Theory of Constraints

(Dr. Eliyahu M. Goldratt)

The literal concept of this theory is explained by the idiom “A chain is no stronger than its weakest link”. It may seem a simple concept to understand that when any problem is encountered in any organization, steps are taken in order to solve the problem. The Theory of Constraints just looks a little bit more into this very problem.

The theory implies that there are constraints in an organization which eventually disrupts the organization in attaining its maximum throughput thus reducing its efficiency. Well, it isn’t called a theory for just implying that a problem does not help achieve a goal but does provide a very logical solution to it.

An organization will have a lot of constraints or conditions to be put simpler. In order to solve a particular constraint, the organization must re-organize itself around this constraint thus making it easy to solve. This theory provides five main steps to accomplish this process known as "Process of Ongoing Improvement" (POOGI).

The first and foremost step is to identify the constraint, and by identifying it also means to prioritize the constraints present and select the one that is the most vital at that moment for the organization. Secondly, decide how to exploit the constraint. Create ways by which the maximum output could be extracted from the constraint. Thirdly, subordinate all other processes to above decision, by this the organization must structure itself in order to tackle the problem in the most efficient manner. Fourthly, elevate the constraint i.e., make all possible efforts and decisions to suppress the constraint. Finally, if as a result of these processes the constraint has been elevated then move on to the first step and never let the inertia become a constraint in itself.

With ‘constraint’ being an essential term in the argument being made it is only reasonable to ask what these constraints are. These constraints could basically be divided into internal constraints and external constraints. The constraint could be considered as any hiccup or a bottle neck that prevents an organization from operating efficiently. The major constraints that are basically faced by an organization are people, policy and equipment. This theory just revolves around solving these constraints thus creating optimum throughput.

The theory of constraints could easily be represented by a just a couple of blocks as follows,

The writer of this article, Anshu Katiyar is a PGP student of Indian Institute of Management, Raipur. He has done his B.Tech in Information Technology from Dr. M.G.R. University, Chennai and can be reached at anshukatiyar@hotmail.com.