Managing Bottlenecks with Theory of Constraints

Learning

Introduction

Theory of Constraints (TOC) originates from the 1984 book, The Goal by Eliyahu Goldratt. The Goal tells a fictional story of how the protaganist, Alex Rogo, flips the fortunes of a once unprofitable production plant to one that is profitable and highly successful. He does so with help of his acquaintance, Mr. Jonah, a physicist who shares important business lessons with him. At the centre of these lessons is the idea of managing ‘bottlenecks’ or constraints in the production process. Alex Rogo is then able to turn the fortunes of the production plant around by identifying the bottlenecks in the production process, mitigate their impact, and increase the flow of the production process.

What is TOC?

Essentially, TOC is based on the idea that any complex system, such as a business or production process, has a single point that limits its overall performance, called the “constraint.” The goal of TOC is to identify and optimize this constraint to improve the performance of the entire system.

TOC is typically applied to manufacturing and production processes, but it can also be used in other areas such as project management and supply chain management.

The Five Focusing Steps

The Five Focusing Steps are a process for identifying and optimizing the constraint. The steps are:

  1. Identify the constraint – this is the point in the process that limits the overall performance of the system.
  2. Exploit the constraint – this involves maximizing the output of the constraint by utilizing it to its fullest capacity.
  3. Subordinate everything else to the constraint – this involves aligning all other resources with the constraint to ensure that it is not constrained by other factors.
  4. Elevate the constraint – this involves improving the capacity of the constraint to allow for greater overall performance.
  5. If a constraint is broken, go back to step 1 – this ensures that the system is constantly monitored and optimized.

Theory of Constraints (TOC) and Critical Chain Project Management (CCPM)

TOC is a management philosophy that can be applied to various industries, while CCPM is a specific application of TOC to project management that addresses the constraint of resource availability and uses buffer management and critical chain of activities to manage project completion.

CCPM is a method for planning and managing projects that takes into account the impact of resource constraints and uncertainty on project completion. It is based on the idea that the constraint in a project is not the individual tasks, but rather the availability of resources, such as personnel and equipment. It uses a number of techniques to address this constraint, including the use of buffer management and the creation of a “critical chain” of activities that represents the longest path of dependent tasks in a project.

Both TOC and CCPM advocate for buffer management, which is the practice of adding extra time or resources to a project schedule to account for uncertainty and potential delays. In TOC this is applied to the entire system, whereas in CCPM it is applied to the critical chain of activities.

Critical Chain Project Management (CCPM) in LYNX

To manage a multi-project portfolio with many projects going on at the same time is challenging. Typically there are always more project ideas or customer projects than resources. Often clear strategic and operational priorities are lacking or cannot be maintained in the daily dynamics of a complex multi-project execution environment. Unclear and conflicting priorities create confusion about what to work on and results in much longer leadtimes for example due to multitasking. The consequences are extension of project lead-times, lack of reliability and/or less projects can be completed as required.

Critical Chain Project Management (CCPM) in LYNX addresses the challenge of running a complex multi-project portfolio successfully, by introducing two simple but highly effective controls.

The first prevents overloads and determine realistic deadlines that can be complied with.

The second controls the execution of the projects, using clear operational priorities synchronized across all roles and departments involved, so that deadlines are respected, and resource conflicts are eliminated.

Conclusion

In conclusion, the Theory of Constraints is a management philosophy that focuses on identifying and optimizing the constraint in a system to improve overall performance. It is based on the Five Focusing Steps, the Thinking Processes, and the Drum-Buffer-Rope system, and has been applied to a variety of industries. The key benefit of TOC is that it helps organizations to make decisions that will have the greatest impact on performance.

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