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• Illinois: 847-971-4986 • Connecticut: 203-315-2123 |
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About Theory of Constraints |
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Theory of Constraints (TOC) is the most important management methodology of the last 25 years. It provides a systematic, proven methodology for accelerating growth and profits in virtually any type of organization. TOC was first released to the world in 1984 with Eli Goldratt’s best selling business novel "The Goal", which continues to sell widely almost 25 years later. Those core concepts have led to powerful applications for Manufacturing, Supply Chains, Project/Portfolio management, Retail, and Management Accounting. The principles have been widely viewed as "common sense," evidence of their elegance and ease of comprehension. Paradoxically, in spite of the common sense label, inertia often blocks their application of these concepts. This paradox and the fact that TOC forces management to question conventional wisdom and long-standing practices explains why, in spite of remarkable successes, TOC is not yet universally adopted. |
TOC Results
First Solar grew from $20 million in sales and significant operating losses to sales of $500 million and $150 million in profits and a market cap of over $11 billion.
Stryker Instruments used the Theory of Constraints (TOC) to expose 32% more capacity in just three months. Overtime dropped 80%, and the exposed capacity was used to increase output by 20%.
Novartis Animal Health Applied the Theory of Constraints (TOC) to create 73% more production output without adding operating expense or capital, while avoiding a $30 million construction project.
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Common practice divides organizations into smaller parts (functions & departments)Once these sub groups are no longer directly connected to the marketplace a variety of local measurements are devised to manage performance. The resulting model creates significant problems in that decisions that improve local performance typically harms the overall performance of the company.
The Five Focusing Steps operate on the basis that a company generates profits primarily through the coordinated efforts of all of its resources and any system is only as strong as its weakest link (constraint). Efforts that strengthen the constraint strengthen the entire company, efforts which do not are largely ineffective, or even wasteful. The Five Focusing Steps are:
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Using these five steps we have defined detailed methodologies and templates for their application in manufacturing, project operations, retail supply chains and strategy execution.
Employing these models our clients are able to identify the long improvement levers, articulate the relevant changes needed and gain buy-in to the needed change in behaviors. After the first round of improvements we assist our clients in using their specific model to drive steep, ongoing improvements.
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What really makes TOC stand out are the results! These are documented in a number of independent studies that suggest the use of TOC has resulted in greater bottom line improvements than all other approaches combined.
An extensive study by a major electronics firm recently confirmed this view. Their study concluded that when TOC was combined with Lean and Six Sigma, the bottom line results were 400% greater than those achieved by implementing Lean or Six Sigma independently. Click here for improvements in the 5-step process "Beyond the Goal"
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Illinois:
847-971-4986 • Connecticut: 203-315-2123