The Theory of Constraints is a methodology for operations improvement brought to mind by Eliyahu Goldratt. It is based in a few simple concepts:

• Any complex system has an inherent simplicity that can be used to modify its output.
• Localized efficiency gains are meaningless. Every change to the operation should be evaluated based on the effect on total system performance. A good change is one that maintains or decreases total expenses, maintains or decreases inventory and maintains or increases the total system output. The three of them simultaneously.
• The maximum output (throughput) of a system is determined by a one or a few constraints process defined as the slowest process in the chain (a bottleneck if you will)

From there, Goldratt devised a methodology to improve the whole system by focusing on the whole system throughput instead of localized gains and in the effects of modifying how the constraint is managed

I have heard a few consultants dismiss the Theory of Constraints. They just draw a series of operations one after the other, one smaller than the rest and they say something such as “Get rid of your bottlenecks. That’s not new!”

But businesses seldom look like a clear drawing, do they? I also find amusing that some people think bottlenecks are something bad per-se when, if all bottlenecks are bad, why does every bottle has a neck? Because they regulate the output.

This is a small set from an example taken from a Symposium about Continuous Improvement.

At the Symposium, a large crowd of Operation Management and/or Continuous Improvement professionals and consultants were presented with the following case study:

The case study follows a Doctor/Colonel who was named to the command post of one of the Army’s major medical centers. He detected that one of the major needs for improvement was the pharmacy, which served hundreds of patients daily and filled thousands of prescriptions daily. The average service time was over 40 minutes, while the longest service time could exceed one hour and a half. He started collecting data to attempt identifying solutions.

The work was divided in 5 stations:

• Station 1
•     Prescription drop-off
•     Verification of data filled by the patient
• Station 2
•     Prescription fill
• Station 3
•    Enter computer data
• Station 4
•     Verify prescription and answer questions
• Station 5
•     Bag-in issue prescription
•     Store and retrieve prescription

There was no budget to add resources. Manning was assigned based on number of prescriptions filled, so the long time prescriptions such as chronic patients and birth control were broken down to monthly refills, to increase the number of prescriptions filled.

Because of the long wait times and the time customer spent in the pharmacy, parking spaces were becoming an issue too.

The keyboard and screen for the person who was doing the data entry was located in an awkward position for the clerk, due to lack of space

Updating the board for the “next” person was sometimes made in increments and from time to time they would move the board 10 numbers, upsetting six people who have been waiting their turn.

An additional report was taken, measuring service times about how long a prescription takes to be processed at each of the five stations.

• Station 1 : From 30 seconds to 1.5 minutes
• Station 2 : 30 seconds with 2 technicians
• Station 3 : From 0.75 to 2.5 minutes
• Station 4 : From 0.5 to 2.5 minutes
• Station 5 : From 5.75 to 10.75 minutes

From the time it took to perform every individual operation, it was clear that most of the service time was waiting time, not processing time.

The request of the subordinates to the newly appointed Doctor/Colonel was to get help to add people to unclog the process and provide better, faster service.

This is a quick summary of the case study, which in total used nine pages to present the detailed information. After presenting the case, the instructor asked the attendees what steps should be taken. After 20 minutes of taking suggestions from all the professionals attending, many of which had already studied Theory Of Constraints, the instructor discarded all attempts of solution since no one was on the right track and described the actual solution following Goldratt’s 5 steps to apply the TOC:

1. Identify the constraint
2. Exploit the constraint (use it as best as possible)
3. Subordinate everything to the constraint
4. Elevate the constraint (improve the performance of the constraint/bottle neck)
5. Repeat

The result in the application of this methodology was a reduction of service time to 10 minutes average. I am not going to go through the details of the solution, because that is prerogative of the instructor who solved and presented the case, but I can say it was clever and once you learn it, you can only say “Of course! Why didn’t I see it before?”

In summary

Real business cases most of the time are not clear cut at the beginning, usually there is a clutter of information and they are rarely presented as simple diagrams where the bottleneck is clearly indicated. So, applying the TOC requires lots of practice. The concepts might be simple, but the reason to hire a good TOC consultant is because they are advanced practitioners who can see through the clutter of information and use this simple, yet powerful technique to dramatically improve operations performance.

To learn more

If you want to learn more about the Theory of Constraints and become a practitioner yourself,

• The basic book to start learning about the Theory of Constraints is The Goal, by Eliyahu Goldratt
• APICS includes the Theory of Constraints among the techniques taught at their CPIM certification
• The Goldratt Institute – AGI offers education based exclusively in the Theory of Constraints and the Jonah certification for those who complete their advanced program
• Robert E. Fox and Reza M. Pirasteh have developed a methodology called iTLS, that integrates the application of the Theory of Constraints, Lean and Six Sigma to improve the convergence of methodologies into a quick, efficient application

At the Ventura Chapter of APICS we offer the CPIM certification program and as a consultant I can assist a company in the application of the Theory of Constraints.