Goldratt's Theory of Constraints - The Applications
The Applications
The processes defined in Goldratt’s Theory of Constraints have been applied to the areas of Manufacturing, Project Management, Distribution, Marketing, Sales, and Finance. I’ve listed some examples of applications and solutions related to this theory:
- Manufacturing
Within manufacturing operations management, the solution seeks to pull materials through the system, rather than push them into the system. This prevents bottlenecking while ensuring resource exploitation.
- Project Management
This is sometimes called Critical Chain Project Management (CCPM), which is a method of planning and managing projects that puts more emphasis on the resources used to execute project tasks. The solution will tend to keep resources levelly loaded, but will require them to be flexible in their scheduling.
- Distribution
The solution for supply chain constraints is to move to a replenishment model, rather than a forecast model. The replenishment model would represent an inventory that is able to meet customer demand while being regularly replenished by some manufacturing facility or other source.
- Marketing and Sales
While originally focused on manufacturing and logistics, Goldratt’s Theory of Constraints has expanded into areas of marketing, sales and finance. The application here is surprisingly similar to that of Manufacturing and is sometimes called Customer Manufacturing. The solution is to avoid market bottlenecking while ensuring maximized sales and marketing resources.
- Finance
The solution for finance and accounting is to apply holistic thinking to the finance application. This has also been called “throughput accounting” and suggests that one examine the impact of investments and operational changes in terms of the impact on the throughput of the business.
Applications for Every Aspect of Business
Goldratt’s Theory of Constraints provides critical information about managing capacity optimally, while producing products and delivering services. While many businesses apply TOC to production only, the successful manager will understand that it should be applied to every aspect of business to improve the bottom line.
This post is part of the series: Goldratt’s Theory of Constraints
Whether your organization manages stand-alone or multiple projects, as a project manager you may quickly find yourself on “project overload.” If this sounds familiar, Goldratt’s Theory of Constraints may be the answer for you.
