Theory of Constraints is a repository of knowledge, methods, and tools for interdisciplinary management of organizations. The lead author is Eliyahu M. Goldratt, with other contributors.
The theory of constraints is a fundamental principle that the flow generated by an organization is limited by at least one process, that is to say, a neck or bottleneck. Production value can be increased by increasing the production capacity at the bottleneck.
Those who are writing their research paper on theory of constraints have to know that there are five key stages of implementation of the theory of constraints:
- Identify the constraint (bottleneck).
- Exploit the constraint (increase its use and efficiency).
- Make all processes in the process forced.
- Raise the performance of the constraint (if necessary).
- Repeat step 1 if the constraint has changed.
The application of the theory of constraints to production is often called the “management by stress.” The bestselling novel by E. Goldratt The Goal is devoted to this subject. This book has sold millions of copies worldwide. It is a method of industrial management based on the distinction between two types of so-called “bottleneck” resources or “non-necks.”
The basic idea is very simple. If we represent a production process through a series of tanks through which flow the products, the concept of “bottleneck” or “constraint” becomes evident. These are the bottlenecks that limit the output stream. Their diameters increase amounts to increasing the throughput of the whole, which is not the case for the “non-necked.” We can call a production line unbalanced, when the resources (machines or staff) performing different operations do not all have the same capacity.
What distinguishes the constraint management from other industrial approaches is that it argues that the imbalance has become not only inevitable – hence the need to recognize the constraints and manage the activity as a function of imbalance existing – but also desirable. We must therefore identify the correct imbalance and invest in order to get as close as possible. It follows that where previously all resources have equal importance, we must adopt a dual view: to sort out what should be the focal point of the organization (constraints) and the rest. If we assume that the non-bottlenecks have excess capacity, it is no longer necessary to seek full employment of each machine. We can get rid of local optima that prevented synchronizing the activity. The company will boost the performance by adapting its rules to reality, a universe where the imbalance is inevitable. In this sense, it is similar to the “collaborative” side of just-in-time strategy: when an operator has lack of parts, he will help his colleague upstream and conversely, if the parts accumulate after his position, he will help his colleague downstream; but this is a management bottleneck “day to day” and not detecting a systemic neck.
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