Theory of Constraints (Goldratt)

Knowledge Center

12manage is looking for students / contributors...


Constraint Management. Explanation of Dr Eliyahu Goldratt’s Theory of Constraints.


  1. Summary
  2. Forum
  3. Best Practices
  4. Expert Tips
  5. Resources
  6. Print

Theory of Constraints - Bottleneck

Organizations are Complex

Organizations are a complex web of people, equipment, methods, materials and measures. This detail complexity is bad enough. Then add to it the dynamic complexity of changing customers, suppliers, workforce, regulations, etc. and you have a picture of the challenge faced by today's management team.

Traditional Management Methods

Traditionally, management has divided the organization into smaller, more manageable pieces. The objective is to maximize the performance of each part. The global improvement is assumed to be equal to the sum of the local improvements. Right?

The Theory of Constraints

No, wrong! TOC claims that a change to most of the variables in an organization will have only a small impact on the global performance - on the bottom line. By trying to improve everything everywhere, the risk is that nothing will be improved that really counts. Why? Because if only a few key variables in any system influence overall system performance at any given time, trying to improve most of the system will be counterproductive.

Theory of Constraints provides a set of holistic processes and rules, all based on a systems approach that exploits the inherent simplicity within complex systems through focusing on the few variables – called Constraints - as a way to synchronize the parts to achieve ongoing improvement in the performance of the system as a whole.

Goldratt likens systems to chains, or to networks of chains. Like a chain, a system is only as strong as its weakest link.

An interesting phenomenon about chains is that strengthening any link except the weakest one does not improve the strength of the whole chain. Strengthening the weakest link produces an immediate increase in the strength of the whole chain — but only up to the level of the next weakest link.

Similarly, in business systems, it is usually the capacity of one element that determines the overall performance of the business, and striving to improve any aspect of the system other than that constraint won’t do anything.


The TOC Process. Steps

A company must first know its goal and the necessary conditions for achievement. Then it has to follow the “Process Of Ongoing Improvement (POOGI)” to identify, exploit and perhaps elevate the Constraint(s) in a continuous way:

  1. Identify (choose) the system’s constraint.
  2. Decide how to exploit the system’s constraint.
  3. Subordinate everything else to the above decision.
  4. (Evaluate various alternatives to) Elevate the system’s constraint.
  5. If the constraint is broken go back to step 1, but do not allow inertia to cause the system’s constraint.


The Main Types of Constraints of a Commercial System

  • Capacity Constraint: A resource which cannot provide timely capacity as demanded by the system.
  • Market Constraint: The amount of customers’ orders is not sufficient to sustain the required growth of the system.
  • Time Constraint: The response time of the system to the requirement of the market is too long to the extent that it jeopardizes the system’s ability to meet its current commitment to its customers as well as the ability of winning new business.

TOC Solution Areas

  • Operation (production) management - Make to Order (MTO) environment and Make to Availability (MTA)
  • Project Management - CCPM - Critical Chain Project Management
  • Distribution & Supply Chain Management - DTA - Distribute to Availability
  • Finance & Measurements - Throughput Accounting
  • Sales Management
  • Marketing – Development of Market Offers
  • Managing People - Management Tools (MT)
  • Strategy & Tactics – How to develop a company-wide improvement plan
  • Thinking Processes – Everything within a system is connected by cause and effect relationships. Identification of the causes leads us to the core problem/contradiction/conflict and this is the level for sustainable solutions. The use of cause and effect relationships helps us to structure our thinking, log our analysis and understand the suggested solution for any problem. The TOC - thinking processes provides a set of tools in doing so.


Useful resources about the Theory of Constraints

Theory of Constraints Forum
  Theory of Constraints Applied to Bonus Payments
Hi everyone, I guess we all agree that if we want ...
  Theory of Constraints in Mining
Hi All, I am currently pursuing a project on the a...
  What's the Difference Between Constraints and Bottlenecks?
Constraint and bottleneck are different concepts:<...
  Theory of Constraints in Education / Quality Assurance?
The Theory of Constraints has been applied in seve...
  New Book on Theory of Constraints & Deming Methodology
In 'Sechel: Logic, Language and Tools to Manage An...
  Big Box Retail - TOC Application at Store Level
I'm looking for any examples of Theory of Contrain...
  Theory of Constraints - PQ Game and GSIM Game
I have been using GSIM ad PQ games regularly to te...
  The Dice Game by Goldrat
I am using Goldrat's dice game in my classe...
  Impediments Analysis?
What is impediments analysis? Any help, please?
  Current Reality Tree
A useful tool that Goldratt uses to identify bottl...
  Neural Network In SCM?
Hi, (how) can the concept of Neural Networks be ap...
  Throughput Accounting
It is important to notice that the theory of const...
  Quote by Eliyahu Goldratt
An expert is not someone that gives you the answer...

Theory of Constraints Special Interest Group

Special Interest Group

Theory of Constraints Education & Events

Find Trainings, Seminars and Events

Best Practices - Theory of Constraints Premium

Expert Tips - Theory of Constraints Premium

Dealing with Changing ConstraintsSign up

Often Management and Business Consultants reported...
Usage (application): Theory of Constraints

What are Constraints?Sign up

A Constraint is something that limits an or...
Usage (application): Theory of Constraints Scientific Approach

Constraints in the Business WorldSign up

In the business world constraints can be categoriz...
Usage (application): Practical Examples of Constraints

Three Dimensions of the Theory of Constraints (TOC)Sign up

There are basically three dimensions of the theory...
Usage (application): Teaching the Theory of Constraints

Drum-Buffer-Rope Methodology and Time BuffersSign up

The Theory of Constraints is also built on the und...
Usage (application): Buffer Management

Time Buffers in Theory of ConstraintsSign up

Production Activities are characterized by pert...
Usage (application): TOC Approach to Variability

Buffer Management in Theory of ConstraintsSign up

What is the right size of the Time Buffer? ...
Usage (application): TOC Approach to Variability

3 Potential Categories of (Root) CausesSign up

Latino and Latino consider in a 1999-paper called ...
Usage (application): Root Cause Analysis, Ishikawa, 8D, TOC

How to tackle Constraints?Sign up

Over the years, TOC School of Thought devel...
Usage (application): Practical Tools from Theory of Constraints

Theory of Constraints Key IndicatorsSign up

In TOC vision any action made by an organization i...
Usage (application): Reaching The Final Goal

InventorySign up

To analyze the amount of a company cash out- flow ...
Usage (application): Estimate Investiments

Throughput AccountingSign up

From the disruptive Theory of Constraints descends...
Usage (application): TOC Controlling System

Throughput ConceptSign up

According to the TOC Measurement System, the first...
Usage (application): Estimate Profits

What is an Accurate Finance System in the TOC Perspective?Sign up

TOC is a methodology and a set of processes to max...
Usage (application): Finance

Resources - Theory of Constraints Premium

Introduction to Goldratt's Theory of ConstraintsSign up

Presentation about TOC, that briefly discusses the...
Usage (application): Theory of Constraints, TOC, Just-in-time, Drum-Buffer-Rope, Shop Floor, Decision Making

Theory of Constraints 101Sign up

Concise 3-minute intro to the 5 main steps in Eliy...
Usage (application): TOC, Theory of Constraints, Eliyahu Goldratt, Focus on the Bottleneck

Theory of Constraints vs. ABCSign up

Two system-based views exist regarding managerial ...
Usage (application): Compare TOC and ABC

Supply Chain CollaborationSign up

Successful supply chain collaboration (SCC) practi...
Usage (application): SCC, Theory of Constraints

TOC Reference SheetSign up

Here is a TOC reference guide from an expert in TO...
Usage (application): TOC Reference Guide

Distribution TOC waySign up

The Theory of Constraints (TOC) analyzes the impac...
Usage (application): Managing Distribution According to TOC Principles

News about Theory GoldrattSign up


News about Theory ConstraintsSign up


Videos about Theory GoldrattSign up


Videos about Theory ConstraintsSign up


Presentations about Theory GoldrattSign up


Presentations about Theory ConstraintsSign up


Books about Theory GoldrattSign up


Books about Theory ConstraintsSign up


More about Theory GoldrattSign up


More about Theory ConstraintsSign up


Compare with Theory of Constraints: Root Cause Analysis  |  8D Problem Solving  |  Gantt Chart  |  Analogical Strategic Reasoning  |  Pyramid Principle  |  Brainstorming  |  Kepner-Tregoe Matrix  |  Crisis Management  |  Game Theory  |  Real Options  |  Dialectical Inquiry  |  Delphi Method  |  Six Thinking Hats  |  Plausibility Theory  |  Mind Mapping

Return to Management Hub: Change & Organization  | Decision-making & Valuation  |   Human Resources  |   Leadership  |  Marketing  |  Program & Project Management  |  Strategy  |  Supply Chain & Quality

More Management Methods, Models and Theory

Special Interest Group Leader
Salvador Pena
Business Consultant

About 12manage | Advertising | Link to us / Cite us | Privacy | Suggestions | Terms of Service
© 2018 12manage - The Executive Fast Track. V14.1 - Last updated: 20-8-2018. All names ™ of their owners.