National Guard

Black Belt Training

Module 18

Theory of Constraints
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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
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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

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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)
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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.
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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.

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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

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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
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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
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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”).
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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

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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

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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
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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
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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

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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

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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

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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

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What other comments or questions

do you have?

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