Simplifying TOC - Theory of Constraints
Theory of Constraints (TOC) is a management philosophy aimed at helping organizations identify the most significant limiting factor, or constraint, that stands in the way of achieving their goals. Developed by Dr. Goldratt, TOC is centred on the premise that any complex system is limited in achieving more of its goals by a very small number of constraints (aka bottlenecks). There is always at least one constraint, and TOC uses a focused process of identifying and addressing this constraint to improve system performance.
Remember, the goal of the organisation is to generate value, therefore, all TOC activities should have the following end goals:
The five steps of TOC
The TOC methodology is structured around five steps, designed to systematically improve organizational performance by identifying and addressing its constraints. These steps are:
1. Identify the system constraints
This step involves determining the factor that most significantly limits the organization's ability to achieve higher performance relative to its goal. This could be a physical constraint, like limited machine capacity, or a policy constraint.
2. Exploit the system's constraint
Once identified, the focus shifts to exploiting the constraint to its fullest capacity. This means making the most of the constrained resource without additional significant investment.
3. Subordinate everything else to the above decision.
This step requires aligning the entire system or organization to support the decision made in the second step. It involves reviewing other activities and processes to ensure they are in harmony with the constraint's requirements.
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4. Elevate the system's constraint
If exploitation and subordination are not enough, the next step is to elevate the constraint's performance. This could involve increasing capacity or changing policies that influence the bottleneck.
4. Close the loop and repeat the process
After breaking a constraint, the process begins again to identify and address the next constraint. This cyclical approach ensures continuous improvement.
TOC should be a critical initial step in any successful Operations Transformation
Incorporating TOC into operations transformations is important for several reasons. Primarily, it provides a clear methodology for increasing throughput. By focusing on constraints (aka bottlenecks), organizations can achieve more with less, optimising resources and significantly improving performance. This focus ensures that efforts and resources are not wasted on areas that will not lead to significant improvements. Moreover, TOC encourages systemic thinking, which is vital for sustainable operations transformations, ensuring that changes are made considering the entire system's performance rather than isolated parts.
So in a mining context, where should your constraint be?
Ideally - Your most expensive asset, and this tends to be your processing facility.
Why? It's simply your largest investment, and so minimising non-utilised time will maximise your return on investment.
Business Coach & Mentor- Coaching Next-Generation Leaders and Entrepreneurs
1 年Theory of Constraints (TOC) management and coaching share the same philosophy. Where TOC management is aimed at helping organizations identify the most significant limiting factor, or constraint, that stands in the way of achieving their goals, coaching follows the same philosophy for people. ? The essence of coaching is to identify and address the most significant limiting factor, or constraint, that stands in the way of an individual achieving their goal. Just like the goal of any organization is to add optimum value, the goal of an individual can also be to add optimum value, whether in life or at the workplace. ? Newton's first law states that an object is at rest or in motion, unable to change their status quo unless acted upon by a third force. Humans are sometimes also stuck in status quo. Coaching can become that third force to unleash our full potential and add our finest value.
CSCO | GAICD
1 年Great work Ahmed! Summarizing one of my favorite books “The Goal”
Startup Founder at Golio.io and green ammonia power hobbyist
1 年"Elevate" and "subordinate" are important concepts. In office settings people construct huge backlogs, work queues to look busy, making everyone look like the bottleneck. It is an unspoken code that no individual or group can admit to having any extra capacity. If everyone is super busy it becomes very difficult to align people to elevating any role or task and subordinating another. It would be refreshing to hear anyone admit they have an extra hour a day to help the bottleneck. This also leads to terribly ineffective improvement efforts. Too often individual groups take on projects without looking at the end-to-end workflow. Improving a non-bottleneck operation generates no benefit. Most popular notations of Ford focus on standardization, assembly lines, etc. Very few discussions highlight the true insight, when you have a bottleneck step you can bring the full force of engineering, human factors, procurement, material science, quality, etc. and quickly deliver real improvements. They made the Model T for 19 years and every year dropped the price. The rate of improvement possible when you apply on TOC is wild.