Theory of Constraints

This is how it all started, I was introduced to this theory by an engineer, he talked about how good the theory was and how it affected his factory; he had his product to go through various manufacturing processes before it turned in to something he could sell.

I was overwhelmed by the whole idea, theory of constraints was quite a thing and my engineer friend explained how important it was for the manufacturing processes. How it could be used to optimize production and how to adjust the supply chain so that the constraint was minimized.

I was lost, too much jargon and information overload but then, it’s our engineers that make simple things look complex so that complex things look simple. Didn’t get it, take a look at a bridge better yet look at a suspension bridge and study its design, you’ll know what I mean.

Later did I learn that the theory is more about the management of the organization as a whole rather than the idea suggested by other management theories of having each department aligning itself to the overall corporate goal. Honestly, the theory of constraints is more like macro economics versus micro economics in organization management. That is what I liked about the theory.

The Theory of Constraints (TOC) is something like this, the achievement of the goal is only limited by the constraints in the organization, these constraints need to be addressed and the flow after careful analysis, correction and well thought strategy be implemented for the flow to increase. The more the increase in the throughput the closer the organization gets to achieving its goals.

The idea behind TOC is continual improvement, raising the stakes every time a bench mark is met. Continual improvement means being constant at one state and this is, change.

A constraint is anything that prevents the system from achieving its goal. There are many ways that constraints can show up, but a core principle within TOC is that there is at least one and at most a few in any given system. Constraints can be internal or external.

An internal constraint is when the market demands more from the system than it can deliver. If this is the case, the focus should be on discovering that constraint and following the five focusing steps to open it up (and probably remove it, if possible).

An external constraint exists when the system can produce more than the market will bear. In this case, then the organization focus should be on mechanisms to create more demand for its products or services.

Internal constraints usually are:

• Equipment: The way equipment is currently being used limits the ability of the system to produce more salable goods / services.
• People: Lack of skilled people limits the system. Mental apprehensions held by people can cause behavior that becomes a constraint.
• Policy: A written or unwritten policy prevents the system from making more.

There are three questions that need to be asked now:

1. What to Change?
2. To what to Change?
3. What to do to cause the Change?

And after having solved these three questions you need to manage the change.

 

What to change?

Identify the core problem causing symptoms and producing corrupted results. Go back from the results all the way to the origin, trace the causes. Build a tree-like structure that validates the identification of the core problems, this helps understand the existing cause-and-effect relationships, it also identifies the illusive formal and informal policies and to an extent the behaviors that support the existence of the corrupted results.

 

To what to change?

Construct a new tree focused on what the expectations are from the future more specifically defining the complete solution or at least the strategy that:

• Resolves the issue of all the corrupted results by making their opposites, the Desired Effects
• Ensures alignment with the strategic objectives of the bigger system that the management area under discussion is a part of
• Ensures that no new negative effects (Negative Branches) will occur from implementing the solution/strategy
• Identifies what changes in the culture (formal and informal policies, policies and procedures) of the system and/or sub-system must be made to ensure the symptoms are resolved

What to do to cause the Change ?

All organizations work to their distinct culture. Therefore, when taking up a change initiative, it has to be not only well thought off in terms of what is wanted; it also needs a lot of thinking in terms of how to get that change in. As you would have read in my earlier post on Change Management, resistance is always there. Some employees raise their voice, some even retaliate physically and then there are those who make sure it’s a failure by not doing anything that was expected out of them and this is just because they found nothing in it for themselves. Therefore, employee buy-in is crucial.

The change management should be a well devised strategy. Knowing who is going to do what and when is really important; this measured by KPIs can get the job done.

Stay tuned: There is more to come.