The Theory of Constraints (TOC) was introduced to the world in 1985 in a book entitled "The Goal" by renown Dr. Eliyahu M. Goldratt. The TOC is a model of verifiable philosophy: by understanding how people think, leads us to understand the world around us, and because we understand it we can improve. The theory of constraints provides answers to three simple questions: What to change, to what to change to and how to cause the change.
1) First question of the thinking process
One of the most important questions of the Theory of Constraints is: "What to Change?" TOC is a method of practice for organizations to focus on ways of making the company run more efficiently thus increasing productivity and profits by figuring out where the constraints are in the system and finding ways to dissolve them..
What are constraints?
Constraints are anything that stops an organization from achieving the highest potential of its goals. Constraints may be inside of an company (internal) or outside of it (external). Internal constraints can come from the equipment being limited to not producing enough saleable goods and services. The written or unwritten policies of the organization can also prevent all the systems within from producing enough product. One of the biggest constraints that Dr. Goldratt talks about is people's resistance to change when the solution is not a win-win situation. Solutions around this constraint must create a situation in the organization that everyone can win with and increase job security, otherwise people will resist and fight the change. Other types of internal constraints are the policies of the company and the equipment, both of which can limit a system from producing more goods or services. We talk about an external constraint when the organization is producing more goods or services than the market can handle. To handle constraints, TOC provides the "5 focusing steps" which I will talk about in one of the next posts.
Suggestion: Watch the original video lectures of Dr. Goldratt.
Continue reading with the second part of this article.