What is the Theory of Constraints?

The Theory of Constraints (ToC) is a way to avoid sub-optimizing a local process at the expense of the whole operation.  The idea is based on two simple facts:
 

1. All processes have one weakest link in the chain: a bottleneck. This bottleneck limits the flow of the whole operation.
 
2. Other activities (both in that process and other parts of a plant) have excess capacity when compared to that weakest link and therefore waste resource and time that could be applied to fix the weakest link.
 
3. Once you fix that particular constraint, your overall flow will improve – however, another weakest link will then emerge.
  

By a continuous process of finding the bottleneck, balancing flows, and eliminating excess production throughout a plant the whole operation can be maximized in its productivity.

Although it may be impossible to achieve perfection in balancing all the flows, generally there is a lot of room for improvement in most operations. In addition, developing a mind-set which thinks in terms of this theory of constraints helps all employees to spot opportunities for helping to achieve balanced flow. When this occurs, the system of production tends to improve itself over time and simultaneously the whole intellectual capacity of the crew is engaged in improvement of the whole, not just the parts.

How to Apply the Theory of Constraints

The Theory of Constraints Improvement Process consists of five steps:

1. Identify the constraint – Find the bottleneck operation.  
 

2. Exploit the constraint – Make operational changes to stimulate increased production at the point of constraint.  For example: provide coverage for lunch and breaks, re-prioritize maintenance activities, improve staging of raw materials, initiate kaizen events such as setup-time-reduction.
 

3. Subordinate everything else to the constraint – Here all upstream processes are coordinated to ensure that sufficient (but not excess) buffer stock is available at the bottleneck operation. Processes downstream of the constraint operate in a just-in-time fashion, ensuring a constant flow of production.
 

4. Elevate the constraint – By this point the plant is operating far better than before.  We now fundamentally change the production capability at the constraint – usually by adding capacity when demand permits.
 

5. Iterate and repeat – Is the constraint still in the same place?  We now revisit our analysis and make changes by repeating the ToC process.