5 reasons (at least) to explore Theory of Constraints

Theory of Constraints is a “business philosophy” or “management paradigm” that takes into account the existence of constraints, e.g. limiting factors hindering the organization to achieve more of its Goal.  It focuses on the one that limits the performance of the whole system and strives to achieve more of the organization’s Goal (patient’s treatments, throughput, sales… whatsoever).

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Theory of Constraints is around since the 1980s but is still barely known. Here are 5 reasons (at least) to explore Theory of Constraints (ToC) and check what good it could do for your organization.

1. Theory of Constraints is not theoretical

The name does not sell and is probably somewhat misleading, but Theory of Constraints is more a body of knowledge than a mere theory and its applications are very real and concrete.

Yes ToC has a lot of metaphoric jargon and it takes some time to get used to it. But after all Lean has a lot of jargon too and makes even people “speak” japanese. Six Sigma has its jargon as well. If you want to share with the community, you have to speak the lingo.

Yet being still “confidential” (this point being discussed later), ToC claims relatively few success stories. Compared to Lean with Toyota, ToC has no such lighthouse, no convincing, undisputable and compelling success story so far. The lack of appealing buzz makes ToC still look theoretical. (In the ToC lingo we call this a Negative Reinforcing Loop.)

2. Theory of Constraints (ToC) is a growth oriented approach

ToC is about breaking the limiting factors and getting more out of the organization’s processes and resources, exploiting wasted precious and scarce capacity.

While many organizations seek survival through cost cuttings and savings – which is limited and potentially deadly – those embracing ToC will challenge expanding their business and growth.

Breaking the constraints is for example drastically speeding up deliveries, getting more out of a very expensive or scarce resource. This could be a factory delivering widgets, a hospital treating more patients or an administration significantly speeding up the delivery of documents.

In project management ToC changes the paradigm and ensures projects to finish on time and more likely within allocated budget.

Any organization achieving its Goal significantly faster and better will soon attract market’s attention and get more demand.

In contrast how many new customers will cost reduction or variability reduction attract?

Which doesn’t mean cost reduction and variability reduction should be disregarded, as we will see right now.

3. Theory of Constraints and Lean make a great pair

ToC is often described as a focusing means/tool/approach (you name it) that is a good catalyst to Lean and/or Six Sigma.

While ToC identifies leverage points and critical root causes of problems, Lean and Six Sigma are great ‘tools’ to exploit the leverage points and solve problems.

The synergy using ToC, Lean and Six Sigma is known as TLS. From what I have experienced, seen, heard or read, ToC is most often used in pair with Lean rather than with SixSigma, or sometimes as a TLS trio.

Good news is all prior investment in Lean or Six Sigma training is still valuable, ToC will simply supercharge them.

With ToC, improvements show on bottom line, which is not always the case with Lean. ToC proposes a structured and logical approach applied system-wide, while Lean initiatives are too often used to chase opportunities to optimize locally, failing to improve globally.

4. Theory of Constraints proposes a consistent framework across all activities

ToC originated in manufacturing and just as many approaches, methods or tools it soon proved usable in other environments.

But unlike some of the others, ToC did not simply transpose into other environments but developed specific tools and approaches for those branches while keeping consistent.

I am thinking about Critical Chain Project Management (CCPM) which revisits project management and corrects the flaws of the Critical Path Method (CPM).

I am thinking about Logical Thinking tackling non-physical constraints such as beliefs, policies or resistance to change.

ToC does also challenge supply chain management, accounting or marketing.

Regardless the various applications, the core concepts of constraints and the scientific approach remain the same.

5. Theory of Constraints is still “confidential”

ToC is not very famous compared or Lean or Six Sigma, but there is an advantage in this ‘weakness’: organizations using ToC and achieving more of their Goal usually outmatch their competitors with a kind of secret weapon.

It happens over and again: a very poorly performing unit achieves a fast, unexpected and surprising turnaround, attracting attention from its peers wondering how this could be possible.

In corporations the now admired unit would share its secret, but it could remain the secret weapon for any organization facing tough competition.

Theory of Constraints is not meant to remain secret, it just failed to get enough attention until now. Those using it to outmatch their competitors will not complain. Those being outmatched or seeking a way to a breakthrough now have 5 reasons to give it a try.

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Starting a new year: 2015


Chris HOHMANN – Author

The first day of the year 2015 started with a beautiful sunrise, which I saw as a good omen for the 364 days to follow.

The first day of a new year is highly symbolic for a new start, resolutions and hope, even so the same new start, resolutions or hope could happen on any other day in the year.

That’s why my new year started one month earlier, when joining my new company and receiving a lot of kind congratulation messages from my personal / pro network.

Joining this new company brings new exciting perspectives and learning opportunities.

Especially Theory of Constraints, still barely known in France, will be part of my assignments and not only an opportunistic support to Lean and Six Sigma. All three approaches or methodologies combined as TLS synergy are on the ‘regular menu’.

I wish all of you to find your own reasons to get passionate and celebrate successes in 2015!

Cost and inventory reduction, right target?

Lego_022aWaste and costs reduction has almost become the definition of Lean for many people as well as an irresistible lure for most executives and managers.

Yet costs and inventory reduction, is this the right target?

In the various definitions proposed by Lean theorists, including Jim Womack, priority is given to identifying and creating value for customers. Using just needed resources is only a way to achieve this while seeking a competitive advantage. Reducing costs and make savings is only a corollary effect of this achieved frugality, not a prime objective.

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Why this obsession about waste / costs?

Lean has long been considered being something for operations: Production, Logistics … as its first name “Lean Manufacturing” could suggest. Indeed, first attempts and successes happened in the workshops and warehouses, on shop floor.

Operations guys have little leverage to create value for the customers. Conversely they can improve almost infinitely operations seeking to be more efficient, to speed up the flow or to reduce defects.

These improvements, synonyms of savings, quickly raised management’s interest in order to justify related expense of these initiatives with ROI and reap the “promised” gains.

However, most of the time these approaches do not produce the expected measurable results and generate frustration among actors although they often see dramatic improvements at their level .

Frustrations, failures, how is this possible?

First one must understand that local initiatives are often disconnected from the purpose of the organization / company. They “improve” activities or processes without a prior validation about their system-wide usefulness and contribution to the higher objectives of the organization / company.

The most disappointing case is to have improved a doomed process or one being itself a waste. In such a case, time and resources were consumed in vain. Deadly sin.

In a less extreme but frequent case, time and resources were consumed to improve a marginal process, which will be insignificant to the overall performance, despite the fact it looks spectacular in situ.

Second, one must remember that the cost and/or inventory reductions necessarily face an absolute limit, which is zero. Once there is no more spending and/or any inventory, this is the end of “continuous” improvement and ironically… an optimum.

Of course there is a practical limit before zero, from which the activities can not proceed satisfactorily neither for customers nor for other stakeholders. But this practical limit > zero only reduces the overall potential of cost and/or inventory reductions.

In contrast, sales growth is virtually unlimited. Although productive resources are saturated, it is always possible to provide new, additional value added services, such as express delivery, personalization, premium services, etc.

But this lever, far more powerful and faster to implement, contrary to general belief, is rarely used.

What alternatives to achieve success?

Those who embraced Lean Management understand that all improvement efforts must be aligned with the purpose of the organization / company, i.e. the need for improvements is derived from the Goal, strategic objectives and necessary conditions to achieve strategic objectives.

Therefore, Lean is only conceivable top-down, from the strategic intent to shop floor actions. Then, for people to apply coherently tools and methods, instead of locally cherry-picking any good looking idea, top management must dictate the needs to cover or better, communicate in transparent manner strategic intents and the cascade of necessary conditions to achieve high level objectives, thus the Goal.

Once these necessary conditions known, operators can measure the gap between the desired state and the current state and work to reduce this gap, on relevant topics and perimeters.

This communication is done using Hoshin Kanri and A3 reports when remaining in the traditional Lean framework, or using Goal Tree if open to add some Theory of Constraints’ tools.
Both are perfectly combinable.

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What is TLS? The Synergy of ToC, Lean and SixSigma


Chris HOHMANN – Author

TLS stands for Theory of Constraints, Lean and Six Sigma. TLS is meant to be the combination of 2 or all of these…philosophies, approaches, methodologies, you name them.

I discovered Lean (but we didn’t call it Lean then) and Theory of Constraints at the same time, when I joined a Yamaha Corp. subsidiary in 1989. Even so I gathered more experience with Lean, I used ToC principles and rules when relevant. Six Sigma came later but without surprise as I had been extensively trained about Statistical Process Control (SPC) long before Six Sigma gave it a new shine.

I used TLS without knowing it and came across concept and acronym only in the 2010s while reading Reza PIRASTEH and Kimberly FARAH’s paper “The top elements of TOC, lean, and six sigma(TLS) make beautiful music together” ( May 2006, APICS Magazine) and Bob SPROULL’s “The Ultimate Improvement Cycle” (CRC Press, 2009).

My “discovery” of TLS was nothing more than conceptualization and confirmation of what I have experienced by myself and found natural: using what the three components of TLS had to offer as a powerful synergy.

Introduction to TLS

This slide show provided by Philip MARRIS, CEO of Marris Consulting will give you an introduction to TLS.


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What is Six Sigma?

Beside Lean, Six Sigma counts among the most popular performance improvement approaches. Based (and named) upon statistical data and tools, Six Sigma’s aim is to speak with data and facts. It is the most “scientific” methodology in the Theory of ConstraintsLean – Six Sigma (TLS) trio.

Once thought to replace Lean, Six Sigma rather completes it. Despite a certain overlap, many comparisons try to clearly discriminate what is in the Lean and what in the Six Sigma pigeon holes. The following presentation is a nice summary for both Lean and Six Sigma.