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THEORY OF CONSTRAINTS (TOC)
Knowing the one (or very few) truly performance and/or growth-limiting constraint(s) – and consistently acting on it – is the fundamental factor for being able to fully exploit the own growth potential. For this reason, the Theory of Constraints (TOC) is for us one of the most important intellectual and methodological frameworks on which we build our support. |
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The THEORY OF CONSTRAINTS (TOC) has been developed to optimise the overall performance of socio-economic systems such as businesses, recognising that the sum of local optimisations never leads to optimisation of system performance as a whole. It thus disproves the widespread but false assumption that: «Any improvement anywhere is good for the system as a whole.»
In addition to the insights TOC provides, it also provides the necessary methods for developing improvements to the system as a whole. Most famous are:
TOC is based on two important concepts of the natural sciences:
This Law Of The Minimum is applied today not only to biological systems but also to socio-economic and technical systems and states in an adapted form: «There will always be at least one weakest element or scarcest resource that determines/limits the performance of the overall system.»
For a business, this means: at any point in time, there are only one or very few constraints, that have very few root causes, limiting the further-growth of the business. In analogy to an anchor chain: there is only one weakest link that limits the strength of the chain; and strengthening any link other than the weakest will not only be ineffective, but will make the situation worse because it will add weight to the chain and thus put additional strain on the weakest link.
This is a very important insight because it clearly states that any «improvement» that does not improve the growth-limiting constraint will make the situation worse because it:
The constraint(s) can be:
Once the constraint(s) are identified and the underlying root causes are understood, it is possible to develop a business strategy that will have a truly massive and rapid positive impact on the business, because such a strategy addresses the decisive point rather than a multitude of symptoms.
Bright Strategies Consulting itself has specialised in the application of the Logical Thinking Process (LTP) and Throughput Accounting (TA) for strategy development and management decisions.
In addition to the insights TOC provides, it also provides the necessary methods for developing improvements to the system as a whole. Most famous are:
- The Logical Thinking Process (LTP) and Throughput Accounting (TA) for strategy development and management decisions
- Drum-Buffer-Rope (DBR) for production
- Critical Chain Project Management (CCPM) for project management, e.g. in R&D or for change or other improvement projects
TOC is based on two important concepts of the natural sciences:
- One is the basis of physics and thus of all natural science and reads: «Only a few truly fundamental elements and laws of nature are responsible for the multitude of effects we find in our world.»
- The other is the Law Of The Minimum, originally formulated in 1828 by the agricultural scientists Carl Sprengel, and later popularised by the famous chemist Justus von Liebig: «The growth of plants is not determined by the total resources available, but by the scarcest resource (limiting factor).»
This Law Of The Minimum is applied today not only to biological systems but also to socio-economic and technical systems and states in an adapted form: «There will always be at least one weakest element or scarcest resource that determines/limits the performance of the overall system.»
For a business, this means: at any point in time, there are only one or very few constraints, that have very few root causes, limiting the further-growth of the business. In analogy to an anchor chain: there is only one weakest link that limits the strength of the chain; and strengthening any link other than the weakest will not only be ineffective, but will make the situation worse because it will add weight to the chain and thus put additional strain on the weakest link.
This is a very important insight because it clearly states that any «improvement» that does not improve the growth-limiting constraint will make the situation worse because it:
- Consumes resources (time, money, labour...)
- Causes non-rewarding (mostly administrative) effort and thus costs
- Increases complexity and thus reduces the flexibility of the enterprise
The constraint(s) can be:
- External (e.g. in the market) or internal (e.g. limited production or management capacities)
- Physical (resources) or non-physical nature (e.g. processes, policies or strategies)
Once the constraint(s) are identified and the underlying root causes are understood, it is possible to develop a business strategy that will have a truly massive and rapid positive impact on the business, because such a strategy addresses the decisive point rather than a multitude of symptoms.
Bright Strategies Consulting itself has specialised in the application of the Logical Thinking Process (LTP) and Throughput Accounting (TA) for strategy development and management decisions.
- In cases where clients intend to implement Drum-Buffer-Rope (DBR) or Critical Chain Project Management (CCPM), e.g. as a result of our strategy development, we can recommend companies who are specialised in such implementations and who can also provide the necessary software packages.
- In such cases, thanks to our expertise, we can help safeguarding our clients' genuine interests by overseeing the implementation so that it remains focused and timeline, efforts and costs do not get out of control in the excitement or stress of the action.