Theory of Constraints By Craig Dooley For professor Merle Davis Colorado Technical University September 2, 2011

The Premise The Theory of Constraints (TOC) is a theory developed by Eliyahu Goldratt with the intent to identify and eliminate constraints within the production system. Therefore the premise for the theory was to develop a system that will trim the production process down to leaner and less wasteful system. Two areas that are important to TOC is the recognition of two (2) concepts;

1) that systems are chains and 2) that throughput, inventory, operating expense are key to the success of the company.

Elements of the theory

There are two main elements of the TOC: descriptive and prescriptive. The descriptive elements are the factual elements of the system that we are examining for constraints. Examples of descriptive measures would be a five step process: 1) identifying constraints through waste (COMMWIP), 2) exploiting the constraints, 3) subordinate everything else, 4) elevate the constraint, and 5) go back to step one. The Prescriptive elements consist of the following most common thinking processes: (CTU. 2011)

Current Reality Tree

Evaporating or conflict cloud Future Reality Tree Negative Branch Reservations Pre-requisite Tree Transition Tree

Descriptive Measures

I will describe the waste and impact associated with each descriptive measure as I reveal the meaning of each stage of the acronym COMMWIP: Correctiveness Anytime an individual is required to repeat a task that is done incorrectly the first time that is considered a waste. Lost productive time and excess labor are factors that affect the production process that are a result of corrective actions being performed for whatever reason. Over production This is obviously the over production of units produced which introduces excess inventory in storage instead of on the shelf being sold and generating revenue/profits. Wasted motion Any motion that is deemed to be non-value added. If the motion is repeated or not a productive move then the motion is wasted and should be eliminated. Material Movement In so many production facilities product will be put in one place upon entering a department and then moved to a staging area and then moved again to the final processing station. That is three (3) moves in one department for one process! This is a waste of time, labor, and space. Waiting Anytime an employee or machine is waiting for product (no matter how small of a time) the waste needs to be eliminated. Time, labor, and productivity are the biggest losers here. Inventory Employing a safety or buffer stock is not acceptable use of organization dollars. By employing a Just in Time system will go a long way to

eliminating the storage costs associated with sitting, not selling, inventory accrues. Processes This has already been eluded to in regards to motion and material movement. Any wasted motion or processes need to be eliminated because of the financial cost associated with them. Time, labor, motion, material movement, and inventory costs can all be affected by non-productive processes.

Prescriptive Measures The Prescriptive Measures associated with the TOC are as follows.: Current Reality Tree - During this measure we are asking ourselves the questions What is the root cause of the constraint? and Why is the constraint happening? In order to analyze this we use something called the 5 Whys or Root cause analyses. We start asking, in reverse, the whys of the constraint. For example: why is the part of the process slower than the others? Why is this step in the process making the process slower?; why is this process necessary? Etc. Evaporating or conflict cloud Conflict resolution is hammered out in this phase. We must resolve any hidden issues at this point so that cohesiveness can be the norm instead of a goal. Future Reality Tree The organization is presented with a tree that illustrates the outline of what the future could look like if the TOC is implemented. Negative branch reservation In this step we seek to realize the negative effect of any of the changes being proposed and whether or not the negative effect will outweigh the positives of the change. Prerequisite tree We decide what is considered a contingent issue when evaluating a standard of success. If these standards are met then this phase of the project is considered successful. However if just one of the standards is not met then we should not continue with this process. Transition tree - Fail safe action planning is what the transition tree is all about. This tree involves on its branches the contingencies of what may happen and how to resolve the situation. For example, if a machine that is producing 150 units a day is unproductive for one-half day then how do we account for the 75 units that will not be produced by that machine? What is our course of action to retrieve those 75 units? We look at every possible situation and account for a timely reaction to an unproductive time as a result of any circumstance.

Application of elements

Descriptive measures These measures in general occur in the production stages but can be addressed in the planning stages of a new process. Utilizing poke-yoke is one to address production issues in the planning stages. Poke-yoke is creating a process with the intent of no defects and no waste. Prescriptive measures The prescriptive measures mentioned in the report are primarily in the planning stage. However the pre-requisite tree can be referred back to during production to assure that the pre-requisites are being met and evaporating cloud can be revisited whenever a conflict arises within the production or planning process.

References

CTU (2011) MUSE; Phase 2, Discussion Board 1 Retrieved from ctuonline.edu. net on August 31, 2011