Even in a Production Environment, Your Constraint Might Not Be a Physical Machine
The first step in any Theory of Constraints (TOC) or Critical Chain Project Management (CCPM) journey is to identify your constraint. It is important because all your subsequent strategy flows from this identification process. As you’re probably already aware, the five steps in TOC are:
1. Identify the constraint
2. Exploit the constraint
3. Subordinate everything to the constraint
4. Elevate the constraint
5. If the constraint is no longer a constraint, return to step 1. Don’t let inertia become the constraint.
Given the way these steps revolve around the constraint, it’s easy to see why the success of your whole programme depends on the correct identification of the constraint.
Correctly identifying the constraint is also vital because TOC tells us that, if we’re making improvements anywhere other than the constraint, those improvements have little or no impact on our bottom line.
In Goldratt’s seminal book ‘The Goal’ the difference between improving performance in one area of a plant and improving overall plant performance is a confusingly simple premise for the book’s protagonist, Alex Rogo. It takes Alex a while to grasp that despite improving performance in one area of the plant by 36% – thanks to installing some robots – he had seen no direct improvement in overall plant performance.
By improving performance in a non-constraint area, Alex created more Work in Progress (WIP) rather than greater efficiency. Under the guidance of his old tutor, Jonah, Alex then sets to work identifying his plant’s constraint. Of course, in ‘The Goal’ Goldratt chooses to represent the constraint as a particular machine – the NCX-10.
This has the advantage of being easy to visualise for the reader; we can clearly imagine the production line, the flow of materials around the plant, and the backlog in front of this particular machine.
But what about in other businesses? Other businesses where the constraint isn’t so easy to visualise? Where it isn’t a particular machine with a huge pile of WIP in front of it?
We recently worked with a healthcare organisation which wanted to improve performance in a particular service. The consultants believed themselves to be the constraint. The anaesthetists believed themselves to be the constraint. On closer inspection, we realised the beds were the constraint. By appointing a bed manager and reducing the number of elective bookings per week, we were able to reduce the number of cancellations, dramatically lower the number of out-of-hours operations, relieve some of the stress felt by staff, and increase throughput.
In this example, of course – however unlikely its status as constraint first appeared to be to staff – the constraint is still a physical entity: the beds. It’s important to remember that this isn’t always the case. Constraints aren’t always physical things.
In one production environment we worked with, we identified the constraint as the customer relationships. How did we know this was our constraint?
Credibility and trust had been lost with both customers and suppliers and this was affecting both capacity and demand. Clearly it isn’t hard to envision how this could affect demand. It was affecting capacity because suppliers were not prioritising our orders. Parts and raw materials were arriving late and this, in turn, delayed orders to customers. Purchasing teams were not in a position to negotiate special rates with suppliers and this was affecting margins. Credibility needed to be rebuilt with both suppliers and customers before the plant could function efficiently.
So, even in a production environment, your constraint isn’t necessarily a physical machine. It’s vital to think diligently about operations as a whole when you begin the search to identify your constraint.
It’s worth remembering that it takes Alex Rogo and his team several days before they identify their constraint. This process is worth the effort: only by focusing improvement efforts on the true constraint can you ensure that you get maximum return for that effort.
Your return will likely be financial. But it can also include better security for your employees, increasing job satisfaction, more satisfied customers and, of course, more satisfied owners or shareholders.
Persevere and keep an open mind; you may be surprised by what you find!