Constraints

A constraint is a limitation, imposed by outside circumstances or by system behavior (ourselves) , that materially affects our ability to do something and limits a person or an organization in achieving their goal. Constraints directly impact systemic capability and potentiality .

There is a subtle difference between a constraint and a bottleneck.

A bottleneck (resource) is a resource with capacity less or equal to demand while a constraint is a limiting factor to organization’s performance, an obstacle to the organization achieving its goal.

A constraint can be called bottleneck but a bottleneck is not always a constraint.

Key Considerations:

  • By managing organization as a whole, instead of separate parts, understand how everything is connected within the organization, understating dominant influences that determine conditions (production output, inventory, sales ect…) by identifying critical  constraint and managing everything around the constraint efficiently and effectively transforms potential into energy.
  • By making a constraint beautiful, implies  seeing it as an opportunity, not punitive restriction, and using it as a stimulus to see a new or better way of achieving organizational goals.
  • When we face the problem of managing finite resources, synergy and synchronization is of fundamental importance to transform its potential ; maximize throughput therefore optimize its performance; freeing up energy that otherwise would be lost.

Constraints fall into four different groups:

  • Constraints of foundation (where we are limited in something that is usually seen as a foundation element for success); internet selling does but provide the buyers to touch and feel. Policy decision such as aligning product development around specific operating system.
  • Constraints of resource such as facilities, manufacturing resources, people ect,,;  A constraint of resource relates to what generates output.
  • Constraints  of method (where we are limited by having to do something in a certain way). Typically entrenched business processes based on ERP system ways of working that influence effective exploitation of resources and time.
  • Constraints of time (where we are limited in the amount of time we have to do something)
  • As it is the case in many companies, top management set local productivity objectives creating whole  system productivity issues.

Examples of Constraints:

    1. Machine Equipment capacity
    2. Austerity ; Government budget deficit or debt to GDP ratio
    3. Process : the way processes is structured
    4. Information Systems
    5.  Facilities

One of the key aspects around effective governance is to continuously review constraints and bottlenecks and related throughput ( effective throughput implies producing the right things) by applying  five focusing steps of based on Theory of Constraints:

  1. Identify the constraint
  2. Exploit the constraint
  3. Subordinate everything to the constraint
  4. Elevate the constraint
  5. Prevent inertia to become the constraint

The above is fundamental in maximizing potentiality, capability, profitability, efficiency and effectiveness.

Advertisements