Theory of constraints (TOC)

Definition

The Theory of Constraints (TOC) is a management methodology that focuses on identifying and managing the most critical limiting factor (constraint) that hinders an organization's ability to achieve its goals. The aim is to systematically improve the constraint until it is no longer a bottleneck.

5 Must Know Facts For Your Next Test

1. TOC emphasizes the importance of identifying the single most significant constraint in any process.
2. The five focusing steps of TOC are: Identify, Exploit, Subordinate, Elevate, and Repeat.
3. Constraints can be physical (e.g., equipment) or policy-related (e.g., company regulations).
4. TOC aims to improve throughput by focusing efforts on the weakest link in the chain.
5. Goldratt's book 'The Goal' popularized TOC by illustrating its application in manufacturing.

Review Questions

• What are the five focusing steps of the Theory of Constraints?
• How does TOC differ from other continuous improvement methodologies?
• What types of constraints may exist within an organization according to TOC?

Related terms

Throughput Accounting: An accounting method that focuses on maximizing production throughput and minimizing inventory.

Bottleneck Analysis: A technique used to identify the point in a process where flow is restricted.

Lean Manufacturing: A systematic method for waste minimization without sacrificing productivity.