The Theory of Constraints (TOC) centers on the concept that in any system, a constraint limits the output of the system. In manufacturing environments, constraints can exist which limits production or the fulfillment system. Constraints can exist within the market, the production facility, or in the supply network. It’s critical to identify and proactively manage the actual constraint. Once you’ve found the actual constraint, you can begin to manage it by properly flowing production through it in a manner that is synchronized to customer demand and strategic inventory targets.
The application of TOC helps organizations increase throughput by employing five focusing steps:
- IDENTIFY the system’s constraint
- EXPLOIT the system’s constraint
- SUBORDINATE everything else to the above decision
- ELEVATE the system’s constraint
- AVOID INERTIA if the constraint has been broken, go back to Step 1
“So this is the goal: To make money by increasing net profit, while simultaneously increasing return on investment, and simultaneously increasing cash flow.”
Manufacturers are constantly challenged to change-up their offerings from new options on existing products to introducing new products. Manufacturers today recognize the production process is never going to be
Although many manufacturers have the ability to deliver within a highly variable marketplace, one difference between gaining or losing market share is predictability.
Being able to deliver on-time consistently has become critical to success in a demand-driven marketplace.
The choice of model would be based on where on the spectrum of production needs your
Many companies see each of the models for Continuous Improvement as competitive alternatives. On-Time Edge doesn’t see them that way. We see Lean, Six Sigma, and Theory of Constraints techniques working together for continuous improvement.
- Are you a high volume repetitive manufacturer where an emphasis on Lean is going to be valuable?
- Are your needs purely project management? Which is the other side of the spectrum, where project management methodologies are going to be more critical?
- Perhaps your production type is somewhere in the middle: make to order, assemble to order, or engineer to order. You have a high mix, a relatively low volume, and thus face more complicated materials and workflow challenges. A Theory of Constraints methodology will enable you to better address the increased variability immediately, while using Six Sigma tools to minimize it.