1. Theory of Constraint

2. Constraint Management
The Goal of a Company:
Make money now and in the future subject to the boundary conditions imposed by:
Employees Shareholders
Customers Suppliers
Government Public
TP = Throughput is the rate at which the system generates new money through sales Inv = Investment in Inventory is all the money the system spends on things it holds and intends to sell [convert to Throughput].
OE = Operating Expense is all the money the system spends in order to turn Investment into Throughput but that does not become Throughput itself.
TP - OE = Net Profit (TP-OE) / Inv = ROI
TP / OE = Productivity TP / Inv = Turns
The sum of the local optimums is not equal to the global optimum.

3. Constraint Management
Dependent Events are things that can only happen in a fixed sequence
Statistical fluctuations are variations in a system
Common and Special Cause
Dependent Events and Statistical fluctuations have the affect to reduce Throughput and increase both Inventory and Expenses.
Bottleneck - a resource whose capacity is equal to or less than the demand placed on it.
Non‑bottlenecks - a resource with a capacity greater than the demand
Constraint - That which most severely limits the organization’s ability to achieve higher performance relative to its purpose / goal.
Capacity constraint is the internal resource with a capacity most short of demand.
Market constraint is the lack of demand with an excess of capacity.
Policy constraint are the things we do by policy or procedure because we choose to do them and which limit our throughput

4. Constraint Management
Throughput is determined by the system constraint and the bottlenecks within the system.
The only utilization level that is important is that of the constraint.
The utilization level of a non-bottleneck is determined by the constraint in the system not the non-bottleneck’s potential capacity.
An hour lost at a constraint is an hour lost for the entire system.
It costs more than just an hours throughput.
An hour saved at a non-constraint is just smoke and mirrors.
It saves nothing unless it also impacts the systems constraint.
Balance and Manage Flow through the system constraint.
Do not balance the capacity of the system or its parts. Subordinate the system to the constraint
Keep Continuous Flow running through the System’s Capacity Constraint as long as there is demand.

5. Constraint Management
Constraints govern throughput and inventory
They determine where to hold inventory, how much to hold and in what form...
Synchronous System is managing and matching human, support and machine capabilities and process time variations so all work together supportively to achieve an increase in throughput, decrease in inventory investment and decrease in operating expense.
A synchronous system must allow Throughput to vary to match demand without an increase in inventory or expense.
It must allow for continual improvement and a decrease in inventory and operating expense if demand and throughput decrease.
A synchronous system will employ all the appropriate and necessary tools and techniques in order to:
Enhance Value
Minimize Waste
Establish Flow
Create Pull
Reach for Perfection
FLOW WHERE YOU CAN; PULL WHERE YOU CAN’T

6. Constraint Management

7. Constraint Management
The Theory of Constraints likens each system (company) to a chain, or a network of chains.
In any chain, there is one weakest link which limits the performance of the entire chain.
The weakest link is the system’s constraint.
Improving the performance of the chain (throughput) requires strengthening the weakest link.
When you have strengthened the weakest link to the point it is no longer the weakest link, you have ‘Broken the Constraint’.
You then move to the new system constraint…

8. Constraint Management

9. Constraint Management
Step 0: Determine the scope of the system or process under review.
Determine its beginning and end points
Step 1: Identify the system’s constraint.
Is there inventory ahead of it? Any behind?
Monitor time components of leading candidates
Cycle time vs Takt time; Uptime/Downtime; Scrap (FTT / RTY), etc.
Step 2: Decide how to exploit the system’s constraint(s)
Maximize it (run it)
Protect it with buffers
Don’t block it - use a space buffer
Don’t starve it - use an inventory buffer

10. Constraint Management
Step 3: Subordinate everything else to the decisions made in Step 2.
Focus on the constraint
Put resources on it
Step 4: Elevate the system’s constraint(s)
Improve its performance
Step 5: If a constraint is broken, don’t allow inertia to become the system’s constraint.
Review and change procedures and practices that you created to manage the former constraint.
Step 6: If a constraint is broken in Step 4 & 5, go back to Step 1
If you’ve eliminated a constraint, go back to Step 1 and manage the system’s new constraint(s)

11. Constraint Management
What is a Constraint?
That which most severely limits the organization’s ability to achieve higher performance relative to its purpose / goal.
Types of Constraints:
Capacity Constraint - Physical internal
Market or Vendor Constraint - Physical external
Policy Constraint – Principles internal or external
A policy, procedure, practice that we follow that limits our ability to achieve higher performance relative to our goal.

12. The Lean/Six Sigma/Theory of Constraints Combination
Why I am here...
Business Strategy
Where I am...
Customers
Product Family
Where I
Identification
want to be...
Process Flow
Current State Map
Suppliers
Future State Map
How I’m going to get there... 5S
6 Sigma
Implementation
T P M
[When I don’t have the solution]
Plan
S M E D
Lean Tools
Continuous Flow
[When I know the solution]
When I’m going
Pull
to get there…
Standardized Work
Constraint Management
[Control while I’m Improving]
Poka
-Yoke

13. 6 Sigma Better Understanding the Magnitude of the Difference... Sigmas
Area
Area of a
medium-sized factory
Area of a large supermarket
Area of a small hardware store
Area of a typical living room
Size of the bottom of a telephone set
Size of a typical diamond
Spelling
170 spelling mistakes per page in one book
25 spelling mistakes per page in one book
1.5 spelling mistakes per page in one book
1spelling mistake in each 30 pages (approx.. 1 book chapter)
1 spelling mistake in one encyclopedia
1 spelling mistake in all books in one small library
Time
31.75 years per
century
4.5 years per century
3.5 months per century
2.5 days per century
30 minutes per century
6 seconds per century
Distance
From here to the moon
1.5 laps around the world
One trip from North to South Brazil
45-minute drive on a highway
A short drive to the closest gas station
4 steps in any direction
PPM -
617,075
66,803
6,210
233
3.4