TOC
What is The Theory of Constraints (TOC)?
Sounds very grand and complicated, but it is actually based on finding the constraint in any system and working on it to enable the system to increase its throughput (throughput is defined as that which achieves the primary goal of the organisation).
Created by Eliyahu Goldratt in the 80s, TOC became more widely known following the release of the Goldratt’s book ‘The Goal’ where Alex Rogo turned around the performance of a business by applying the principles of TOC whilst being informally coached by a mysterious character called Jonah!
Like any other improvement technique, the application of TOC requires a cultural shift to change the current reality to that of the future way of working, and the leadership of the organisation will need to nurture that with just as much care. However, the significant difference with TOC when compared to other programs, including Lean, is the pace at which results start to change! Often, within days there is a significant difference to the throughput of a system, and performance increases of 40% are not unusual following its application.
Since 1985, the Theory of Constraints has been delivering startling tangible results to companies worldwide. An independent study of Theory of Constraints implementations around the world found that huge results were consistently achieved:
Lead Times Reduced 69%
Cycle Times Reduced 66%
Due Date Performance Improved 60%
Inventory Levels Reduced 50%
Revenue / Throughput Increased 68%
This ‘step change’ in performance is what gives organisations implementing TOC a formidable advantage over those attempting other improvement programmes
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In today’s economic climate, many organizations struggle with declining sales and increasing costs. Some choose to batten down and weather the storm, hoping for better results in the future. However, layoffs and workforce reductions can jeopardize future competitiveness.
Organizations that have implemented the Theory of Constraints (ToC) however, continue to thrive and grow in difficult times, achieving real bottom line growth, through improving productivity or increasing revenues.
The Five Focusing Steps of Ongoing Improvement
1. Identify the system’s constraint
2. Decide how to exploit the system’s constraint
3. Subordinate everything else to the prior decisions
4. Elevate the system’s constraint
5. If, in the prior steps, the constraint has been broken, go back to step one.
To speak to our TOC expert, Jeff Watson, call us now or drop Jeff an email.
