Theory of Constraints

The theory of constraint (TOC), developed by Dr. Eliyahu Goldratt, is a method of operations management and organizational problem solving. The premise underlying TOC is that all systems have at least one constraint that is preventing the system from reaching its goal. Primacy is given to systemic goals rather than local efficiencies. TOC is applicable to the management of entities that produce products or services, including health care operations.

The TOC was initially popularized in Dr. Goldratt's business novel, The Goal, in which the protagonist, Alex Rogo, the manager of a factory, has been told, by the senior management of his company, to make his factory profitable, or the factory will be closed. Rogo enlists the help of a consultant, Jonah, who guides Rogo, using the Socratic method to help Rogo discover the principles of TOC, until Rogo is ultimately able to save the factory.

Because the initial description of TOC presented in The Goal was in a manufacturing setting, readers may have the misconception that the applicability of TOC is limited to the identification and elimination of production bottlenecks in a manufacturing, job-shop environment. In reality, the TOC provides managers with a methodology that allows them to clearly state their organization's global goals, for example (for most businesses), to make money, identify and remove the constraints that are preventing the organization from reaching its goal, and to enable the manager to logically approach the organizational conflicts that occur when mutually exclusive a priori assumptions are proposed as the basis for making key decisions.

An algorithm is provided whereby managers can identify and eliminate the impediments to achievement of these goals, that is, the constraints, or, in a manufacturing environment, the production bottlenecks. This algorithm is as follows:

• 1.
  Identify the system's constraints.
• 2.
  Figure out how to best exploit those constraints.
• 3.
  Subordinate everything else to these efforts.
• 4.
  Remove the constraints.
• 5.
  Once the constraints have been removed, go back to step 1 and start again.

The system's constraint is typically the resource in the chain of production or service, with the least capacity. This is referred to as the capacity constraint resource (CCR). However, Goldratt stresses that constraints often appear that are the result of the organization's policies. Although identifying policy constraints can be very difficult, removing them does not typically cost money.

By “exploiting” the system's constraints, Goldratt means to make sure that the CCR is fully utilized; that is, don't waste the CCR. For instance, in a physician's office practice, if the CCR is the physician's time availability for seeing patients, exploiting the constraint in this instance means making sure the physician's time is spent doing billable activities related to patient care. An example of “subordinating everything else” is to enlist the aid of nurses or physician extenders to increase the amount of time the physician has available to see patients, and to make sure that patient flow is optimized by making sure that all lab data and other information needed by the physician at the time of the visit are tracked down by the office staff prior to the visit, rather than by the physician at the time of the visit. Ultimately, it may become necessary to “remove the sys-tem's constraints.” In the example given, this may involve hiring additional physicians once the current physician's patient panel reaches a given level.

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