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Home » Theory of constraints (TOC) – Definition, Meaning & Steps

Theory of constraints (TOC) – Definition, Meaning & Steps

E. M. Goldratt first described the Theory of Constraints (TOC) in the novel “The Goal.” This book describes the philosophy & its accompanying methodology by using the story of a fictitious plant manager as he struggles to make the plant profitable.

What is the Theory of constraints (TOC)

Theory of constraints (TOC) is an approach to business that focuses on achieving the goal of that business which is to make more money now & then in future. Goldratt stated that a business like any system operates with constraints.

Definition of Constraint

Constraints can be defined as anything that limits the performance of a business relative to its goal.

Another important aspect of the Theory of constraints (TOC) is its unique approach to improvement that does not focus on cost reduction but instead on increasing throughput. Under this concept, the system defines throughput as the money generated through sales. It is throughput value which represents (Seling price – raw material cost) the value added to the product by system.

TOC strives to continuously increase the money generated by the system.

TOC Foundation

Theory of constraints – 5 steps

The FIVE-step process for improving a system by focusing on the constraints of that system.

  1. Step 1: Identify the primary constraint of the system.
  2. Step 2: Decide how to exploit the constraint.
  3. Step 3: Subordinate all other actions to exploit the constraints.
  4. Step 4: Determine if it is necessary to elevate the constraints.
  5. Step 5: If the process breaks the constraint, return to the first step and repeat it.

TOC can play an important role in the successful implementation of Total Productive Maintenance (TPM) to reduce downtime cost of maintenance & increase throughput.

This results in an appropriate increase in productive capacity i.e. increase in the overall rate of throughput & reduction in starvation & blockage at the bottleneck of equipment.