Theory of Constraints
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Theory of Constraints (TOC) is a management philosophy that focuses improvement efforts on the system constraint that limits overall performance.
Definition
Theory of Constraints (TOC) is a management philosophy developed by Eliyahu Goldratt that focuses on the systemic constraint limiting an organization's performance. TOC recognizes that every system has at least one constraint that determines its output—like the weakest link in a chain. Rather than improving everything everywhere (which dilutes impact), TOC concentrates resources on identifying and managing the constraint. The approach includes specific tools: the Five Focusing Steps for operations, Drum-Buffer-Rope for scheduling, Throughput Accounting for decisions, and Thinking Processes for strategic improvement.
Examples
A factory with five production steps discovered that assembly was the constraint—all other steps had excess capacity. Rather than improving all steps equally, they focused on maximizing assembly output: reduced changeovers, added overtime, improved tooling. Throughput increased 30% with no capital investment in non-constraints.
Key Points
- Every system has at least one constraint limiting its performance
- Improving non-constraints doesn't improve system output
- Five Focusing Steps: Identify, Exploit, Subordinate, Elevate, Repeat
- Includes tools for scheduling (DBR), decisions (Throughput Accounting), and strategy (Thinking Processes)
Common Misconceptions
TOC is only about finding bottlenecks. Finding the constraint is step one. TOC includes comprehensive methodologies for exploiting, subordinating to, and elevating constraints—plus strategic thinking tools for complex organizational problems.
A system can have multiple constraints. By definition, only one constraint limits the system at any time. Multiple resource shortages may exist, but only one currently limits throughput. Others are "capacity constrained resources" that could become constraints.