A Guide to Implementing the Theory of Constraints (TOC)





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How to use this site


Books, websites & the explicit/tacit Conundrum


Inherent simplicity


The “theory” in Theory of Constraints


Convergence between inherent simplicity & theory


A word on lean (& six sigma)


Beware – international best practice


Are we really crazy?


People, people, people


Who uses this website


How to print










Let’s start by stopping for a moment


What is Theory of Constraints?


Yes but, we’ve seen flavor of the month before


A systems approach


Dependency and variation


Finite capacity




What about detail and dynamic complexity?


Thinking Process













Bottom Line

Increasing profitability through increased productivity


Increasing profitability in low-growth rate periods


Types of constraints


Yes, we get results


Multiplier effect


That’s nice, but we are not-for-profit


We aren’t in manufacturing either






Tell me how you will measure me


Reductionist/local optima approach


So, how do we measure success here?


The P & Q Analysis


Saving cost alone is not enough


How did we get into this mess?


What to do – rules of engagement


Define the system


Define the goal of the system


Define the necessary conditions


Define the fundamental measurements – T I OE


What about not-for-profit?


Systemic/global optimum approach


Hey!  This is just contribution margin analysis


But we are still missing something – where is the constraint?


Hey!  This is just linear programming


What happens if my constraint is in the market?


Local performance measures


An airline analogy


Did we still miss something?





P & Q Question

The P & Q question explained



P & Q Answer Part 1

P & Q Answer - Part One



P & Q Answer Part 2

P & Q Answer - Part Two



P & Q Answer Part 3

P & Q Answer - Part Three



P & Q Answer Part 4

P & Q Answer - Part Four


What did we discover?




Trying to do our very best


Reality check


Some pre-suppositions




Maps of reality


Maybe global optimization is contrary to human nature?


If global optimization is so natural – why aren’t we all doing it?


If there is conflict – there is an erroneous assumption





Process of Change

The process of change


Developing a focus – our plan of attack


How many weakest lengths in a chain?


How many weakest lengths in a system?










Go back - inertia


The hourglass analogy


Systemic and systematic


Our erroneous assumption – failure to subordinate


Doing our best – exploitation and subordination


Application to logistical problems


Application to non-logistical problems


Tools for change


A cautionary tale


Rates of improvement


Focus and leverage





Agreement to Change

Obtaining agreement should be easy – right?


Obtaining agreement on the problem at hand


Obtaining agreement on the solution to consider


Obtaining agreement on overcoming additional negative outcomes


Obtaining agreement on overcoming obstacles






Five layers of resistance/agreement


How many layers?


Resistance is natural


Is this approach different from others?







More Layers

How many layers?


Five layers


Six layers - Cohen


Six layers - Smith


Nine layers


A composite 5 layer





Evaluating Change

Evaluating change


The context


The fundamental measurements


The see-saw analogy


Productivity and production


The effect of a financial investment


See-saws & equations


How do we express the fulcrum?


Determining throughput at the constraint


T/cu short-hand and other expressions of constraint units


Change just one important thing!


Evaluating change – internal constraints


Tactical and strategic decisions


Static and strategic


Evaluating change – external constraints


We can’t evaluate change without a strategy


Subordinating tactics to the strategy


Levers of control – levers of success







Accounting for Change

Financial navigation

(Superseded but still on-line)

Financial accounting & management accounting


Define throughput accounting then


Horses for courses


Throughput accounting


Small businesses/large businesses


Internal decision analysis


Strategic and tactical decisions


Static and strategic


Subordinating the tactics to the strategy


On-the-fly conversion from GAAP to throughput accounting


Cash flow


Direct labor as operating expense and strategic implications


Limitations of throughput accounting


Constraints accounting





P & Q Answer - Solver

Using Excel Solver to calculate the P & Q answer



5 Focusing Steps

The five focusing steps – structured and strategic


Goldratt’s original verbalization


Newbold’s verbalization


Schragenheim’s verbalization


A comparison of the re-verbalizations


A synthesis





Leadership & Learning

Reframing the situation


Specific issues


A catch-22?


A product of the real world


Resistance and reframing


Goal congruence and clarity of purpose




General issues


Management by Ninjutsu


Learning as organizational knowledge creation


Tacit to explicit – the YF-16 & YF-17


Tacit to explicit knowledge and the Thinking Process


Management and leadership


Mixed messages


Unintentional punishment of positive actions


Unintentional reward of negative actions












How do we manage production processes?


Job shops and flow shops


Discrete or non-discrete


Flow shop layout – VATI analysis


How can we schedule these systems?


Ford production system


Toyota production system


Synchronous manufacturing & drum-buffer-rope


The scout troop analogy


Protecting against process variability


Synchronous manufacturing principles


What then of MRP II and ERP?


What about World Class Manufacturing?


What about lean production?


And what of TQM?







Drum Buffer Rope

A motor for production


Our plan of attack


Identify the system’s constraints


Exploit the system’s constraints


Subordination – protect the system’s constraints


An initial buffer sizing rule


Why is the constraint buffer size and activity determined by time?


A journey through time


Subordination – protect everything else


An alternative initial buffer sizing rule


Elevate the system’s constraints


If a constraint has been broken, go back


Some definitional subtleties


Buffer management – make-to-order


Local control – buffer status


That’s nice – but we have short ropes and we have long ropes


Local control – work order status


Local control – new work order release priority


Local control/global feedback – word order zone 1 buffer penetration


Local control/global feedback – work order performance measures


Global feedback – work order buffer resizing


A market constraint


Simplified drum buffer rope


Stock buffers


Why is the stock buffer size and activity determined by quantity?


Transition to make-to-stock


Drum-buffer-rope & make-to-replenish


An initial finished goods stock buffer sizing rule


Buffer management – make-to-replenish


Local planning in make-to-replenish


Local control – stock buffer status


Local control – stock order status


Local control – new stock order release priority


An alternative stock buffer sizing rule


Local control/global feedback – stock buffer zone 1 penetration


Local control/global feedback – stock buffer performance measurements


Global feedback – stock buffer resizing


Drum-buffer-rope in mixed make-to-order/make-to-replenish


The role of reduced inventory in drum-buffer-rope


Raw material and inwards goods stock buffers


But wait, reality isn’t this simple!


Some changes in definitions





More On Buffers

More on buffers


The erroneous approach is entrenched


The erroneous approach is base on current experience


Buffering is subordination – buffering is not exploitation



More Definitions

More definitional subtleties



Implementation Details

How do we implement drum buffer rope?


How do we identify the constraint?


Let’s collect data and write a report!


Wandering constraints


How then do we exploit the constraint?


Schedule the constraint


Shadow constraints


Schedule discipline




Buffer the constraint


Local safety argument


How then do we subordinate?


Measurements and communication


Speed wobbles


Work-in-process – a previous indicator of success?


Gating issues


Protective capacity/sprint capacity


Road runner activation/utilization


Reluctant road runners


That traffic light analogy again


Batch sizing


Material handling


First-in first-out (FIFO) discipline


Local performance measures – lateness


Local performance measures – inventory


Buffer management and the buffer manager


How do we elevate?


If the constraint is broken – go back


Strategic constraints


A postscript to implementation details





Local Safety

Local safety



Batch Issues

Why do we batch?


A brief history of batch size issues


Manufacturing lead time and batch size


Transfer batching is natural


Yes, but you don’t understand – we have 3000 standard items


The truck and trailer analogy


Batching discipline





Quality/TQM II

Quality will go up!


Passive improvement


Active improvement


Broader issues






Good intentions are not enough


Detail complexity issues


Reframing the argument


Dynamic complexity issues


Lieutenant’s cloud


Effective subordination is the key to effective TOC/DBR implementation!


Some subordination clouds


Effective subordination


Other broader alignment issues





Lieutenant’s Cloud

Lieutenant’s cloud


Constructing the cloud


Reading the cloud back




How much time is necessary?


Rapid solutions


But you don’t understand, they are closing us down in 3-4 months











Supply Chain

Crossing the threshold – external constraints


Internal and external causes


Causes internal to the company


Causes external to the company


There are only internal solutions


The holistic approach





Lead Times

Competitive advantage – short lead times


Excessive queue time/work-in-process


Batching of product


Batching in time


Making money out of people in a rush


Making money out of people with time to spare





Finished Goods

Competitive advantage – just sufficient stock




Excessive queue time/work-in-process & batching in time


Batching of product


Process batching is an antidote to excessive warehousing








Replenishment – adding value through the supply chain


The motor for supply chain


Replenishment means different things to different people


Fixed re-order quantity with near-instant re-supply – batch lots


Fixed re-order frequency with near-instant re-supply – shipment lots


Replenishment buffers


Filling from the top


Initial sizing of the buffer – with near-instant re-supply


Initial sizing of the buffer – with non-instant re-supply


A small yes but


Local prioritization – the quantity of the re-order


Why is the replenishment buffer size and activity determined by quantity?


Local control / global feedback – buffer management


Local control / global feedback – stock buffer zone 1 penetration


Local control / global feedback – stock buffer performance measurements


Local control – stock buffer status


Global feedback – stock buffer resizing




Raw material and inwards goods stock buffers


Comparison with traditional supply chain management


Potential for variable re-order frequency






An important subtlety for manufacturers



Replenishment & Distribution

How can we characterize distribution?


Plan of attack


The beer game!




The distribution network


Channel stuffing


Dead stock






General solution – distribution with replenishment


Local performance measures


Distribution is not simple replenishment


Let’s think it through


What are the unavoidable outcomes?


But wait, reality isn’t this simple


Give us some examples





Replenishment & Marshalling

How can we characterize marshalling?


Log Marshalling


Log Making


Plan of attack


The log marshalling network




We can’t sell half a tree


Mining as a solution


General solution – log marshalling with replenishment


To super skid or not to super skid


Local performance measures


Log marshalling is not simple replenishment


Let’s think it through


What are the unavoidable outcomes?


But wait, reality isn’t this simple!





Replenishment & Healthcare

Patient waiting lists & healthcare


Plan of attack


The waiting list network


But demand will increase


You don’t understand we have too many acute patients


Cart before the horse


There is no goal in public health


Who should set the goal then?


How do we set the goal?


How then do we measure progress towards the goal?


Yes but, the Government already uses maximum patient wait times


Broader issues


A critical erroneous assumption




General solution – part 1: intervention and drum-buffer-rope


General solution – part 2: patient waiting lists and replenishment


Let’s put it all together


Local performance measures


Yes but, do we do tonsillectomies or hip operations?


Patient waiting lists are not simple replenishment


Let’s think it through


What are the unavoidable outcomes?


But wait, reality isn’t this simple!


Gives us some examples











Tool Box

The principle of leverage


The Thinking Process


Verbalizing intuition


Structured nemawashi


Cause and effect


Which tool for which occasion?


Proof-reading trees





Categories of Legitimate Reservation

Categories of legitimate reservation


Clarity reservation


Entity existence reservation


Causality existence reservation


Predicted effect existence reservation


Insufficient cause reservation


Additional cause reservation





Current Reality Tree

Undesirable effects & core problems


The five whys




Core problem or core conflict



Constructing a CRT

How do we build a current reality tree?




Clouds and silver linings


Countermeasures and injections


The cloud and the OODA loop


Don’t think outside of the box – break the box


How do we build a cloud?




Why the OODA Loop?


OODA is not a loop!




The big “O” – Orientation


Implicit guidance and control


Attrition warfare/maneuver warfare


Cost world/throughput world


Decision Loops




Remember the 5th Step?





Breaking the Box

Breaking the box



Common Clouds

Common clouds


Efrat’s cloud



CCRT/3 Cloud Method

The communication current reality tree


3 Cloud method


How do we build it?



Future Reality Tree

Future expectations





Construct a FRT

How do we build a future reality tree?



Negative Branch

We didn’t intend that to happen


How do we trim a branch?



Pre-requisite Tree

Overcoming obstacles


How do we build a pre-requisite tree?










Well, just what is strategy?


The articulated truck analogy


Two ways to skin a cat


Holistic approach


Constraint Management Model for Strategy


Levers of control





Constraint Management Model

Boyd meets Goldratt


Constraint Management Model for Strategy


Define the paradigm


Analyze the mismatches


Create a transformation


Design the future


Plan the future


Deploy the strategy


Review the strategy





Holistic Approach

All singing from the same systemic song sheet


The holistic approach is not…


The holistic approach is …


Tool Sets





Strategic Advantage

Is Theory of Constraints a strategy?


Are the logistical applications of Theory of Constraints strategy?


Are the non-logistical applications of Theory of Constraints strategy?


Pulling it altogether - subordination






Redundancy and variety


Redundancy and variety are flexibility


Flexibility is survival


Survival is success




That “P” word – paradigm


Let’s characterize our two approaches


Developmental sequences of the various methodologies


Are our approaches indeed paradigms?


Awareness of anomaly


Mopping-up operations


Intolerance of other theories




Resistance & assurance of the older paradigm


Yes, paradigms they are


Let’s then characterize the paradigms


What is the fundamental driver for Scientific Management?


What is the fundamental driver for Theory of Constraints?




Let’s then characterize the differences


Same words – different worlds – different meanings


Goldratt & Pareto


Paradigms & detail/dynamic complexity


Quality and timeliness are necessary conditions


Subordination is also a necessary condition


Failure to fulfill necessary conditions


Exploitation and subordination


Subordination is even more fundamental still


All doing our best – according to our map of reality


Tactical and strategic advantage


Paradigms and layers of resistance


Paradigms – development, propagation, & transferal


Breaking paradigms – a word on simple simulations





A Japanese Perspective

A Japanese perspective – an explanation


Pumpkin pies & carrot cakes


Goals & necessary conditions


The goal – a North American perspective


The goal – a Japanese perspective


What about the customer?


Yes but – the goal must be open-ended


Yes but – the owners set the goal


Which one is correct?


The problem with the North American perspective


The problem with the Japanese perspective


Cheaper labor in China





SPIN Selling & Mafia Offers

Sales constraints and Mafia Offers


The sales model


Implied needs/explicit needs


Small Sales


Buyers are not liars


Large sales – the SPIN selling model


Quincy’s rule


Insufficiency of the SPIN model


Reservations and obstacles


Detail complexity sales within a paradigm


Detail complexity sales across paradigms


Mafia Offers


Mafia Offers and sales across paradigms


Theory of Constraints as a sales constraint to itself












Projects, projects, projects ...


A definition of sorts





Project Buffers

Comparing safety in production & projects


A project is an “A” plant tipped on its side


Touch time and variability in projects


Variability and dependent events


Gains are lost – projects never finish early


Losses are gained – projects always finish late


More variability – contingent dependency and uncertainty


More variability – novelty and uncertainty


More variability – resource availability and uncertainty


Touch time and uncertainty


Uncertainty and dependent events


Safety & task duration estimates


Heuristics – task & buffer sizing rules







Critical Chain

Critical chain project management – a performance engine for projects


Our plan of attack






Subordination – protect the system’s constraints


Subordination – protect everything else


Subordination – an aside on the effect of bad-multi-tasking


A journey through time


Buffer management – critical chain


Local control – buffer status


Local control/global feedback – project performance measures


Global feedback – task resizing


Elevate the system’s constraints


If a constraint has been broken, go back










A shorter critical chain



Implementation Details



The good, the bad, and the ugly


Basic project plans


Task resourcing


Reduce multi-tasking


Freeze, reduce, maintain


Alternative one – pace the introduction of new projects


Alternative two – stagger the introduction of new projects


Failure to reduce the number of projects


Local efficiency measurement


An alternative buffer status graph


Alternative initial task sizing rules


Rewarding incorrect behaviour


Punishing correct behaviour


Multi-tasking & matrix organizations







Multi-Project Drums











Caring about healthcare


We’ve been here before – lean & healthcare


What can we do about it?


Rate limiting steps


Focus – Theory of Constraints and healthcare







Accident & Emergency




Non-Acute Surgery




Medical/Surgical Nursing




Logic Matters










& More

Yes, there is more





Dr Deming




Taylor & Social Darwinism




Toyota, Kaizen, Lean




Fantasy, Hierarchy, & Groups




Fundamental Cloud




Paradox Of Systemism










Next Step

What’s the next step


Plan A – do it yourself


Plan B – do it yourself with facilitation


Plan C – do it yourself with viable vision







Links and Resources







Nothing stands still


Contact me



The Offer

The offer


The reality of constraints


How to out-Toyota Toyota


The prequel


The strategy


A generic pre-requisite


What about receivership/restructuring


Initiating change


Yes but …


The prequel then




A chain is a chain is a chain


Breaking the bind that stops us from saying “no”


Breaking the bind that stops us from saying “yes”


The classic balanced dice game


“Advanced” unbalanced dice simulations


A fundamental cloud



Dead Horse Strategies