Theory of Constraints – Revisited

In 1984 Eliyahu M. Goldratt wrote a book entitled “The Goal” which is geared to help organizations achieve goal of continuously improving linkage and flow of manufacturing operations. This methodology would ultimately be coined the Theory of Constraints (TOC).  It’s a simple but powerful tool.  Find the constraint and optimize it until a new constraint is identified downstream then optimize that until you can go no further. Always look to improve but don’t cannibalize your operation.

Its 2017 let’s see that’s 33 years later and still TOC number one tenet is routinely violated! The number one rule is DO NOT OPTIMIZE OPERATIONS THAT FEED THE CONSTRAINT!

I have routinely seen this done and it is definitely one of my biggest pet peeves.

Optimizing a non-bottleneck has zero impact on the throughput of entire system. Constraints are not bad there inherent to every process however they must be identified and understood.

Too many lean events focus on the efficiency at the operator level of non-constraining departments. Time study after time study is performed focusing on how to take seconds out of an assembly process. Then once that non constraining assembly process is optimized it can efficiently run excess inventory to the constraining department by increasing the bottleneck.

What’s the reason organizations fail to heed this major tenet of TOC? In my opinion organizations and management systems are set up to report short term wins. Top management doesn’t want to hear that the problem is complex and we’re working on it they want to hear wins. Report outs must say something positive even if it optimizing a non-bottleneck which may ultimately drive up inventory, scrap and costs. Finance departments that don’t use lean accounting practices focus on efficiency and utilization at all process is also the culprit. Low efficiency isn’t a concern if it’s still overloading a downstream bottleneck. Even in Kanban environments this forces managers to keep working (machine utilization) even when signals say to stop.

Constraints are best managed by focusing on reduction of scrap and rework, reducing set up and change over time, discovering new technologies, using old technology as needed and buffering shared resources. Again you must start at the area of bottleneck, typically a shared resource.

Take away. Optimizing process before constraint has zero impact on entire process. Optimizing after constraint no matter how well can only produce at the level of constraints output.

Attacking the constraint is not a two week lean event it should become a continual management practice.  Removing constraints is time consuming, expensive and might even call for the ultimate sin increased inventory!

But if nothing changes every report out will focus on how we saved travel by 128 steps to the paint booth and reduced 20 seconds in assembly without mentioning parts will now just increase backlog of constraint along with inventory WIP!

If you haven’t read the The Goal its a must read for lean practitioners! You can get copies for less the ten dollars!

What are your, thoughts, opinion or stories would love to hear from you!

 

 

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