What is the Theory of Constraints? 

The Theory of Constraints, proposed by Goldratt, claims that a change to most of the variables in an organization will have only a small impact on the global performance - on the bottom line. 

Theory of Constraints provides a set of holistic processes and rules, all based on a systems approach that exploits the inherent simplicity within complex systems through focusing on the few variables – called Constraints - as a way to synchronize the parts to achieve ongoing improvement in the performance of the system as a whole.

The underlying assumption is that only a few key variables in any system influence overall system performance at any given time, trying to improve most of the system will be counterproductive.

What are the Types of Constraint in a Commercial System?

The primary types of constraint in a commercial system include: 

• Capacity Constraint: A resource which cannot provide timely capacity as demanded by the system.
• Market Constraint: The amount of customers’ orders is not sufficient to sustain the required growth of the system.
• Time Constraint: The response time of the system to the requirement of the market is too long to the extent that it jeopardizes the system’s ability to meet its current commitment to its customers as well as the ability of winning new business.

What is the Process of On-Going Improvement? 

A company must first know its goal and the necessary conditions for achievement. Then it has to follow the “Process Of Ongoing Improvement (POOGI)” to identify, exploit, and perhaps elevate the Constraint(s) in a continuous way:

1. Identify (choose) the system’s constraint.
2. Decide how to exploit the system’s constraint.
3. Subordinate everything else to the above decision.
4. (Evaluate various alternatives to) Elevate the system’s constraint.
5. If the constraint is broken go back to step 1, but do not allow inertia to cause the system’s constraint.