TheoryTheoryofofConstraintsConstraintsJamesHendersonMarch20,2002OverviewPresentationonTOCMarch20th/JRHAgendaAgendaIntroductionWhatisgoingonintoday’sprojects?WhatisTheoryofConstraints?•FiveFocusingSteps•ThinkingProcesses•CriticalChain•Buffers&DealingwithUncertainty•Drum-Buffer-RopeWhoisusingTOCtoday?Questions&(possibly)someAnswersClosingRemarksOverviewPresentationonTOCMarch20th/JRHWhatWhat’’sgoingonintodaysgoingonintoday’’ssProjectsProjects--ProcessesProcesses--Systems?Systems?OverviewPresentationonTOCMarch20th/JRHWhetheryouareafunctionalmanagerovertheproductionofwidgetsoraProjectManageroverthedevelopmentandimplementationofthenextmajorwhizbangsolutiontothemarket’sneeds,yourelyonagoodproduction/processfloworprojectnetworktoensurethesuccess.Theproblemisthat…““constraintshappenconstraintshappen””...andthingsdon’tgoaccordingtotheplan.TheoryofConstraints(TOC)takesthe“systemsapproach”toovercomethoseconstraints.TOCfocusesonthefewcriticalelementsthattrulyinfluence/controltheproductivityofthesysteminsteadoftryingtocontrolalloftheelements.ConstraintsHappenConstraintsHappenOverviewPresentationonTOCMarch20th/JRHProjectTypeTimeCost50newproducts(newchemicalentities,1.78X1.61Xcompoundedproducts,oralternatedosageforms)inethicaldrugfirm69newproductsinproprietarydruglaboratory2.95X2.11X20managementinformationsystemprojects2.10X1.95X34DODsystemsfrom“planningestimate”N/A2.11Xfrom“developmentestimate”N/A1.41X10majorconstructionprojectsN/A3.93X10energyprocessplantsN/A2.53XHistoricaldataHistoricaldataOverviewPresentationonTOCMarch20th/JRH•Usuallyoriginalduedatesarenotmet.•Toooftenresourcesarenotavailablewhenneeded(evenwhenpromised).•Thereisconstantpressuretoaddmoreprojects.•Necessarythingsarenotavailableontime(information,specifications,materials,designs,authorizations,etc.)•Therearefightsaboutprioritiesbetweenprojects.•Therearebudgetover-runs.•Thereispressuretobeginbeforespecsarewritten.•Therearetoomanychanges…etc.etc.etc.Whatkindsofthingsgowronginprojects?Whatkindsofthingsgowronginprojects?OverviewPresentationonTOCMarch20th/JRHAccordingtoTomPeters…“Velocity”......Faster=moremarketshare...Faster=shorterpay-backperiod...Faster=morerapidlearningandchange...Faster=smallertargetforchangesWhatisthekeytosuccess?Whatisthekeytosuccess?OverviewPresentationonTOCMarch20th/JRHW.EdwardsDemingmaintainedthatrealqualityimprovementisn’tpossiblewithoutprofoundknowledge,accordingtoDeming,profoundknowledgecomesfrom:Anunderstandingofthetheoryofknowledge.Knowledgeofvariation.Anunderstandingofpsychology.Appreciationforsystem.ProfoundKnowledgeProfoundKnowledgeOverviewPresentationonTOCMarch20th/JRHInvestmentandOperatingExpensesRawMaterialRevenueRevenueNetProfit=Throughput-OperatingExpenseThroughput=Revenue-RawMaterialsReturnonInvestment=NetProfit/InvestmentTheTheSystemSystemtheProjectGoesThroughistheCompanytheProjectGoesThroughistheCompanyOverviewPresentationonTOCMarch20th/JRHSoSo……WhatisWhatisTheoryofConstraints?TheoryofConstraints?OverviewPresentationonTOCMarch20th/JRHGoldrattcontendsthatsystemsareanalogoustochains,ornetworksofchains.Likeachain,thesystemperformanceislimitedbytheweakestlink.Thismeansthatnomatterhowmucheffortyouputintoimprovingtheprocessesofasystem,onlytheimprovementstotheweakestlinkwillproduceanydetectablesystemimprovement.Throughputislimitedbytheweakestlink...theconstraint!(Asystemmightbegenerallydefinedasacollectionofinterrelated,interdependentcomponentsorprocessthatactinconcerttoturninputsintosomekindofoutputsinpursuitofsomegoal.)TheoryofConstraintsTheoryofConstraintsOverviewPresentationonTOCMarch20th/JRHEverysystemcanbemodeledasanetofchainsTheweaknessofthesystemistheweaklinkinthechain,theconstraintconstraintAprojectscheduletogetaproductrapidlyrapidlythroughthroughthesystemmustaccountfortheconstraintImprovingthethroughputofthesystem(company)isthehighestleveragepointforimprovingprofitabilityprofitabilityTheoryofConstraintsTheoryofConstraints--ThreeImportantConceptsThreeImportantConceptsOverviewPresentationonTOCMarch20th/JRHDrumBufferRopeFiveFocusingStepsCriticalChainThinkingProcessesTheoryofConstraintsCoversManyThingsTheoryofConstraintsCoversManyThingsOverviewPresentationonTOCMarch20th/JRHFiveFocusingSteps?FiveFocusingSteps?OverviewPresentationonTOCMarch20th/JRH1.IdentifytheConstraint2.ExploittheConstraint3.SubordinateeverythingtotheConstraint4.ElevatetheConstraint5.RepeatforthenewConstraintTheoryofConstraintsTheoryofConstraints--FIVEFOCUSINGSTEPSFIVEFOCUSINGSTEPS(WhichwillStrengthentheChain)OverviewPresentationonTOCMarch20th/JRH1.IdentifytheSystem'sconstraints.Theprocessisanalyzedsothatataskoractivitythatlimitstheproductivityofanentiresystemcanbeidentified.Asystemconstraintmaybeidentifiedbyalongqueueofworkorlongprocessingtimes.2.Decidehowtoexploitthesystem'sconstraints.Inthisstep,decisionsmustbemadeonhowtomodifyorredesignthetaskoractivitysothatworkcanbeperformedmoreeffectivelyandefficiently.3.Subordinateeverythingelsetotheabovedecision.(step2)Now,managementdirectsallitseffortstoimprovingtheperformanceoftheconstrainingtaskoractivityan