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Introductionto toc

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Theory of Constraints (TOC) is an overall management philosophy introduced by Dr. Eliyahu M. Goldratt in his 1984 book titled The Goal, that is geared to help organizations continually achieve their goal.[1] The title comes from the contention that any manageable system is limited in achieving more of its goal by a very small number of constraints, and that there is always at least one constraint. The TOC process seeks to identify the constraint and restructure the rest of the organization around it, through the use of the Five Focusing Steps.

- Source: Wikipedia

Published in: Education

Introductionto toc

  1. 1. Introduction to Theory of Constraints Presented by Hasham Muhammed [email_address] 23rd September, 2008
  2. 2. Contents <ul><li>Introduction – The Philosophy </li></ul><ul><ul><li>Thinking Process </li></ul></ul><ul><ul><li>System’s Thinking </li></ul></ul><ul><ul><li>Goal </li></ul></ul><ul><ul><li>Concept of System Constraints </li></ul></ul><ul><ul><li>TOC intro </li></ul></ul><ul><ul><li>Steps in TOC </li></ul></ul><ul><ul><li>Example </li></ul></ul><ul><li>Conclusion </li></ul>23rd September, 2008
  3. 3. Do we really want or need another New Theory? 23rd September, 2008
  4. 4. Do we really want or need another New Theory? 23rd September, 2008 “ The significant problems we face today can not be resolved at the same level of thinking we were at when we created them.” - Albert Einstein
  5. 5. Thinking Process <ul><li>The process of how an entity learns to gain understanding of the environment or System </li></ul>23rd September, 2008
  6. 6. Thinking Processes 23rd September, 2008 <ul><li>The process of how an entity learns to gain understanding of the environment or System </li></ul><ul><li>The KEY focus being </li></ul><ul><ul><li>Thinking from a SYSTEM’s point of view </li></ul></ul>
  7. 7. <ul><li>A system is an entity which maintains its existence through the INTERACTION of its elements. </li></ul>System’s Thinking 23rd September, 2008
  8. 8. <ul><li>A system is an entity which maintains its existence through the INTERACTION of its elements. </li></ul>23rd September, 2008 The key point here is INTERACTION. System’s Thinking
  9. 9. <ul><li>A system is an entity which maintains its existence through the INTERACTION of its elements. </li></ul>23rd September, 2008 Cooking food is a good analogy – Final product is different from the individual ingredients The key point here is INTERACTION. System’s Thinking
  10. 10. The System’s Goal Why do Systems exist? 23rd September, 2008
  11. 11. The System’s Goal 23rd September, 2008 Why do Systems exist? <ul><ul><li>To achieve a “Goal” </li></ul></ul>
  12. 12. The System’s Goal 23rd September, 2008 Why do Systems exist? <ul><ul><li>To achieve a “Goal” </li></ul></ul><ul><ul><li>A result or achievement toward which effort is directed. </li></ul></ul>
  13. 13. Who gets to decide what the goal should be? The System’s Goal 23rd September, 2008
  14. 14. 23rd September, 2008 Who gets to decide what the goal should be? The System’s Goal <ul><ul><li>The Leader is responsible for the Goal </li></ul></ul>
  15. 15. 23rd September, 2008 Who gets to decide what the goal should be? <ul><ul><li>The Leader is responsible for the Goal </li></ul></ul>The System’s Goal <ul><ul><li>Everyone may be considered as a Leader of something (Whole Organization, Unit, Integrated Business, department, small team, life, career…) that is supported by a System </li></ul></ul>
  16. 16. Theory of Constraints is about Management 23rd September, 2008
  17. 17. <ul><li>The three important questions for a manager </li></ul><ul><ul><li>What is the Ultimate goal? </li></ul></ul><ul><ul><li>Where does he or she stand in relation to the goal? </li></ul></ul><ul><ul><li>The magnitude and direction of the change needed to move from the status quo to where he or she wants to be (the goal). </li></ul></ul>23rd September, 2008 Theory of Constraints is about Management
  18. 18. <ul><ul><li>“ Average managers are concerned with methods, opinions, and precedents. Good Managers are concerned with solving problems ” </li></ul></ul><ul><ul><li>- William Dettmer </li></ul></ul>23rd September, 2008
  19. 19. Concept of System Constraints 23rd September, 2008
  20. 20. Concept of System Constraints 23rd September, 2008 What keeps your system from doing better?
  21. 21. Concept of System Constraints 23rd September, 2008 What keeps your system from doing better? Is there something that is constraining your system from reaching its GOAL?
  22. 22. Systems as Chains <ul><ul><li>Assume the SYSTEM to be a chain with ‘n’ links and with a goal of transmitting force from end A to B . </li></ul></ul>23rd September, 2008 A B 1 2 3 6 5 7 4
  23. 23. Systems as Chains (cont..) <ul><li>Weakest link </li></ul><ul><ul><li>The link at which the system fails to achieve the goal is the weakest link. </li></ul></ul>23rd September, 2008 A B 4
  24. 24. Constraints and Non-Constraints 23rd September, 2008
  25. 25. Constraints and Non-Constraints 23rd September, 2008 <ul><li>There is only one CONSTRAINT in a system </li></ul><ul><li>at a given point of time </li></ul>
  26. 26. Constraints and Non-Constraints 23rd September, 2008 <ul><li>There is only one CONSTRAINT in a system </li></ul><ul><li>at a given point of time </li></ul>
  27. 27. Constraints and Non-Constraints <ul><ul><li>Nonconstraints are all the other links; ‘n-1’ </li></ul></ul>23rd September, 2008 <ul><li>There is only one CONSTRAINT in a system </li></ul><ul><li>at a given point of time </li></ul>
  28. 28. Strengthening the Chain 23rd September, 2008
  29. 29. Strengthening the Chain <ul><li>Where Should we focus our efforts? </li></ul>23rd September, 2008
  30. 30. Strengthening the Chain <ul><li>Where Should we focus our efforts? </li></ul>23rd September, 2008 Strengthen the weakest link
  31. 31. Core of TOC 23rd September, 2008
  32. 32. Core of TOC 23rd September, 2008 If you don’t impact the Constraint, you have no effect
  33. 33. Basic Questions for Managers <ul><li>What’s the desired standard of performance (System’s Goal ) </li></ul><ul><li>What to change? (Where is the constraint?) </li></ul><ul><li>What to change to? (What should we do with the constraint?) </li></ul><ul><li>How to cause the change? ( How do we implement the change?) </li></ul>23rd September, 2008 Note: These are system-level questions, not process-level
  34. 34. 23rd September, 2008 TOC- FIVE FOCUSING STEPS ( Which will Strengthen the Chain )
  35. 35. 23rd September, 2008 1 . Identify the Constraint 2 . Exploit the Constraint 3 . Subordinate everything to the Constraint 4. Elevate the Constraint 5 . Repeat for the new Constraint ‘ Beware’ of Inertia TOC- FIVE FOCUSING STEPS ( Which will Strengthen the Chain )
  36. 36. A Production Example 23rd September, 2008 A simple production System
  37. 37. TOC – Step 1 23rd September, 2008
  38. 38. <ul><li>Identify the Constraint </li></ul>TOC – Step 1 23rd September, 2008
  39. 39. TOC – Step 1 <ul><li>Identify the Constraint </li></ul>23rd September, 2008 Step C is the Constraint
  40. 40. TOC – Step 2 23rd September, 2008
  41. 41. <ul><li>Decide how to exploit the Constraint </li></ul>TOC – Step 2 23rd September, 2008
  42. 42. <ul><li>“ What can we do to get the most out of this constraint without committing to potentially expensive changes ?” </li></ul>TOC – Step 2 23rd September, 2008 <ul><li>Decide how to exploit the Constraint </li></ul>
  43. 43. TOC – Step 3 23rd September, 2008
  44. 44. TOC – Step 3 23rd September, 2008 <ul><li>Subordinate Everything to the constraint </li></ul>
  45. 45. TOC – Step 3 23rd September, 2008 <ul><li>Subordinate Everything to the constraint </li></ul>
  46. 46. TOC – Step 3 23rd September, 2008 <ul><li>Subordinate Everything to the constraint </li></ul>Capacity Increased at Step C
  47. 47. 23rd September, 2008 TOC – Step 4
  48. 48. 23rd September, 2008 TOC – Step 4 <ul><li>Elevate the Constraint </li></ul>
  49. 49. 23rd September, 2008 <ul><li>Elevate the Constraint </li></ul><ul><li>If we are doing Step 4, it means that Steps 2 & 3 weren’t sufficient to eliminate the constraint. </li></ul>TOC – Step 4
  50. 50. 23rd September, 2008 <ul><li>Elevate the Constraint </li></ul><ul><li>If we are doing Step 4, it means that Steps 2 & 3 weren’t sufficient to eliminate the constraint. </li></ul><ul><li>‘ Elevating’ the constraint means we take whatever action is required to eliminate the constraint. </li></ul>TOC – Step 4
  51. 51. 23rd September, 2008 TOC – Step 5
  52. 52. <ul><li>Go back to Step 1, But Beware of ‘ Inertia’ </li></ul>23rd September, 2008 TOC – Step 5
  53. 53. <ul><li>Go back to Step 1, But Beware of ‘ Inertia’ </li></ul><ul><li>Constraint shifted to a different place - Market </li></ul>23rd September, 2008 TOC – Step 5
  54. 54. Types of Constraints Internal External <ul><ul><li>Process constraints </li></ul></ul><ul><ul><ul><li>Machine time, etc. </li></ul></ul></ul><ul><ul><li>Policy constraints </li></ul></ul><ul><ul><ul><li>No overtime, etc. </li></ul></ul></ul><ul><ul><li>Material constraints </li></ul></ul><ul><ul><ul><li>Insufficient materials </li></ul></ul></ul><ul><ul><li>Market constraints </li></ul></ul><ul><ul><ul><li>Insufficient demand </li></ul></ul></ul>23rd September, 2008
  55. 55. 23rd September, 2008 1 . Identify the Constraint 2 . Exploit the Constraint 3 . Subordinate everything to the Constraint 4. Elevate the Constraint 5 . Repeat for the new Constraint ‘ Beware’ of Inertia TOC- FIVE FOCUSING STEPS ( Which will Strengthen the Chain )
  56. 56. Theory of Constraints ……a summary <ul><li>Understanding of the system is mandatory to improving it </li></ul><ul><li>Any system has a Goal </li></ul><ul><li>The Leader is responsible for the Goal </li></ul><ul><li>Theory of Constraints is about Leadership and Management </li></ul><ul><li>Every System has one and only one constraint at any instance of time </li></ul><ul><li>If you don’t impact the constraint then there is no effect on the system’s improvement </li></ul><ul><li>Improvement is a long term and continuous process </li></ul>…… Goldratt has used business novels to get his concepts across which can be grasped by people like us and practiced… 23rd September, 2008
  57. 57. Goldratt – TOC Bestsellers 23rd September, 2008
  58. 58. 23rd September, 2008 There is no such thing as staying the same. You are either striving to make yourself better or allowing yourself to get worse. - Source Unknown
  59. 59. 23rd September, 2008 The Logical Thinking Process – A systems approach to complex problem solving - H. William Dettmer References Thank You!

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