated
continuously. There are two scenarios in this step:

 The constraint has been broken: As one constraint is identified,

exploited, subordinated to, and elevated, new constraints will take its place
as the weakest link within the operation. These new constraints can then be
managed by repeating steps 1-4.
 The constraint is not broken: If the constraint has not been broken, then
you’ll need to repeat the process. Often this can be a result of
misidentifying the constraint. Return to step 1.

It is crucial to remember that the 4 previous steps are not a one-time

action. Rather, they are an ongoing process that enables businesses to
evolve and grow.

3 Examples of the Theory of

Constraints
Let’s finalize what we’ve learned about the Theory of Constraints and
apply it to real-world scenarios that affect manufacturers.
Keep in mind that the above 5 steps can vary greatly depending on the
operation and industry. This means that some scenarios will only be able
to experience full exploitation and/or subordination rather than completely
elevating/breaking the constraint.

Theory of Constraints Example #1: Drum-

Buffer-Rope & Work Orders
Improperly managing time is often a huge constraint for many businesses,
especially companies with vertically integrated production lines where
multiple parts are fabricated before moving on to the final assembly.
For this Theory of Constraints example, think of a camera sensor and lens
for state-of-the-art videography drones.
 The camera sensor takes 30 minutes to fabricate while the camera lens
itself takes close to 60 minutes to create - almost twice as long as the
sensor. If you let each process run its course without intervention, the
assembly department would have a buildup of camera sensors while
constantly waiting for the lenses.
To mitigate waiting and pileup of stock, you could issue the work order for
the camera sensors 30min after the lens work order has begun. This should
allow both pieces to arrive at the assembly department at the same time
and effectively subordinate all non-constraints.
However, this idea is somewhat incomplete as it leaves little room for any
fluctuations or issues.
Instead, by understanding the tenets and tools of the Theory of Constraints,
deploying a drum-buffer-rope system subordinates all non-constraints to
the maximum potential of the current constraint while introducing
flexibility.
First, identify the constraint (drum). In this case, the constraint is the
camera lens process. The rope is used to issue work orders in advance of
the constraint and buffer. Since other non-constraints are faster, the lens
process will set the pace of production. But we can maximize the
constraint's capacity and flexibility by applying one of two types of
buffers.

 Parts Buffer: Each day, maintain a small stock of camera lenses that are
ready for the assembly process (rope), ensuring that the assembly
department has the number of lenses they need for the day. This way, even
if there are unforeseen issues, you still have some stock to maintain the
constraint at maximum capacity.
 Time Buffer: Here you would issue work orders for the camera lenses
slightly in advance of the camera sensors. If the lens takes 1 hour to
fabricate, you could create a buffer that ensures the lens work orders are
issued (rope) 2-3 hours in advance of the assembly process. This head start
enables the assembly department to keep a small yet ever-growing
inventory that should deplete itself by the end of the production period.
Despite adding more time to the total process, we are simply starting work
earlier than needed to protect the operation from unforeseen issues while
maximizing the potential output of the constraint.

Choosing between a time buffer or a parts buffer will ultimately depend on

the specific requirements and capabilities of the manufacturing operation
and business.
Read More: Push vs Pull Manufacturing: Which is Best for You?

Theory of Constraints Example #2. Slow

Quality Inspections

While production can often be a major focus within the Theory of

Constraints, other areas add complexity, resulting in a slower operation
overall. One such activity that companies struggle with is quality
inspections.
For instance, imagine your company is assembling toy cars for children.
Since this is a children's toy, several quality guidelines must be followed.
 Final quality inspections have been a major drain on time, creating a
constraint with a significant backlog of products waiting to be inspected.
To maximize the constraint, you’ve applied the 5 steps of the Theory of
Constraints methodology.

1. Identify that the constraint is within the final quality inspection process.
2. Exploit the constraint to ensure that final quality inspection personnel are
never waiting for products to inspect.
3. Subordinate all non-constraint activities to the speed and tempo of the
quality inspection process. In this case, you may need to slow down the
speed of toy car production.

Organizing these three steps properly will give you some time and space to
properly evaluate your decisions for the 4th step.

4. Elevate the constraint by investing in tools and training to speed up the

rate of inspections along with the number of people that can perform the
quality checks. Work instruction software enables employees to quickly
learn how to perform inspections while also directing experienced
employees with the best practices for the inspections.
5. Repeat the process to verify that the constraint has been broken. Then
identify the new constraint and continuously improve the operation.

Read More: Did you know that Republic Manufacturing was able
to decrease their inspection times by 75% using VKS work instructions?

Theory of Constraints Example #3. Finding 2

Fluid Constraints
Sometimes, rather than existing within one section of a process, a
constraint can be found within a fluid part of your operation, such as the
workforce or the machinery itself.
For this example of the Theory of Constraints, imagine you run a high-
mix/low-volume manufacturing operation. While some contracts are
repeated, it has become increasingly challenging for your operators to
 remember the ins and outs of every job, creating several potential
constraints within each product line.
In this case, like in our earlier example, you decide to follow the 5 steps of
the Theory of Constraints.

1. Identify that in most departments, the constraint is within the human

processes.
2. Then, exploit the constraint to maintain maximum capacity by providing
additional training when needed.
3. After, subordinate all non-constraints to set the proper tempo for
production with the current methods and workforce capacity.

While the constraint has been properly exploited, the production speed is
still too slow.

4. In this case, invest in work instruction software so that every worker has
the right knowledge they need at the right time.
5. Then repeat the process to evaluate if the changes were successful.

Lo and behold, they were. But now you’ve already noticed the next
constraint that needs to be developed.
 By using your work instruction software and monitoring employee
performance, you see that certain machines are often sitting inactive,
greatly limiting the efficiency of the operation and creating a new
constraint.
In this case, you repeat the 5 steps above.

1. You identify that inefficient planning of machine usage is the current

largest constraint.
2. Exploit the constraint by optimizing the machine usage plan.
3. Subordinate all non-constraints to set the proper tempo for production with
the current methods and equipment capacity.

Similarly, the constraint has been properly exploited but the production
speed is still too slow.

4. Elevate the constraint by using advanced systems and tools to create an

intelligent machine layout and schedule.
5. Then repeat the process to evaluate if the changes were successful.

Read Next: Did you know you can optimize both Overall Labor
Effectiveness (OLE) and Overall Equipment Effectiveness (OEE) with VKS
and JITBase manufacturing software?
Why VKS
Work Instructions

By focusing Lean initiatives in the right places within the company the Theory Of
Constraints leads to much faster improvements in performance. By identifying what limits
sales, TOC enables organizations to renew with growth and avoid downsizing. You could
call it focused Lean.
Point of view written by Philip Marris, Founder and CEO of Marris Consulting based in
Paris, a specialist in Theory Of Constraints (TOC) and Lean and author of the French
reference book on applying TOC to manufacturing and process industries Le Management
Par les Contraintes en gestion industrielle .
[1]

The Theory Of Constraints (TOC)

The main approaches to improve the performance of industrial organizations are Lean, Six
Sigma and the Theory of Constraints. TOC is the least well known and the least used. It is
sometimes referred to as Constraints Management. This school of thought was developed
by Eliyahu Goldratt in the 70's and became known in particular through a worldwide
bestseller novel – The Goal [2] – that has been sold over 7 million copies in 29 languages. It
assumes that all plants are now unbalanced, the workload is unevenly distributed. At any time
there are overloaded resources – bottlenecks or constraints – and "non-bottlenecks”.
Management rules must be redesigned accordingly.

Lean or Toyota’s way

To avoid confusion we consider here that "Lean" is the approach developed by Toyota. It is
[3]

a long term process of eliminating waste, a process of continuous improvement implemented

by all employees. It seeks to continuously, uncompromisingly, improve products flow.
The Lean manufacturing system is now quite well understood, very frequently identified as
a goal…and sometimes quite well copied. We believe that it is unfortunate that in the
majority of cases Toyota’s R&D and new product development system is not also copied
since it is a very important component of the Toyota “model”, people buy their cars as much
for the way they are designed as for the way they were built. What is most disturbing is that
when the ex-first world copies Toyota, it nearly always leads to a process of continuous
downsizing whereas Toyota is a growth and full employment model. We call this company
contraction “improvement process” laced with Japanese words “Bad Lean”.

TOC + Lean: winning combination

When Lean and Theory Of Constraints are combined, improvements are much faster and
significant increases in sales are frequently observed. Lean drives out wastes
and TOC identifies constraints on which to act to increase turnover. The combination of the
two creates a virtuous circle whereby the company becomes continuously more effective by
eliminating the added expenses, and simultaneously generates additional sales that can absorb
the productivity improvements.

TLS: TOC + Lean + Six Sigma

The third major approach today is Six Sigma. It aims at reducing variability in the processes.
Its 2 main components are DMAIC (Define, Measure, Analyze, Innovate/Improve, and
Control) and an implementation system based on certified experts (Green Belts…Master
Black Belts). Its major differentiating factor is probably the importance attributed to
collecting and analyzing data and doing Design Of Experiments (DOE) to minimize
variability. Since the year 2000 Lean and Six Sigma have been frequently united as “Lean
Six Sigma”. TOC, Lean and Six Sigma can be combined hence the “TLS” label. The
compatibilities or incompatibilities between the 3 are the subject of unending internet
discussions mostly among consultants. TLS, or TLSx, is meant to symbolize an open
mindset and avoidance of quarrelling between the approaches or sects. You keep an open-
[4]

mind and you mix your own cocktail according to the problem to solve and your personal
experience.

An example
Let’s take for example, a production unit of steel sheets. The plant is large - more than 1,000
people - and includes several stages of production: steel smelting, continuous casting, rolling,
heat treatment and surface treatment, then cutting. The initial production cycle was 30 days.

First step: increase the turnover

An analysis of the plant located the bottlenecks. In this type of process
industry, identification of the constraint is easy because Work In Progress accumulates in
front of the bottlenecks. In this case, the heat treatment furnaces were the bottlenecks: the
turnover is determined by these equipments. Each hour lost on these ovens is an hour of lost
sales for the company. Therefore we must focus all improvement efforts on that part of
production. In this way, without investing but just applying simple solutions, the throughput
of the furnaces was increased by over 20%:
 Improvement of curative and preventive maintenance of these bottlenecks by giving
them priority over other equipments,
 Reduced changeover time by compressing the cooling time with the use of cold steel
sheet "martyrs" (“Process SMED”),
 A decrease in the number of changeovers per week thanks to an appropriate
scheduling,
 Elimination of most of the rework by better process mastery (simple Six Sigma).
In this way the productivity of the whole 1,000 people factory was increased by 20% in 3
weeks.

Second step: Synchronize the factory to the rhythm of the

bottleneck
The flow of the plant must be controlled and driven in accordance with the bottlenecks.
The TOC system is called "Drum - Buffer - Rope" or DBR: [5]

 Drum: Optimized scheduling of the bottlenecks to maximize their output,

 Buffer: Protection of the bottlenecks with buffers so that upstream problems on non-
critical resources don’t starve these critical resources, and to ensure on-time
deliveries, implementation of a buffer before shipment,
 Rope: Launch new work orders according to the bottlenecks' capacities.
The DBR system has demonstrated its ability to reduce WIP by 50 to 80%. Furthermore it is
a nearly universal system applicable to all sorts of production systems. In the present case
WIP and lead times immediately dropped by 50% from 30 to 15 days including 6 days
of buffers in front of the ovens.

Drum - Buffer - Rope : The product flow control logic of the Theory Of Constraints

Third step: focus the improvement process – focused Lean

Once DBR is implemented, it is imperative to continuously observe the contents of
the buffer. The lateness of arrivals was analyzed to identify the major upstream problems, it
permitted to set the priorities of the improvement actions. In our example, it highlighted two
activities that were responsible for the worst delays:
  An old shearing machine in a corner of the factory with frequent breakdowns of several
days,
 Metal samples that were frequently late because the testing laboratory lacked
rudimentary priority management.
Once these issues had been resolved, the plant was able to reduce the buffer from 6 days to 4
days. It took 3 weeks and an investment of 9K€. By solving those two "small secondary
problems” which were actually the most damaging for the plant, the entire manufacturing
cycle was reduced from 15 to 13 days. This process of continuous improvement, guided by
the analysis of the buffer stock is then repeated continuously (endlessly). This is a relatively
unknown facet of the Theory of Constraints: do not ignore the "non-bottlenecks" (which are
maybe 90% of resources in a factory!). Consider them in a different way; they cannot
contribute directly to the level of short term sales but they have an important role to play.

Maintain the virtuous growth spiral to avoid continual

downsizing
In the above example, in just a few weeks, the productivity of the company was increased by
20% and the production lead times were reduced by 50%. The next step was to exploit this
new performance and increase the volume of sales to absorb the newly available
capacity. This is critical to avoid the pressure of headcount reductions which would destroy
the process of ongoing improvement by stifling the motivation of the employees to further
improve. The goal is to maintain “good”, focused Lean (a growth model) and avoid
“Bad Lean” (continual downsizing).

TOC is applicable to all departments of the company

and the constraint might not be in production
In the case presented here, producing more was sufficient to sell more. This is currently not
the case in many companies who suffer from insufficient demand for their products. In this
case the basic reasoning remains the same but the Theory of Constraints considers that the
market is never really the constraint. Weak market demand is the consequence of a weak
product and/or service offering. The company must identify where its internal constraint
really is. It could be in Engineering if the products are of inferior quality (specifications) than
those of the competition. It could be in the Marketing or Sales departments if the company
has good products but the market is not buying them in sufficient quantities. In these cases it
is recommended to reconsider the company’s strategy and tactics using for instance
the Thinking Process of TOC. [6]

For further information, follow or participate in discussions in the LinkedIn TLS group and
stay informed about the latest news of the TLS community with TLS Scoop.it!.

About the author

Philip Marris is CEO of Marris Consulting based in Paris. Over 80% of the firm’s projects
are based on Theory of Constraints, "TOC + Lean" or TLS. He is the author of the French
reference book Le Management Par les Contraintes en gestion industrielle. He is the founder
of the LinkedIn “TLS – TOC, Lean and Six Sigma” group. He is active in increasing the
awareness of Theory of Constraints in Europe. He is a member of the Advisory Board of
the TOC Institute India. He started his Theory of Constraints journey in 1986 when he
worked with Eli Goldratt. He started his Lean journey in 1984 and has been trying to better
master Lean ever since. He has over 35 years of experience in industry and in consulting. He
is English and is bilingual and bi-cultural English - French.

More about the combination of Lean and Theory of Constraints in

manufacturing

Marris Consulting is an expert company in the field of Lean manufacturing and Theory of
Constraints consulting. With more than 25 years of experience in combining Theory of
Constraints (TOC) with Lean, we are convinced that this integrated approach leads to faster
and more significant performance improvements in the manufacturing and process
industries. The combination of Lean and TOC creates a virtuous circle: the Theory of
Constraints is a highly effective mechanism to identify the constraints on which to act,
while Lean manufacturing provides a rich toolbox of improvement techniques. The
company then becomes more competitive by eliminating waste in the parts of the system that
are the greatest constraints, while generating additional sales.
With proven knowledge and significant experience in implementing TOC + Lean in
manufacturing, our Theory of Constraints consultants provide you with the most efficient
path to implementing this integrated approach, for a major transformation in your company’s
performance.