Theory+of+Constraints

Introduction
toc

A number of approaches have been developed to enhance an organisation's ‍‍competitive advantage within business‍‍ of which Theory of Constraints (TOC) is one such approach, initially developed by [|Goldratt] in the mid-1980s based on his novels, 'The Goal' and The Race (Rahman, 1998). In The Goal the TOC was described as an effective management tool for increasing profit or throughput (Goldratt & Weiss, 2005). These novels were initially based on the Optimized Production Timetables system (a production scheduling system) however the content was developed and eventually in 1987, was labelled TOC.

Originally this theory was applied to standard production situations ‍‍however is now ‍‍applied across all aspects of business (Rahman, 1998), including project management (Cohn, 2006) and software development (Beck and Andres, 2006).

Definition
Within literature, TOC has been defined as many things e.g. a philosophy, approach, practices and principles, a methodology, theory, model and management tool (Watson et al, 2007; Rahman, 1998; Beck and Andres, 2006; Goldratt). It would seem TOC is a contextually perceived phenomena.

Watson ‍‍et al.‍ (2007) suggest it is "a management philosophy with practices and principles..." and that the main principle upon which the theory seems to be based is that a constraint is __present__ in every system which compromises performance (Watson et al, 2007). Goldratt (1988) views TOC as "//an overall theory for running an organisation//" which encompasses the identification of constraints within an organisation in order to improve organisational performance (by removing the constraint).

A constraint is described as a physical or of a managerial nature (Rahman, 1998) which creates issues within a __system__ or process and impedes achievement and performance. Constraints are often referred to as 'bottlenecks' although this term is largely related to physical constraints (Anderson and Schragenheim, 2003).



By concentrating resources upon the 'bottleneck' the related issues can be removed and performance improved. In the traffic jam scenario above, a car sharing scheme may create a more effective flow at rush hour (less traffic) enhancing traffic performance.

**Theory Components**

The main underlying component of TOC as identified within literature is the Five Focusing Steps (Rahman, 1998; Watson et al, 2007, Anderson and Schagenheim, 2003) described as a philosophy for continuous improvement. ‍‍‍‍‍‍The steps are‍‍‍‍‍‍:
 * Step 1: Finding the constraint(s)
 * Step 2: Exploiting the constraint(s)
 * Step 3: Subordinating everything else
 * Step 4: Prioritising the constraint
 * Step 5: Repeat the process and take a proactive approach to constraints

Note that all workarounds put in place to keep the old system working must be removed. The system must fail honestly so that the TOC can identify the real constraints and target them.

Other developed components include:
 * Drum Buffer rope and Buffer Management generally used within the manufacturing environment (Rahman, 1998)
 * The Thinking Process, a generic approach used in complex problem-solving and management (Watson et al, 2007)
 * Performance Measurement approach introduced for organisation-level measurement (Rahman, 1998)
 * Critical Chain Project Management mainly used for planning (Poppendiek & Poppendiek, 2006)

Theory of Constraints and Agile
The 'common ground' between Agile and TOC is continuous improvement and the pursuit of quality, __found__ in many Agile based methodologies and approaches such as Scrum, eXtreme Programming (Beck and Andres, 2004) and Lean Software Development (Poppendieck and Poppendieck, 2006). The concept of continuous improvement is also represented within the [|Agile Manifesto] in a number of principles e.g. attention to technical excellence and good design and the reflective requirement of teams to improve performance. Anderson and Schagenheim (2003) identify TOC as a contributing theory to the Agile approach with specific focus on improvement.

The theory of constraints is a precursor of agile techniques as it iteratively improves a process. This is reminiscent of selecting a user story and working upon it in a timeboxed iteration. Cohn (2005) describes how planning is performed in the knowledge that the plans will change in the future. Changes are not made for the sake of it but to improve the process as with TOC.

The TOC relates to the Agile Principles of improvement, reflection, flow and quality in that reflection is constantly taking place to identify areas of improvement, increase flow of the process and improve the overall quality of the process to improve profitability.

It would appear utilisation of TOC alone is not sufficient within an Agile project environment due to its limited focus on specific areas, however, adoption of the principles supports improvement of the processes and throughput of the project.

Benefits

 * The main benefit of TOC is that it increases throughput of a system, reduces inventory and reduces operational expense (Goldratt & Cox, 2004).
 * Although originally aimed at business processes TOC is adaptable within other areas such as the field of education as identified by Goldratt and Weiss (2005).
 * Goldratt's theory is simple to understand (if not to implement). Its five focussing steps are explicit and easy to follow.
 * TOC is effective in raising awareness of processes and existing bottlenecks in order to improve performance (Beck and Andres, 2006).
 * Quality is at the heart of TOC and can enhance an organisation's competitive advantage.
 * TOC locates and addresses the problem areas that cause most of the issues. This is very similar to [|Pareto charts] and the [|80/20 rule].

‍‍Limitations‍‍

 * Changing a company's systems is often a challenge that requires political manoeuvring.
 * Where organisations do not address TOC approach with an organisation-wide perspective with individuals focusing on their own specific productivity, improvements will not occur and as Beck and Andres (2006) suggest the "//reward system and culture need to align with overall throughput//" for positive results.
 * Where performance measurement focuses on an area which is subordinated in order to address a constraint, resistance and conflict may occur within the team (Watson et al., 2007).
 * The model is limited in that it does not appear to address the people-aspect of the workplace and implications on the model arising from people interactions (Beck and Andres, 2006).
 * Where TOC is focused within a specific area and constraints resolved the constraint may actually be pushed elsewhere within the organisation which can lead to conflict and rejection of the approach due to the transfer of performance issues to these organisational areas (Beck and Andres, 2006).
 * Identifying managerial constraints is complex and can be problematical (Watson et al, 2007).
 * The assumption that all activities should be known in advance directly opposes effective application of critical chain project management (Poppendiek & Poppendiek, 2006).
 * When removing a bottleneck it is important to be aware of the reasons for that constraint (Poppendiek & Poppendiek, 2006). If a departmental job-logging system for an IT department takes excessive time to log jobs, there is no point replacing it if the IT team is about to be outsourced.
 * The environment that development is taking place in is constantly and rapidly changing (Poppendiek & Poppendiek, 2006).
 * Constraints can never be entirely eliminated, just reduced or moved to another area (Poppendiek & Poppendiek, 2006).

‍‍References‍‍
Anderson, D.J. and Schragenheim, E. (2003) //Agile Management for Software Engineering: applying the theory of constraints for business results//. New Jersey: Prentice Hall Agile Alliance (2012) [Online] Available at: http://www.agilealliance.org/the-alliance/the-agile-manifesto/the-twelve-principles-of-agile-software/ [Accessed on: 27th February, 2012]. Beck, K. and Andres, C. (2004) //Extreme Programming Explained: Embracing Change//. 2nd edition. Boston: Addison-Wesley. Cohn, M. (2005) //Agile Estimating and Planning//. New Jersey: Prentice Hall. Goldratt, E. (2004) Adopt a new approach to business management: Theory of constraints URL: http://gmg.download.files.s3.amazonaws.com/download/TOC_Brochure_14012004.pdf, accessed 23rd February 2012. Goldratt, E. & Cox, M (2004) //The goal: A process of ongoing improvement//. Second Edition. The north riverpress publishing corporation: Great barrington. Goldratt, E.//. // (2006) Viable vision // Leadership Excellence //. (23)8, p4-4, 2/3p Goldratt, E. & Weiss, N. (2005) Significant enhancement of academic achievement through application of the Theory of Constraints (TOC). //Human systems management//. 24(2005). pp. 13-19. Poppendiek, M. & Poppendiek, T. (2006) //Implementing Lean Software Development From Concept to Cash//. Boston: Addison-Wesley. Rahman, S. (1998) Theory of Constraints: A review of the philosophy and its applications. //International Journal of Operations and Production Management.// 18(4), pp. 336-355. Watson, K.J., Blackstone, J.H. and Gardiner, S.C. (2007) The evolution of a management philosophy: The theory of constraints. //Journal of Operations Management.// 25(2007). pp. 387-402‍‍‍‍‍‍.‍‍‍‍‍‍