Presentation I gave on Theory of Constraints - Management paradigm that views any manageable system as being limited in achieving more of its goals by a very small number of constraints» – wikipedia. Introduced by Eliyahu M. Goldratt in his 1984 book titled «The Goal». Constraint – anything that prevents system from achieving its goal. External or internal.

1. Theory of Constraints
«Management paradigm that views any
manageable system as being limited in achieving
more of its goals by a very small number of
constraints» – wikipedia.
Introduced by Eliyahu M. Goldratt in his 1984
book titled «The Goal».
Constraint – anything that prevents system from
achieving its goal. External or internal.
Most examples, tables and content is taken from book «The Goal» by E.Goldratt 1

2. Key assumptions
• Throughput - rate at which the system
generates money through sales.
• Operational expense - money the system
spends in order to turn inventory into
throughput.
• Inventory - money that the system has
invested in purchasing things which it intends
to sell.
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3. Five focusing steps
• Identify systems’ constraint.
• Decide how to exploit it.
• Subordinate everything else to decision.
• Elevate constraint.
• If constraint has been broken go back to
identify new constraint.
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4. Types of constraints
• Equipment
• People
• Policy
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5. Buffers
Buffers are placed before the governing
constraint, thus ensuring that the constraint is
never starved. Buffers are also placed behind
the constraint to prevent downstream failure
from blocking the constraint's output.
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6. Thinking processes
• Gain agreement on the problem.
• Gain agreement on the direction for a
solution.
• Gain agreement that the solution solves the
problem (problem/solution fit).
• Agree to overcome any potential negative
ramifications.
• Agree to overcome any obstacles to
implementation.
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7. In other words
• What to change?
• What to change into?
• How to cause the change?
• Why change?
• How to maintain the process of ongoing
improvement (POOGI)?
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8. Example: hike I
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9. Example: hike II
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10. Example: welding I
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11. Example: welding II
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12. Example: welding III
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13. Resource types
• Bottleneck is any resource whose
capacity is equal to or less than the
demand placed upon it.
• Non-bottleneck is any resource whose
capacity is greater than the demand
placed on it.
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14. Flow
• Some resources have to have more capacity
than others. The ones at the end of the line
should have more than the ones at the
beginning—sometimes a lot more.
• Balance flow, not capacity.
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15. Finding bottleneck I
• What is our «market demand»?
• What items are we missing the most?
• Where do we look for them?
• Big pile of work-in-process in front of it.
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16. Finding bottleneck II
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17. Finding bottleneck III
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18. Finding bottleneck IX
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19. What to do about a bottleneck I
• Exploit (make most of it).
• Reduce load (if possible).
• Subordinate everything else.
• Reduce scrap.
• Make capacity more equal to demand.
• Its okay to reduce non-bottleneck efficiencies
to increase systems’.
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20. What to do about a bottleneck II
• Outsource (partly/all).
• Work only on things that produce value.
• Put as much QA before as possible.
• Wary upstream non-bottlenecks working on
things not consumed by bottleneck.
• Treat outputs at the same level as deliverables.
• Don’t let outputs to queue.
• Minimize setup times for bottleneck.
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21. Cost of bottleneck
• Cost == Total operational costs per hour.
• Bottleneck not working == System not working
• Cos𝑡 =
𝑒𝑛𝑡𝑖𝑟𝑒 𝑜𝑝𝑒𝑟𝑎𝑡𝑖𝑜𝑛𝑎𝑙 𝑐𝑜𝑠𝑡𝑠 𝑝𝑐𝑚
𝑏𝑜𝑡𝑡𝑙𝑒𝑛𝑒𝑐𝑘 ℎ𝑜𝑢𝑟𝑠 𝑝𝑐𝑚
• Example:
250,000
3×7×22
= 541
• Think cash flow.
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22. Pay attention to I
• Inventory in front of bottleneck.
• Everyone working all the time.
• Non-bottlenecks by definition have more
capacity, extra hours worked end up in
inventory.
• Example: Y -> X, capacity of Y 600h, capacity of
X 450h, extra 25% end up in inventory.
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23. Pay attention to II
• Inventory at final assembly.
• Example: given 80% of features require UI
work, and UI work is a bottleneck. When API
work isn’t limited there will be a big inventory
of features that cannot be accessed by end
users.
• Excess finished products.
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24. Pay attention to III
• Turning non-bottleneck into bottleneck.
• Singal to link the bottlenecks with the release-
of-materials schedule.
• An hour saved at a non-bottleneck is a mirage.
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25. After improvements to bottleneck
• Increase in throughput can put an extra load
on other resources.
• Different resource become a bottleneck.
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26. Improving system even further
• Half batch size for non-bottlenecks.
– Halfs the investment, amount of cash tied up.
– Halfs the time it takes to process a batch, queues.
– Respond faster to market – comp. advantage.
• Half batch size for non-bottlenecks.
• Half batch size for non-bottlenecks.
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27. • Non-bottleneck never determines throughput
for the system.
• The level of utilization of non-bottleneck is not
determined by its own potential but by some
other constraint in the system.
• Making an employee work and benefiting
from that work are two different things.
• Improving tech is like adding robots in a plant.
Conclusions
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28. Game
• Perfectly balanced system.
• Dice with a fluctuation of 1-6.
• Move as many matches as possible up to a
number on dice.
• Measure fluctuations from average 3.5
(1+2+3+4+5+6)/6).
• Take 10 rounds.
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