Constraints Management: Simple logic for complicated systems.
Goldratt's The Goal
Constraints Management, also called Theory of Constraints, was developed by Dr. Eli Goldratt and popularized in his seminal work, The Goal. Dr. Goldrat has published books with sales of over 7 million copies, outselling Harry Potter in Japan. The Toyota Company ordered all its managers to read this revolutionary take on production.
A physicist by training, Goldratt’s approach was refreshing and effective. Coming from a purely logic-driven profession, he was appalled by the lack of logic and scientific reasoning in business.
An organization can be viewed like a chain with links of differing strengths. Each department represents a link, related to other links or departments. The weakest link is what is termed the “constraint,” or the factor that most limits a system. Strengthening the chain can only be accomplished by making the weakest link stronger. If the constraint within the chain is not improved, all the stronger links are denied effectiveness.
In distilled terms, this means that the Constraint Management philosophy puts a very sharp focus on what element of an organization most limits its productivity.
The Constraint Management approach sees even large organizations and businesses as inherently simple “chain-like” systems. Here, the management focus is on how a few core aspects of a system, when strengthened, can have huge implications on an organization’s success. Management becomes much simpler when a few core issues are the focus of energetic revitalization, in place of bogged-down and generalized problem-solving, which wastes precious energy on non-critical issues.
Constraint Management employs 6 focusing steps:
- Identify the goal of the system.
- Identify the constraint.
- Decide how to exploit the constraint.
- Subordinate and synchronize everything else to the above decisions.
- Elevate the performance of the constraint.
- If the constraint has shifted, go back to Step 1.
Additional Constraint Management tools:
- Throughput accounting: Better aligns financial information with performance and avoids the damaging distortions that traditional accounting creates. Motivates staff in every area to align actions with organizational success.
- The Thinking Process: Removes chronic “Catch 22” issues that prevent peak performance. Identifies and corrects serious erroneous rules that are embedded into the organizations culture.
- Drum-Buffer-Rope: Protects the constraint, reduces inventory and simplifies day to day operations.
- Critical Chain: Improves project management and new product development.
- Mafia Offers: Creates offers to the market that are so good, customers cannot refuse them! Based on finding the problems your industry creates for its customers and then eliminating them leaving your competitors unable to compete.
- Distribution: How to avoid the fallacy of chasing more accurate forecasting by improving operations and giving customers what they want when they want it and at much higher profits.
- Technology Questions: Improve the effectiveness of new technologies on organizational performance.
- Overcoming Resistance: Identifies and overcomes the six layers of resistance to organizational revitalization.
- Strategy and Tactics: Aligning the all departments through strategy (the objective) and tactics (the action) trees.
Every year more books and publications add to this growing body of knowledge. Download our brochure for graphical evidence of the power of Constraints Management.
How Constraints Management (CM) Works with Lean and Six-Sigma:
Constraints Management (CM) works to improve the effectiveness of Lean and Six-Sigma by:
- Focusing their strengths in the area of greatest impact.
- Expanding the scope to cover all business areas.
- Correcting the issues that have made Lean difficult to implement.
- Introducing new, powerful techniques such as Drum-Buffer-Rope.
- Adding the focus of increasing throughput, not just eliminating waste.
| Vision ● Traction ● Impact | Continue to Meet the President... |