The Theory of Constraints (TOC)

 

Theory of Constraints (TOC0

Business Performance can only be substantially and sustainably improved once the impact of flow of products and or services to the customer and the interdependency of the various business functions are fully visible and understood

 

Sound financial decision-making can be greatly enhanced once this visibility is created through effective measurement and analysis of Material Flow, Operational Expense and Production Throughput.

The success of any organisation hinges on the decisions it makes

Whilst goal achievement and expectations vary, it is fair to say, that for most businesses, the ultimate success story lies in their ability to make a profit now and in the Future. To achieve this they need to be able to analyse and measure the cumulative impact of their activities. By understanding the interdependency between activities and processes it becomes clear that any process has a Constraint (bottleneck) and improvement activities should be focused on management of this bottleneck as it is the most effective and quickest route to profitability.

The Role of the Theory of Constraints (TOC) in Performance Improvement

The Theory of ConstraintsTOC was developed by the Avraham Y Goldratt Institute (AGI) and offers a Holistic approach to Strategic Improvement.

This revolutionary approach to business improvement focuses on companies with more complex supply chains and material flows. TOC Methodologies have a role in development and improvement in Production, Logistics, Project Management, Finance and Measurement and Thinking Processes.

TOC Methodologies and a Common Framework

The principal underpinning the TOC methodology is the need for a common framework from which actions are aligned, and that the success of an organisation can be measured by variations on three core areas of business:

1. Throughput in terms of money generated through sales
2. Inventory
3. Operational Expense

TOC and Five Steps towards Continuous Improvement

The TOC Methodology identifies five focusing steps in the process of ongoing improvement (POOGI). These steps are centred round the individual organisations constraints ( as researched and identified) and are as follows:

1.Identify the Constraint
2.Decide how the Constraint can be Exploited
3.Subordinate everything else
4.Elevate the system constraint
5.If any of the steps in the above list has been broken, go back to step one

ValueMetrics and TOC Consulting

At ValueMetrics we have over 10 years experience in the TOC arena and have successfully completed projects across a number of industriesTOC and Performance Improvement including: Mining, Packaging and Paper, Minerals and Sand, Iron Ore Rail Transport and Food Processing Plants.

Our Consultants, using proven technologies, have empowered many organisations to improve throughput and profitability, and make more effective financial decisions that have revolutionised the way they run their business.

To find out more about a ValueMetrics TOC Consulting see the contact numbers for our UK and South Africa offices:

South African Team:+27 (0) 12 743 6630

UK Team: +44 (0)121 318 5667

Alternatively CLICK HERE to send us an email