The Theory of Constraints
Overview
The theory of constraints was developed by Eliyahu Goldratt and published in his book,
The Goal.
A basic understanding of the theory of constraints can be had by considering a simple process diagram. This process is divided into
three sub processes. The output of process A is an input to process B, whose outputs are inputs to process C, whose output
is the product.
If process B is a bottleneck, that means that process A can produce more input to B than B can process. Likewise, when running
at full capacity, Process B may need be able to produce enough input to process C so that C can run at full capacity.
Within the theory of constraints, bottlenecks are identified by intetifying constraints. Every process runs under a set of constraints.
As a simple example, the inputs to the process are a constraint. (that is, the process cannot run faster without inputs)
As a second more intangible example, established procedure may act as a constraint, in the sense that if the procedure were
altered in some way, the process may be able to run faster.
Driving Efficiency
The theory of constraints says that to optimize the process, like the simple one above, one should focus on the bottlenecks.
In this case, there is no use in optimizing either process A or process C. In fact, it is optimal for them not to run
at full capacity. That is, resources devoted to process A or C will be idle from time to time.
Managing Risk
The second aspect of the theory of constraints deals with managing risk. In this case, the firm should build up some buffer to
process B. That is, the firm should overproduce from process A some, in order to create an inventory for B to draw on in the
case that some disruption causes A to be idle. Having the buffer available means that the firm can keep the bottlenect process
B constantly running.
Framework
