Map
Framework

Theory of constraints

The question it answers

A plant manager sees every department busy yet orders still ship late: which constraint limits the whole system, and where should resources go first?

Origin
Goldratt, 2018 (first published 1990); Goldratt and Cox, 1984
Diagram type
Cycle
Level of analysis
Firm
Topics
Supply chain & operationsStrategy & leadership
Delivery lorry pulling a chain of linked glass boxes, icon for supply chain

Diagram

Theory of constraints

  1. Identify the constraintRank constraints by their impact on the goal. A constraint is anything that stops the system reaching higher performance.
  2. Decide how to exploit itThe constraint is the scarce thing limiting the whole system, so none of it should be wasted.
  3. Subordinate everything elseManage the other resources so they supply only what the constraint will consume. Producing more than that does not help.
  4. Reduce its limiting impactConstraints are not acts of God: there is always something that can cut the limit they put on the system.
  5. Go back to step 1Once a constraint is broken, another one limits the system. Review the rules built around the old one, and do not let inertia turn them into policy constraints.

When to use it, and when not to

Use it when

Use it when there is too much to improve and a choice must be made about where to start. Goldratt holds that every system has at least one constraint and only very few, so the first job is to find them.

Pitfalls

Pitfall

Pushing non-constraints to produce more than the constraint will consume does not help, because overall performance is set by the constraint. Goldratt also warns about inertia: he argues that systems are usually limited by old policies rather than by the market or the machines.

Sources

References

Listed A–Z by author surname, Harvard style. A source with a DOI links to https://doi.org/…; one without links to its page or says plainly that it has no DOI.

  1. Goldratt, E.M. and Cox, J. (1984) The goal: excellence in manufacturing. Croton-on-Hudson, NY: North River Press.No DOIopenlibrary.orgSource page
  2. Goldratt, E.M. (2018) The 5 focusing steps of the theory of constraints (first published 1990 in What is this thing called the theory of constraints). North River Press (free download, adapted from the 1990 book).No DOInorthriverpress.comCited in 1 article