Posts Tagged ‘bottleneck’
August 22nd, 2009
The Theory of Constraints (TOC) is a Quality Management System originally introduced by Dr. Eliyahu M. Goldratt in the book called The Goal (1984). TOC uses the ‘Five Focusing Steps’ which is also termed the ‘Process of Ongoing Improvement’. TOC is powerful in that it is logical and, in many ways, very obvious. Here is a brief and simple overview and example of TOC:
TOC is about identifying the most significant constraint in a system (or set of constraints) and removing this constraint. The constraint will then move hence the process of identifying the constraint and eliminating it as the primary constraint continues. A constraint in terms of TOC is a bottleneck. Think of TOC in terms of a car which we want to race…
- Image via Wikipedia
We buy a regular road car and want to get it onto the track to race. The objective of the race is to complete 20 laps of the track in as short a time as possible. We think about the car and what may prevent it from completing 20 laps and from driving faster than the other cars (this is a very simplistic example!). We list the constraints:
1) The car is reliable and working fine however engine parts are expensive when required.
2) The car needs to be registered to race. Without registration it can’t even go on the track.
3) The car needs to be repainted. Our sponsor requires red paint within a year or will withdraw sponsorship.
What is the biggest constraint listed above? Numbers 1 and 3 above don’t prevent us from racing however constraint 2 means we can’t race at all. According to TOC we eliminate the ‘most severe’ constraint therefore we address item 2 first (i.e. we get the car registered). Once we have eliminated number 2 as the constraint we will have a new ‘most severe’ constraint therefore repeat the process of identifying and eliminating the ‘biggest’ constraint. Every time we eliminate the most severe constraint we improve the quality and likely the performance of the system. In our example, by eliminating bottleneck 2, we have immediately improved performance as now we can actually race the car!
TOC was originally designed for improving manufacturing processes however has been adapted and successfully used in many industries including; Marketing, Service Industries and Information Technology. As mentioned before, TOC has as its foundation very obvious logic in that we look for and remove the greatest bottleneck of a system or process and this will improve the performance and quality.
Think of any problem you may have and more often than not, you’ll find TOC very useful in identifying and eliminating the causes of the problem.
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May 18th, 2009
Thinking of enrolling on an MBA program? Then these five books are essential reads (in no specific order):
1. Michael Porter – Competitive Strategy
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February 3rd, 2009
The Theory of Constraints (TOC) as offered by Eli Goldratt is a very powerful conceptual as well as practical tool of which every Business Analyst should be aware. Many MBA programs recommend the reading of ‘The Goal’ (authored by Goldratt) and cover the core elements of TOC in Operations Management modules.
Very simplistically, TOC is about identifying the core bottleneck in a system and then eliminating that bottleneck (something like ‘a chain is only as strong as it’s weakest link’). The bottleneck will then be somewhere else in the system so the process of identification and elimination continues.
ITIL and TOC
In relation to Quality Management and ITIL, the ITIL books refer primarily to The Deming Cycle (‘Plan, Do, Check, Act’) for process improvement (ITIL version 3 also describes a ‘7-Step Improvement Process’). TOC is conceptually very powerful and compliments the Deming Cycle. The power of TOC is it’s simplicity in illustrating that there is always a bottleneck (constraint) in any system. The challenge is to identify the primary bottleneck and eliminate it as the primary bottleneck. ITIL process maturity is all about eliminating the bottleneck at which time the bottleneck will move and during this removing of the bottleneck/constraint the ITIL processes mature. TOC therefore works very well with the Deming Cycle together in that TOC assists to identify the bottleneck whilst the Deming Cycle assists in eliminating it (we could also add in Lewin’s ‘Unfreeze Change Refreeze’ Change model as we are we unfreezing a stable state, effecting the Change and then moving to the next constraint).
As an example, suppose that we are continuously failing a Service Level where the Service Desk should be responding to all emails within ten minutes even although we employ two people to specifically respond to emails. We analyse our business process and discover that 40% of emails are received between 12 p.m. and 2 p.m. each day and that these are the hours where our two email responders take a lunch break. Our constraint is in the supply of services where demand exceeds supply during the two hours. We eliminate the bottleneck by changing the lunch break hours of the responders. Now we are free to look at the next bottleneck (please note that this is a very simplistic example).
External Article
Below is an article offering TOC as part of an ongoing Process Improvement initiative. The article may provide some benefit however doesn’t articulate well how TOC may be used for process improvement (I believe that the article was originally authored by Pink Elephant):
A system or a process cannot be more efficient than its limiting factor!
In “The Goal” Eli Goldratt presents the Theory Of Constraints (TOC). TOC introduces primary measurements for the analysis of systems based on productivity and ultimately, profit. The core truth of TOC is that every system or process has at least one constraint or bottleneck, and that the identification of this constraint should be the focus for any improvement activity.
TOC advocates that organizations take a three-dimensional view of three core business concepts, Inventory, Operating Expense and Throughput. To relate these financial terms to IT one needs to expand the definitions beyond their traditional concepts.
Inventory: All of the money, investment, outstanding issues, pending changes, unresolved incidents, excess capacity, etc. an organization has tied up in an un-sellable, unfinished, unresolved, undeliverable, or pending state.
- Pre Process Inventory: stuff that is currently waiting in queue in a raw or input state. i.e.: Calls that are waiting in the ACD system or emails that have not been answered by the Service Desk.
- Active Inventory: stuff that is currently within the system or process and is currently being transformed into a desired or sellable output state, i.e.: Change Management records that are currently being assessed, authorized and scheduled.
- Post Process Inventory: stuff that has been successfully transformed into a desired output but has not been delivered to a client, sold, confirmed resolved, or generated profit, i.e.: The Service Desk’s feedback calls back to the users to confirm that an incident, which has been resolved, can be permanently closed.
In TOC, the concept of Inventory contradicts the conventional balance sheet definition of Inventory as an “asset” and redefines inventory as a “liability.”
Operating Expense: All of the money, time, energy, thought, resources, overtime, etc. tied up in the process of converting raw data or inventory into the output of the process.
Throughput: Defined as the speed at which inventory is moved through the end-to-end process, and delivered to the customer in order to realize the goal of profit, resolution, deployment, etc.
Goldratt observes that these three core principles are inseparably linked and that a change in any one of these three dimensions will automatically result in a proportionate change in the others. The perspective taken by TOC is that the biggest gains are realized by increasing throughput. However, to increase throughput the bottlenecks to the process need to be identified and eliminated.
Question: What occurs when you remove a bottleneck?
Answer: Another bottleneck appears elsewhere in the process.
Result: The identification of the next area for improvement to increase throughput, and the cycle of continuous improvement continues.
Conclusion
In conclusion, Goldratt’s Theory of Constraints places a practical tool in the hands of individuals involved in the ongoing management and improvement of business processes.
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