Theory of Constraint
- 6. What is constraint? • A limitation or restriction. • Stiffness of manner and inhibition in relations between people. • A constraint is could also be any thing, object, person, process, or structure in an organization that prevents the flow of value to a customer.
- 7. What is Theory of Constraint? • The theory of constraints (TOC) is a management paradigm that views any manageable system as being limited in achieving more of its goals by a very small number of constraints. • The Theory of Constraints (TOC) is a management concept that views any manageable / organization as being limited in achieving its goals by a very small number of constraints on the system.
- 9. ELIYAHU M. GOLDRATT in 1990
- 10. •“If we dive deep enough we’ll find that there are very few elements at the base, the root causes, which through cause-and-effect connections, are governing the whole system. The result of systematically applying the question “Why?” is not enormous complexity, but rather wonderful simplicity”
- 11. but particularly, how teams work within organizations to achieve flow. The Theory of Constraints (TOC) applies the cause- and-effect thinking processes to understand and improve all systems,
- 13. • Org values speed and volume as determinants of success • Current processes are essential to produce the desired output • Product or service design is stable, economical and essentially correct and satisfies customers • Management structure supports and values change • Process has dependent events and fluctuations/variation
- 15. Average managers are concerned with methods, opinions and precedents.
- 16. Good Managers are concerned with solving Problems
- 17. TOC basis three important questions What should we change? What should we change to? How do we implement the change?
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- 19. What should we change? • From a list of observable symptoms (UDEs), cause-and-effect is used to identify the underlying common cause, or root cause(s), for all the symptoms. • In organizations, however the root cause(s) are inevitably unresolved conflicts that keeps the organization trapped and/or distracted in a constant tug-of-war.
- 20. What should we change to? • By challenging the logical assumptions behind the conflicts, counter-measures to the root cause(s) can be identified. This is only the starting point for the development of a complete solution – as strategic intent – for resolving the root cause(s), as well as all the initial symptoms. • This often involves changes to the policies, measurements, and organizational structures identified in What to Change? As well as the organization’s strategic intent.
- 21. How do we implement the change? Taking into consideration the unique culture which exists in every organization, a plan is developed to transition an organization from where it is today to realizing the strategic intent which is aligned to elevate the key constraints on the system which are preventing the organization from achieving flow.
- 22. TOC five focusing steps
- 24. Exploit the constraint Step A Capacity 120 units/day Step B Capacity 150 units/day Step C Capacity 75 units/day Step D Capacity 135 units/day What can we do to get the rid of this constraint?? Without being charging high expenses this is all about management as TOC is about Management so here there must be efficient management who get rid from this constraint…
- 25. Subordinate every thing to constraint Step A Capacity 120 units/day Step B Capacity 150 units/day Step C Capacity 140 units/day Step D Capacity 135 units/day
- 27. Elevate the constraint Once the capacity of the system is exhausted, it must be expanded by investing in additional equipment/land, hiring people, or the like.
- 28. Even when a damped, driven system is at equilibrium, it is not at equilibrium… JAMES GLEICK CHAOS
- 29. Prevent inertia from becoming the constraint Once elevated, the weak link may not remain weakest. Consider elevating other resources to retain the old constraint, depending on where you wish to have the constraint in the long-term. A new constraint demands a whole new way of managing the system. We therefore return to Step 1, and thus begins our journey of continuous improvement ... 2 3 4 5 1
- 31. •Throughput accounting. •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.
- 33. •Understanding the system is mandatory to improving it •Any System has a Goal •The Leader is responsible for the Goal •Theory of Constraint is about Leadership & Management •Every System has at least one constraint •If you don’t impact the constraint then there is no effect on the system’s improvement •Improvement is a Long Term and Continuous Process