Theory of Constraints — A Concise, Expert Management Briefing

Identify deep-rooted core problems (might be 20+ "why's" deep!) Surface and challenge assumptions Construct simple, practical outside-the-box solutions Basis for Buy-In and team work

Unique Planning & Analytical Tools for Managers

The "TOC Thinking Processes" are the Theory of Constraint ’s analytical, planning, problem-solving and communication processes, and they can be used by any organization to improve performance by constructing a powerful and practical solution to their own, specific core problems. They are also integral to all the TOC applications that have been developed – including Synchronous Manufacturing, Critical Chain Project Management, Distribution, Supply Chain, Throughput Accounting and the Marketing Solution.

Managers can also use these Thinking processes to help them deal more effectively with many management issues that arise during a day – including minor and major conflict resolution. The tools enable managers to find win/win solutions that are not compromises, but provide a genuine win/win. However, the TOC Thinking Processes were initially developed to enable manufacturers to methodically identify and overcome the Policy Constraints that inhibited them from continuous, rapid, order-of-magnitude performance improvement.

Policy Constraints at the core of many problems

Dr. Goldratt, the originator of the Theory of Constraints, has the almost uncanny ability to view complex problem situations in an unconventional manner. He is usually able to cut straight through to the "heart" of the problem in very little time, and construct simple, practical solutions that often break all the conventional rules and are extremely powerful in practice. Inevitably the heart of the problem is a policy constraint of some kind. That is, policies or procedures, rules or measurements, ways of working, whether written or unwritten, formal or informal, that passed unchallenged in the daily operation of the business but were preventing the company from achieving the next break-through in performance improvement. These are what we call "Policy Constraints."

Dr. Goldratt was frustrated at seeing organizations improve rapidly and dramatically using one aspect of the Theory of Constraints, only to stagnate because they were unable to identify and deal with the obvious policy constraints standing in front of further improvements. He set out to document and then teach the "Thinking Processes" that enabled him to analyze and plan so effectively.

Over several years, working with a group of associates, these "Thinking Processes" were documented to the level that they could be taught to others; and, courseware was developed to teach people to effectively deliver the courses.

Powerful Tools

Five separate processes comprise the full suite of Theory of Constraints' Thinking Processes.

Today, these Thinking Processes have proven to be far more powerful than probably anyone (perhaps including Dr. Goldratt) expected. They have also been refined and modified over the years, and they are used today in a variety of ways and for a variety of purposes.

• As a suite, to perform what is known as a "full analysis," starting with a list of symptoms of a major problem area and concluding with a full solution and an implementation plan.
• As individual processes to perform specific types of analysis or planning, with or without use of the other processes. For example, to ensure that a "Good Idea" is developed into a "Good Solution" with a high degree of likelihood of achieving the intended outcomes of the idea, and a low risk of creating negative side effects.
• As a suite or as individual processes used in a more limited way for day-to-day communication purposes by management. The word "limited" here does not imply "less powerful" – simply that the full power of the processes do not need to be brought to bear to achieve great results in enabling managers to be better at dealing with day-to-day issues. A manager might use one process to resolve a conflict in a win/win manner. Or, a different one to plan a way through, or around, obstacles to coordinate a team to achieve a successful outcome. He/she could use a third process to help a person working for him/her see flaws in their plan and strengthen it without suspecting criticism, or a fourth to plan a conversation in such a way as to gain a buy-in from another party to some course of action. In this form the processes represent day-to-day management skills.
• As the basis for breaking "External Constraints" – for example, causing customers or markets to buy more product or pay higher prices, or causing vendors to provide better service levels. The Theory of Constraints' Marketing Solution is an example.
• As superb communication tools. In analyzing a situation or planning a course of action every major assumption is surfaced and opened for challenge. There is no room for ambiguity, and use of the Thinking Processes routinely gains 100% consensus as to the nature of a problem or solution among people who may have started at polar extremes in terms of their opinion.
• As tools specifically for Gaining a Comprehensive Buy-In from anyone as to the correctness in principle and detail of a course of action.

Generic Solutions and custom solutions

A full analysis can be performed of any problematical set of circumstances. Usually this yields a case-specific solution, not necessarily of use to any other organization.

Sometimes, however, the full analysis yields a solution that is entirely applicable to an entire industry type.

For example, when the symptoms associated with poor manufacturing performance are subjected to a full analysis, the outcome is an approach to scheduling and managing a factory known as Drum-Buffer-Rope, which has proven extremely effective in thousands of manufacturing businesses internationally. On a bigger scale this becomes the application Synchronous Manufacturing.

When the symptoms associated with poor project management performance are subjected to a full analysis, the outcome is an approach to scheduling and managing a project known as Critical Chain Project Management. This, too, has proven extraordinarily effective in generating improved project performance in a wide variety of environments.

A similar application was developed for Distribution issues, which also plays some part in the bigger-picture Supply Chain solution.

Any system, any organization

The above all refer to industrial-type applications. The Thinking Processes of the Theory of Constraints can, however, be applied to any system, any organization. Examples include the military, hospitals, utilities, education, even the church.

These analytical and business tools can be applied to any complex business situation where:

• There simply appears to be no way out of a lose/lose situation. You need to find an "outside the box" solution – perhaps even a way to keep identifying such solutions over time. Symptoms of a problem stubbornly resist direct attack – you might suppress them, but not totally, and not for long. What is really going on is not clear – everyone has their own different views (and many people have their own pet solution). Attempts to improve the situation do not produce the desired outcome, and often produce negative side-effects. Frustration by all who are touched by the problem continues to rise. A strong consensus as to the real problem, or agreement on the value of a good solution, is needed. A proposed solution is meeting a great deal of resistance.
• The size of a task facing a person or people is intimidating.

Typical situations;

• Constructing revolutionary "Supply Chain" solutions. Gaining a clear and substantial competitive edge in a tightly-contested market place ... sufficient (for example) to charge more than the competition while simultaneously increasing market share. Positioning the company for growth and job protection regardless of the economic cycles of markets. Predicting what your competition is likely to do in certain situations. Overcoming stubborn resistance to change. Gaining buy-in from employees, customers, vendors or bankers to a good idea.
• Getting all the bugs out of a "good idea" before making it a reality.