I got a question on my mention of Theory of Constraints (TOC) in an earlier post.
As my factory production has reached capacity, my most critical goal is to introduce TOC into my production facility. I first heard of the Theory of Constraints in the book The Goal by Eliyahu M. Goldratt and Jeff Cox.
The TOC is based on the view that there is some essential limiter in a system, i.e. at least one bottleneck. Overall increases in production can only be achieved by increasing the throughput of that bottleneck.
The steps to implement TOC are:
- Identify the constraint (bottlenecks are identified by inventory pooling before the process)
- Exploit the constraint (increase its utilisation and efficiency)
- Subordinate all other processes to the constraint process (other processes serve the bottleneck)
- Elevate the constraint (if required, permanently increase bottleneck capacity)
- Rinse and repeat (after taking action, the bottleneck may have shifted or require further attention)
source wikipedia article on Theory of Contraints
I’ll provide updates here on how the process at my factory goes.
You can buy the book from Amazon
3 responses to “Theory of Constraints”
[…] Wealth Esteem — paulz @ 12:54 Yeah I misspelled Theory of Constraints in my rush to post earlier. I don’t normally spell Thoery of Constraints I thought I’d add another point that I learned from The Goal. In business accounting Inventory is an asset, which normally means it is a good thing. However inventory must be insured, counted, protected and marketed. Inventory becomes obsolete. Inventory consumes working capital. You can go broke with inventory. […]
“Theory of Constraints” is a great concept and methodology. Thanks for the post.
Hi Gary, Thanks for the comment. I’ll be happy to restore the URL in your name once we have a chat here.
What about the Theory of Constraints appeals to you? What’s the constraint in your business?
Looking at your website it seems a service business.