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Theory of Constraints (TOC)

Definition - What does Theory of Constraints (TOC) mean?

The theory of constraints (TOC) refers to a general philosophy put together by Dr. Eliyahu M. Goldratt that is used by a large number of organizations to improve their operations. TOC includes management/decision-making and problem-solving tools known as the Thinking Processes (TP). TOC asserts that organizations, processes, and so on are sensitive and vulnerable because the most fragile part or individual can often break or harm them, negatively impacting their outcomes. Eliyahu M. Goldratt introduced the theory of constraints as part of his 1984 book named "The Goal".

The focusing steps in the theory of constraints are mainly used in project management, manufacturing, etc. TOC applications are also used in the sales, marketing and finance fields.

Techopedia explains Theory of Constraints (TOC)

The theory of constraints is used to practically and methodically answer the following three questions, which are vital for any strategy of constant improvement:
  • What to improve?
  • How much improvement is required?
  • How to produce the improvement?

There are also five focusing steps put forward by TOC to achieve the goal:
  • Recognize the system’s constraints
  • Make a decision on how to make use of the system’s constraints
  • Subordinate everything else to the previously mentioned decision
  • Elevate the system’s constraints; that is, make other significant modifications required to break the constraints
  • If the constraints have been broken in the prior steps, return to step one
Project management is one of the area where this theory is applied. Critical chain project management (CCPM) is applied in this field. CCPM depends on the notion that every activity converges to a final deliverable. As a result, to shield the project, there should be internal buffers to safeguard synchronization points as well as a final project buffer to shield the entire project.
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