Key Points

• The Theory of Constraints is undoubtedly an excellent methodology to find and eliminate bottlenecks.
• Even one small bottleneck can be detrimental to an entire organization.
• Organizations, large and small, need to be on constant watch for bottlenecks before they form.

When you examine the various management philosophies that exist today, there truly is something for everyone. From Six Sigma to Lean to Kanban, there are numerous options for businesses to choose from. Among the choices is the Theory of Constraints, a system introduced in the 1980s by Dr. Eliyahu M. Goldratt. 

In this case, the Theory of Constraints acts as a problem-solving methodology that looks to identify the weakest link in any system. Generally speaking, there is a single constraint that can often restrict the overall performance of an entire system, and the Theory of Constraints seeks to identify this constraint and determine the optimal way to optimize operations and return to business as usual. 

Understanding Bottlenecks

Whether it’s the Theory of Constraints or elsewhere, bottlenecks exist and serve as a process where workflow is restricted. Unsurprisingly, this is a problem that slows the entire system, and whether it occurs due to limited resources, outdated equipment, or insufficient staff, it can be a significant red flag. 

If you look at a bottleneck in something like a restaurant kitchen, if one person is working slower than others, it’s going to delay everything. The impact will be immediately felt by customers, who will be upset, and frontline staff, like servers, who have to deal with customer complaints. Understanding where this is a chokepoint is going to help determine how to best resolve and optimize. 

Bottlenecks absolutely matter because they can cause delays, sometimes significant ones, while also increasing operational costs and frustrating customers due to slow processes. The inefficiencies that are caused by a bottleneck, such as unresolved bottlenecks, can strain an entire team or organization. What’s worse is that employees may feel overwhelmed and frustrated. 

The Theory of Constraints

When you start to look at the Theory of Constraints, there are generally five steps for tackling and resolving constraints. 

Identify the Constraint

In the first of the five steps, you are going to start by identifying the constraint that is causing a bottleneck. Whether it’s a slow machine, understaffing, or a lack of budget, the important aspect here is to examine all available data and make a final determination on where delays and/or backlogs are occurring.

For example, if you work in a retail store environment, you might examine how a slow checkout process causes customers to walk out without purchasing items. You can examine customer wait times based on different times transactions occur, which can help pinpoint exactly how severe the problem is. 

Exploit the Constraint

When you exploit the constraint, you will maximize the bottleneck’s efficiency without incurring any additional investment. This may require examining different instances of downtime, which can be optimized to operate at peak capacity. Any kind of quick win you can find here might help boost the overall performance of a system.

A great example of this is a machine that generally doesn’t receive maintenance during off-hours, which can be an ideal time to perform fixes, rather than taking the machine down during peak times. Scheduling maintenance for off-hours can eliminate the constraint of having to take the machine down during peak times. 

Subordinate Everything Else

The third step will ask you and your organization to examine how to align the best non-constrained activities that support the bottleneck’s pace. This ensures that the whole system works harmoniously within the constraints’ capacity, while also minimizing wasted efforts on tasks that might otherwise not be considered critical. 

If you observe a call center, you might ask the team to set aside paperwork requirements during peak call times. The focus should be on resolving customer issues and signing up new customers, all while reducing longer-than-usual wait times. 

Elevate the Constraint

If you want to proceed to the fourth constraint step, consider elevating the constraint by investing resources in the bottleneck, such as hiring new staff or upgrading equipment. Of course, this comes with a cost, so you must ensure that the cost-benefit analysis aligns with taking these steps, which will impact the bottom line.

If you purchase more registers and add more staff at a retail store, you will be able to check out customers faster. However, your costs have also increased due to the new staff, the upfront cost of a new register and equipment, as well as future maintenance. 

Repeat

For the last step in the Theory of Constraints, it’s all about repetition. This step asks you to examine what the next bottleneck might be after one constraint is resolved. The more an organization, store, hospital, etc., can continuously monitor, the more likely it is to optimize everything as new conditions come about. 

The single most important thing to remember is that businesses that continually optimize their workflows are the ones that are often least likely to suffer from a bottleneck, or multiple bottlenecks. 

Benefits of the Theory of Constraints

At the end of the day, the benefits of the Theory of Constraint are high, as removing a bottleneck is likely to unlock a hidden capacity a business was previously unaware of. This might involve reducing customer wait times, increasing transaction speed, or minimizing machine maintenance. Regardless of the circumstances, the higher the throughput, the more likely a company is to increase its bottom line. 

Separately, the fewer bottlenecks that exist, the faster a company can deliver its goods or services to customers. Any instance in which a bottleneck is addressed can lead to reduced wait times. This means customers will spend less time on hold, which in turn increases customer loyalty. In a world where industries and businesses are focused on speed, speed can be a major differentiator. 

The final benefit of TOC might be that it enables companies to allocate resources more effectively in instances where they matter most. Instead of wasting on non-critical areas, there will be an emphasis on maximizing efficiency and reducing any unnecessary costs. The big takeaway is that companies need to work smarter, not harder. 

Challenges of the Theory of Constraints

On the negative side of the Theory of Constraints, you won’t find everyone accepting of everything. Employees are likely to be resistant to change because they fear the unknown and the potential loss of job security. The hope is that communication from leadership can help overcome any of the potential negatives, as well as showing some quick wins will be helpful in removing this challenge. 

Another potential flag is that the Theory of Constraints requires ongoing efforts to continuously monitor as new constraints emerge. This can be frustrating to some teams, who might feel as if they are spending more time fixing than driving forward with new ideas.

There is also a concern that the challenge of staying at the forefront of bottlenecks can help a company lose focus. The goal is to eliminate any bottlenecks that prevent you from delivering more to customers and differentiating yourself from the competition. The challenge is that staying agile to make these changes and improvements can be tiresome from a resource and employee management standpoint. 

Other Useful Tools and Concepts

If you are looking to find some other reading material on this subject, the news is good, as you can jump right into the beginner’s guide to the Theory of Constraints. After you have finished with the beginner’s guide, you can move right into some case study reading to help show you exactly how TOC has been helpful to businesses all over the world. 

When you want to switch gears, try and sit down with some real-life applications of Kanban beyond manufacturing. This is a great article to read, as it has both personal and professional implications for how you can better manage your life. 

Conclusion 

At the end of the day, the Theory of Constraints is a great way to identify and eliminate bottlenecks, no matter what type of organization you are involved with. The five-step process can be highly targeted to help make some quick changes within a process, allowing a company to quickly regain its footing, deliver more to customers, and improve its bottom line.