Supply Chain Concepts

Theory of Constraints (TOC)

Major Topic Area: Lean, TOC

Theory of Constraints (TOC) is a management philosophy. It is based upon the premise that all systems are usually limited in performance due to the existence of a constraint.

Constraints can either be physical, policy, or thinking (paradigms).

Further, physical constraints can be internal or external. For example, an internal constraint may be machine capacity. Examples of external constraints include a shortage of raw materials, or a lack of consumer demand.

Policy constraints may limit a systems potential. An example may be a company policy to freeze hiring new staff.

Finally paradigm constraints can be generated when management's beliefs are based upon incorrect or invalid sources.

 

 

 

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