1. National Guard
Black Belt Training
Module 18
Theory of Constraints

2. UNCLASSIFIED / FOUO
CPI Roadmap – Measure
8-STEP PROCESS
6. See
1.Validate 2. Identify 3. Set 4. Determine 5. Develop 7. Confirm 8. Standardize
Counter-
the Performance Improvement Root Counter- Results Successful
Measures
Problem Gaps Targets Cause Measures & Process Processes
Through
Define Measure Analyze Improve Control
TOOLS
•Process Mapping
ACTIVITIES
• Map Current Process / Go & See •Process Cycle Efficiency/TOC
• Identify Key Input, Process, Output Metrics •Little’s Law
• Develop Operational Definitions •Operational Definitions
• Develop Data Collection Plan •Data Collection Plan
• Validate Measurement System •Statistical Sampling
• Collect Baseline Data •Measurement System Analysis
• Identify Performance Gaps •TPM
• Estimate Financial/Operational Benefits •Generic Pull
• Determine Process Stability/Capability •Setup Reduction
• Complete Measure Tollgate •Control Charts
•Histograms
•Constraint Identification
•Process Capability 2
Note: Activities and tools vary by project. Lists provided here are not necessarily all-inclusive. UNCLASSIFIED / FOUO

3. UNCLASSIFIED / FOUO
Learning Objectives
 Understand principles of TOC
 Learn and apply the 5 focusing steps
 Analyze Drum – Buffer - Rope
 Differentiate and apply Little’s Law, takt
time and cycle time
 Use TOC to improve a process
3
UNCLASSIFIED / FOUO

4. UNCLASSIFIED / FOUO
Video: The Goal
Questions as you watch:
 What are the 5 steps?
 What is step 0?
 Who/what is the bottleneck? Why?
 How is the process fixed?
 What is POOGI?
The Goal: A Process of Ongoing Improvement
Based on the book by Eliyahu Goldratt and Jeff Cox (2004)
4
UNCLASSIFIED / FOUO

5. UNCLASSIFIED / FOUO
What is “Theory of Constraints” (TOC)?
 Basic Principles of TOC:
– A system must have a goal on which everything in that system is
evaluated
– Systems function as chains. Strengthening the weakest link
benefits the system the most
– Optimum system performance is NOT equal to the sum of the
individual process optima
– Systems operate in an environment of cause and effect. Visible
problems are usually indicators (undesirable effects or UDE) of
some critical root cause(s) that must be addressed
– An optimal solution deteriorates over time. Improvement must be
continuous.
– Policy constraints are the most common and most difficult to
break. Policy constraints offer the most opportunity for system
improvement.
5
UNCLASSIFIED / FOUO

6. UNCLASSIFIED / FOUO
TOC Measures of Progress
 Throughput: The rate at which the system produces
customer value or generates money
 Inventory: Inventory is all the money invested in buying
things that will at some time be sold (turned into
Throughput) or that is tied up in the system (investment).
Includes costs for raw materials, infrastructure, etc.
 Operating Expense: The costs associated with turning
Inventory into Throughput. Includes costs for labor,
utilities, interest, etc.
6
UNCLASSIFIED / FOUO

7. UNCLASSIFIED / FOUO
TOC Focuses on Constraints
 A constraint is anything that impedes Throughput.
 TOC concentrates on identifying and improving the
worst impediment
 Identifying constraints
– Visual identification of WIP (Work in Process)
– Calculating Throughput for each process step
7
UNCLASSIFIED / FOUO

8. UNCLASSIFIED / FOUO
TOC Principles
What are the 5 focusing steps of Theory of
Constraints?
Step 0: Know the Goal!
1. Identify the constraint
2. Exploit the constraint
3. Subordinate everything else to the constraint
4. Elevate the constraint
5. Re-evaluate, go back to step 1
How can you identify the constraint?
Piles of WIP or calculate cycle time
8
UNCLASSIFIED / FOUO

9. UNCLASSIFIED / FOUO
D-B-R Concept
 Drum – The speed at which the constraint
performs
 Buffer – A “safety stock” to account for
process variation so the constraint
doesn’t “starve”
 Rope - A signal to make sure that correct
“number of things in process” put into
the system at the appropriate time
9
UNCLASSIFIED / FOUO

10. UNCLASSIFIED / FOUO
TOC Definitions
Define Work in Process
WIP - (Work in Process) the “number
of things in process” at any given time
Define Exit Rate
The amount of work completed over a
given period of time, which should also
equal customer demand (“completions per
hour”).
10
UNCLASSIFIED / FOUO

11. UNCLASSIFIED / FOUO
TOC Definitions
What is Little’s Law and what does it
represent?
Work in Process (WIP)
Process Cycle Time =
Exit Rate
Voice of the process
11
UNCLASSIFIED / FOUO

12. UNCLASSIFIED / FOUO
TOC Definitions
What is Takt Time and what does it
represent?
Time available for work in the given time period
Customer demand for a given time period
Voice of the customer
12
UNCLASSIFIED / FOUO

13. UNCLASSIFIED / FOUO
TOC Definitions
Define Cycle Time
 Cycle Time: The time it takes a product to
move (cycle) through a step or a process,
including queue and move times.
 Common synonyms (often used
interchangeably):
– Flow Time
– Lead Time
– Throughput Time
13
UNCLASSIFIED / FOUO

14. UNCLASSIFIED / FOUO
TOC Example
P1 P2 P3 P4
12 seconds 10 seconds 5 seconds 8 seconds
What is the process cycle time?
12 + 10 + 5 + 8 = 35 seconds
If the Takt time is 11 seconds, where is the
constraint, and why?
P1, it exceeds the Takt time
14
UNCLASSIFIED / FOUO

15. UNCLASSIFIED / FOUO
TOC Flow & Pull
Explain the difference between Push
and Pull work systems
 Push: Work is pushed into the system or
process based on forecasts or schedules
 Pull: A customer-driven system that produces
and moves a product/service only when the
customer needs it
15
UNCLASSIFIED / FOUO

16. UNCLASSIFIED / FOUO
Knowledge Check
TOC is….(pick one)
A. A new way of getting people to work harder
B. Strengthening the weakest link (constraint) in a
system
C. A fancy scheduling tool meant to confuse workers
D. Adding extra inspections to get first time quality
16
UNCLASSIFIED / FOUO

17. UNCLASSIFIED / FOUO
Knowledge Check
Lean is….(pick one)
A. A new weight loss program for employees
B. A war on Waste
C. Reducing manning
D. Adding extra inspections to get first time quality
17
UNCLASSIFIED / FOUO

18. UNCLASSIFIED / FOUO
Knowledge Check
Six Sigma is….(pick one)
A. A new way of using metrics to blame workers
B. A war on variation
C. Complicated statistics meant to confuse workers
D. Adding extra inspections to get first time quality
18
UNCLASSIFIED / FOUO

19. UNCLASSIFIED / FOUO
What other comments or questions
do you have?
19
UNCLASSIFIED / FOUO