The “Theory of Constraints:” What’s Limiting Your Organization?

  • Capacity Constraint. This constraint occurs when a resource which cannot provide timely capacity as demanded by the system.
  • Market Constraint. This is when the amount of customers’ orders is not sufficient to sustain the required growth of the system.
  • Time Constraint. This occurs when the response time of the system to the requirement of the market is too long to the extent that it jeopardizes the system’s ability to meet its current commitment to its customers as well as the ability of winning new business.

POOGI Approach

TOC practitioners follow a 5-step approach known as Process of ongoing Improvement (POOGI). The 5 steps are as follows:

Rules of Thumb about Constraints

Here are general principles about TOC:

  • You will always have a constraint, so choose wisely (perhaps the most capital intensive, or energy consuming, or largest batch, or longest touch time, etc.).
  • If you identify the wrong constraint, it is easily rectified and causes no permanent damage. The POOGI process autocorrects for errors made over time.
  • The constraint may appear to shift suddenly based on product mix. However, this is often due to batching practices, rather than actual shifting of the constraint.
  • Most systems typically have one single resource constraint, such as a machine or department.
  • Permanent constraints typically include sales/marketing and R&D.
  • The constraint should eventually be stabilized. Frequently, shifting constraints cause havoc on policies, procedures, and people.

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Mark Bridges

Mark Bridges

I blog about various management frameworks, from Strategic Planning to Digital Transformation to Change Management. https://flevy.com