The Theory of Constraints (TOC) is an overall philosophy developed by Dr. Eliyahu M. Goldratt, usually applied to running and improving an organization. TOC consists of Problem Solving and Management/Decision-Making Tools called the Thinking Processes (TP). TOC is applied to logically and systematically answer these three questions essential to any process of ongoing improvement:
- “What to change?”
- “To what to change?”
- “How to cause the change?”
More specific uses of the Thinking Processes can be used to significantly enhance vital management skills, such as:
- Win-win conflict resolution
- Effective communication
- Team building skills
TOC postulates that the goal is to make (more) money. It describes three avenues to this goal:
- Increase Throughput
- Reduce Inventory
- Reduce Operating Expense
Dr. Goldratt’s TOC is being used by thousands of corporations, and is taught in over 200 colleges, universities and business schools. His books have sold over 3 million copies and have been translated into 23 languages.
Here are descriptions from other outside organization and writers:
A management philosophy developed by Dr. Eliyahu M. Goldratt that can be viewed as three separate but interrelated areas-Iogistics, performance measurement, and logical thinking. Logistics include drum-buffer-rope scheduling, buffer management, and VAT analysis. Performance measurement includes throughput, inventory and operating expense, and the five focusing steps. Thinking process tools are important in identifying the root problem (current reality tree), identifying and expanding win-win solutions (evaporating cloud and future reality tree), and developing implementation plan; (prerequisite tree and transition tree).
APICS Dictionary, James F. Cox III and John H. Blackstone Jr., Editors, 9th edition, Falls Church,VA, 1998.