Theory of Constraints is a body of applied knowledge that treats a corporation as an interlinked, interdependent system rather than just a collection of independent processes or functions. Dr. Eli Goldratt, the creator of TOC, observed that just as the strength of a chain is dictated by its weakest link, the overall performance of any company is dictated by its constraint.
Do you know of any organization that reports infinite profits? Certainly none. This verifies that something exists that limits your profits. That something is a constraint on the performance of the organization.
This constraint might be production capacity, or ability to generate new orders, or capability to procure raw material, or even the market size itself! If you can find a way to manage the constraints you can dramatically increase sales, cash and profit without any significant investment.
Five Focusing Steps
- Identify the system’s constraint.
- Decide how to exploit the system’s constraint.
- Subordinate everything else to the above decision.
- Elevate the system’s constraint.
- If the constraint is broken go back to step one but do not allow inertia to cause the system’s constraint.
In an interview to CNBC, Amazon’s founder and CEO Jeff Bezos, reveals The Goal as one of the three books his top Amazon executives read.
The Goal continues to be one of the most widely used and recommended business books of all times, as reported by Time Magazine, Slate Magazine and more. It has sold more than 3 million copies, been translated into 21 languages and produced into a 45-minute movie, and been taught in more than 200 colleges and universities.
THE GOAL is also available on demand, DVD, audio CD formats.Thousands of organizations around the world have achieved breakthrough results with TOC, including well-known names such as Intel, Cadillac, Texas Instruments, Boeing, Lucent Technologies, Ford Motors, Samsonite, Bethlehem Steel, Pratt & Whitney, General Electric, and Procter & Gamble.
TOC, as a body of knowledge, has seen tremendous development and expansion over the last 30 years. It has evolved into a holistic management philosophy and set of focusing and critical thinking processes that enable us to identify and implement win-win solutions.