Whole System Performance Enhancement (Now and in the Future)
A True Process of Ongoing Improvement
TOC is based on the idea that in any complex system at any point in time, there is only one, or at most, very few aspects of the system keeping that system from achieving more of its goal (and what are problems but impediments blocking you from reaching a goal?). These constraints, if properly identified and broken, provide the fastest route to significant improvement for the system and can provide the basis for long term, strategic improvement.
Think of your system -- your organization -- in terms of a chain . . .
If you care about the capacity and capability of the chain, strengthening any link other than the weakest is a waste of time and effort. Identifying and strengthening the weakest link -- the system's constraint -- is the only way to strengthen the chain itself.
(An aside -- This suggests one of the common failures of typical TQM and Process Management implementations -- lack of focus. All the localized improvement efforts (including all the quality circles, process management teams, and departmental initiatives that focus on non-weak links) diffuse the resources and energy available for improvement, and top management wonders why they see minimal bottom line results. It's because the only significant system-wide, bottom-line results come as a result of improvements on the weak link. If in real estate, it's "location, location, location," then in improvement, it's "focus, focus, focus.")
The Five Focusing Steps of the Theory of Constraints show how to achieve on-going improvement by addressing these constraints in a continuous fashion:
1. IDENTIFY the system's constraint
You can't manage the constraint unless you identify it. And it's a surprisingly straightforward process to do so. Like a doctor assesses symptoms and draws a conclusion that they come from a common source, a review of the undesirable symptoms that an organization suffers from can quickly lead to a diagnosis of the system's constraint.
2. Decide how to best EXPLOIT the constraint
Since the output of the constraint is the limiting factor of the output of the whole system, our desire to exploit it translates to making sure that we are squeezing the most we can out of it. Utilization and productivity of the constraint must be maximized.
3. SUBORDINATE everything else to the above decision
The idea of subordination suggests that our use of the constraint itself should not be allowed to be limited by anything else that's outside of its control, including policies, habits, and assumed requirements of non-constraint. A second aspect of subordination relates to the capability of the constraint itself. Just as it makes no sense to expect a chain to lift more than its weakest link can handle, we should not expect the system to do more than the constraint can handle. To push more work than the constraint can deal with into the system results in excess work-in-process, extended lead times, and too many decisions relating to priorities that often devolves into no sense of priority.
4. ELEVATE the system's constraint
Once you've isolated the constraint and are managing the system based on it, it is commonly found that there is far more untapped capacity than previously thought. But sometimes, demands for more throughput leads to the need to acquire more capacity, by finding alternatives to the constraint, offloading to other resources, or simply buying another machine or hiring more people. Note that too often, systems under pressure skip the first three steps and jump to capacity acquisition, spending more money than might be necessary. Step 4, elevation, should only be considered once we've already exploited and subordinated.
5. If, in a previous step, a constraint has been broken, go back to step 1. PREVENT INERTIA from becoming the system's constraint.
When the weakest link has been strengthened to the point that it's no longer the weakest link, guess what? Yup...There's a new weakest link. For example, you might raise production capacity to the point that the market is now the constraint. Or in a project, you may find a way to shorten the critical path of tasks to the point that it no longer defines how soon the project can get done. This new constraint, whether it be the market, a new critical path, or whatever, demands a whole new view of the the system. So we loop back to step 1 . . . thereby putting the "on-going" in to the process of on-going improvement.
By using your organization's current constraint as the initial target, you will be able to apply your efforts in the most effective place, getting the most bang for the buck in the short term and setting the stage for a process of truly on-going improvement.
What is your current constraint?