Theory of Constraints was first initiated by Eliyahu M. Goldratt in his 1984 book titled “The Goal. Particularly”. Specifically, the Theory of Constraints is an organizational change method that is focused on profit improvement. Moreover, The theory of constraints uses a set of tools to manage and eliminate constraints. It consists of solving problems by finding the weakest link in a process. Initially, engineers have to identify the bottleneck and then improve that part of the process. Additionally, the engineers identify other bottlenecks to make further improvements. Also, according to the theory of Constraints, every organization should have at least one constraint, there are manufacturing constraints but also market and sales constraints as well. Subsequently, the measures used in theory of constraints are the throughput, operational expenses and inventory. First, the inventory is the amount of money invested to purchase things that will be sold later. Second, the operational expenses are expenses faced to turn inventory into throughput and third the throughput are money generated through the sales. Thus, the goals could be met in case there is respect of standards, quality, legal obligations, and safety measures. Thus, a company could make sound decisions based on the measures of theory of constraints (throughput, operational expenses, and inventory).
Theory of constraints methodology
In order to apply the theory of constraints the company should follow these steps:
Many studies assessed the differences and similarities between TQM and Lean methodology, (Anderson et al. (2006), Anvari et al. (2011), Hines et al. (2004)). Hines et al. (2004) state that TQM can be a tool or a technique for Lean. Anvari et al. (2011) provided a comparative study between TQM and lean. TQM or Six Sigma both of them fit very well with Lean and vice versa.
We present below similarities and differences between Total quality Management and lean thinking based on the studies of Anderson et al. (2006), Anvari et al. (2011), Hines et al. (2004).
- Identify the constraint: it could be a process or something physical.
- Exploit the Constraint: get as much as possible capabilities from the constraints without undergoing major changes. ;
- Adjust non-constraints components of the system: adjust non-constraints components to enable the constraints to operate at maximum capacity. Jump to step five if the constraint is eliminated.
- Elevate the constraint: in case step 2 and 3 are not successful take any additional action to eliminate the constraint.
- Long-term implementation;
- Return to step 1.
In order to increase profits, theory of constraints relies on Throughput, Inventory and Operating expenses, instead of the cost based measures derived from accounting. The company should increase the throughput and minimize inventory and operating expenses.
Below, we presented the similarities and differences between TQM and the theory of constraints based on the studies of Raimona and Mohd (2006), Stamm et al (2009).
- TQM and Theory of constraints both seek continuous improvement.
- (2) TQM and Theory of constraints both see production line as an area of improvement.
- Theory of constraint does not require continuous training of all employees.
- TQM supports suggestions coming from top management and employees. However in TOC, suggestions and ideas of improvements are the responsibility of manufacturing engineers and management, unlike quality circles where everyone in the company can participate and provide ideas and suggestions.
- Total Quality Management aims for zero defects; Theory of Constraints seeks to maximize output.