You’ve probably heard the classic business advice to focus on ONE THING at a time to achieve your goals.
But how do you decide what that one thing is? Especially when your days are teeming with demands and distractions?
Identifying the single constraint that hinders performance is the central theme of Eli Goldratt’s business management classic, The Goal.
Goldratt’s protagonist, Alex Rogo, embarks on a journey to uncover this critical issue as he works to save his struggling manufacturing plant.
Is his NCX10 machine the bottleneck? Or something more fundamental?
Every situation, including yours, will have a different answer.
To help you find the one thing holding your operation back, first let’s define what a constraint is, according Theory of Constraints (TOC):
A constraint is a factor that limits performance in the pursuit of a goal.
To find that key constraint, you need to step back, like Alex does, and look at the entire business.
It’s like peeling an onion.
Start by identifying if the problem is in your internal operations (do you have too much demand and can’t meet your commitments?), or if it’s external (demand is not sufficient to grow the system).
If it’s internal…
TOC’s 5 focusing steps are a systematic way of dealing with a constraint to improve efficiency, throughput and overall performance. Here’s the process:
1. Identify the constraint: Start by drawing a flow stream map and consider: where is the weak link in the chain? Which machine has the least capacity most of the time? Which machine or process creates the most problems for you?
2. Exploit (optimize) the constraint: Fix or reorganize things to produce as much as you can through the constraint, so it works at full capacity.
3. Subordinate all other activities to the constraint.
4. Elevate the constraint: Invest in capacity related to the constraint (equipment, people, other resources) to produce more.
5. Stabilize the system: Increase output via the constraint in relation to everything else in the plant, growing production of the entire plant.
Contrary to common wisdom, our objective is not to eliminate the constraint.
It’s to create a continuous improvement process around the constraint that unlocks growth using TOC solutions like Demand-Driven Replenishment, Demand-Buffer-Rope scheduling and Critical Chain Project Management.
If it’s external…
If demand is not sufficient to sustain the growth of your operation, we recommend using a Throughput Economics approach to assess market demand and profitability (more on this to come next month).
Once you better understand your market using Throughput Economics, chances are you’re gonna flood your plant with orders. Then we focus on exploiting your capacity.
Thanks for reading.
— Jack Warchalowski
Montera CEO