Theory of Constraints

Presented by Sandesh Musale ,Pune on 15/05/2021

B.E, MBA

Management Consultant, Marketing & Sales Expert, Corporate Trainer

& Visiting MBA College Faculty

Email –sandeshmusale@gmail.com , Mb No -9881731897

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 Outline

 Introduction to Theory of Constraints

 Five Steps of Theory of Constraints

 Benefits

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 Constraints
Any system can produce only as much as its critically
constrained resource

Constraint

60 units 70 units 40 units 60 units

Per day Per day Per day Per day

Maximum Throughput = 40 units per day

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 Significance of Bottlenecks

 Maximum speed of the process is the speed of the slowest

operation

 Any improvements will be wasted unless the bottleneck is relieved

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 Theory of Constraints

 Is a management philosophy.

 Purpose is to identify constraints and reduce them to the extent

possible.

 Developed by Eliyahu Goldratt in the mid 1980’s with his business

novel The Goal. ( Available on Amazon )

 There really is no choice in the matter. Either you manage constrains

or they manage you. The constraints will determine the output of the
system whether they are acknowledged and managed or not”

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 Theory of Constraints Steps

2.
2.Exploit
Exploit the
the 3.
3.Subordinate
Subordinate
bottlenecks
bottlenecks bottlenecks
bottlenecksproperly
properly

1.
1. Identify
Identifythe
the 4.
4.Elevate
Elevatethe
the
bottleneck
bottleneck bottleneck
bottleneck

6.
6.Avoid
Avoidinertia
inertia and
and
return
returnto
toStep
Step#1 #1
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 Five Steps Of TOC

 Step 1: Identify the bottleneck(s)/constraint(s).

 Look at your production plan as a whole and determine which

resource is preventing you from achieving better performance.

 Look at the cause (old machine, untrained employee, long setup

times, machine breakdown).

 According to Goldratt, an entire plant’s throughput (productivity)

is limited to the bottleneck’s productivity.

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 Step 2: Exploit the bottleneck(s).

 All process efforts should be focused primarily on the constraint

to maximize throughput.

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 Step 3: Subordinate everything else to the bottleneck(s).

 According to the theory, other activities must be subordinated to

the actions taken to fix the bottleneck in hand.

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 Step 4: Elevate the bottleneck(s).

 At this point, management has to decide whether to purchase

additional capacity (new machine, better trained employee)

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 Step 5: Evaluate whether solving the current bottleneck(s) created
other bottlenecks. Do not allow inertia.

 The production plant has to be monitored carefully as to whether

other constraints now exist and to monitor the progress of the
old constraint.

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 How does TOC help companies?

 Focusing improvement efforts where they will have the greatest

immediate impact on the bottom line.

 Improve flow time of product or service through the system

 Increase throughput.

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 Application of TOC

 Marketing-

Scope to remove bottleneck ( time , reduction in steps ) from enquiry

generation till order execution

 Operations & Supply chain

Purchase, Logistics, Manufacturing

 Both in Manufacturing & Service sector.

Banks, Hospitals, Shopping malls etc

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 Q & A Session

 Thank you

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