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Five steps to the theory of constraints

groupplanning26668223.jpgThe Theory of Constraints is a management philosophy that was introduced by Dr. Eliyahu M. Goldratt in 1984. The key assumption to the theory of constraints is that organizations can be measured and controlled by variations of three different measures. The three different measures that are used is the money that is generated by sales, the company's operating expenses, and the inventory of the business.

The theory of constraints is because a company's ability to achieve a specific goal is limited by at least one constraining process. This constraining process prevents the company from fully reaching their goals, so by following five specific steps the money that is generated by sales can be increased because there is an increased flow through the constraint.

The first step to the theory of constraints is to identify the constraints. One thing that you need to think about when identifying the constraints is that there can be more than one constraint, so don't try and limit it to one or two, identify what you think all of the constraints are, you can always weed out the details after you have had a chance to look over the entire list. Even though there might be more than one constraint there is never going to be many constraints, usually three or four is considered on the high side.

The second step to the theory of constraints is to figure out how you are going to exploit the constraints. Once you have figured out what it is that is limiting you or preventing your from accomplishing the things that you want to accomplish you need to figure out how to take advantage of those constraints. The underlying job is to fix the constraints so that they are not doing something that they aren't supposed to be doing. If the constraint is not doing what it is supposed t be doing time and money wasted, which affects how much money the company is generating through sales because operating expenses are going to increase.

The third step behind the theory of constraints is to subordinate all of the non-constraints to the decision that was made in step two. Rather than trying to go against the system, you want to make sure that the non-constraints are in line with what you have decided to do with the constraints in step two. Having everything in line, which includes the whole organization, not just the one process you are working with, will improve the company's bottom line. The reason for this is that things will flow smoothly rather than being bunched up, if stuff gets bunched up the company will lose money on operating expenses, but if they flow smoothly less time is being wasted.

The fourth step of the theory of constraints is to elevate the constraints. This step has nothing to do with the first three steps, except you have to identify the constraint before you can elevate it. The first three steps work on getting everything that you can out of the system as it currently exists. This fourth step focuses on getting a higher level of performance, which the only way to do that is to have more of the constraint.

The final step of the theory of constraints is that the constraint has become broken, meaning there is no more constraint. This can become a problem because if you do not go back to step one and start all over again inertia can become the next constraint. Once you have broken one constraint you want to repeat the process for other constraints.

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