Constraints-Based Thinking: A way to lead your organization to Breakthrough Results

Shifting priorities? Limited time? Work piling up? Late deliveries?

As a leader, you have a choice: survive and get by with incremental improvements or really focus your organization on delivering Breakthrough Results.

Most leaders want the Breakthrough Results but don’t know how to start. Constraints-Based Thinking, rooted in Dr. Eli Goldratt’s Theory of Constraints (ToC), might be the place to start.

Constraints-Based Thinking sees every organization as a system where people, processes, and resources depend on each other to produce the system’s final output.

Dr. Eli Goldratt introduced ToC through the bestselling management book The Goal. ToC has enabled public and private organizations across the world to achieve big jumps in performance (throughput, cycle time, on-time delivery, etc.). From its origin in manufacturing, ToC and its applications have spread to every aspect of business.

ToC fundamentals

• The main objective must be to improve overall system’s THROUGHPUT
• Improving FLOW delivers improvements in throughput, speed, quality, and reduces costs
• Every system is like a chain whose strength is dependent on the weakest link ( the CONSTRAINT). A constraint is anything that limits a system from achieving higher performance versus its goal. Unless we are able to improve the constraint, the overall system will not improve.

ToC – two basic frameworks

FLOW and the FIVE FOCUSING STEPS
FLOW is the orderly movement of work through a series of established steps in a system.

• Good FLOW means that this movement is a steady, continuous stream where value is being added to the input as it moves quickly through the system to be the output.
• Bad FLOW is where the work is not moving quickly through the steps, perhaps waiting at every step, and taking a long time before becoming an output. Obviously, improving the FLOW through the system is the key to improving the system’s throughput.
• Improving FLOW increases throughput, speed, quality, and reduces costs.

 

How does FLOW get disrupted?

Natural causes: Every system has natural variations where things don’t go as planned. Delays in one part of the system can cascade and flow will get disrupted. These disruptions to flow are intrinsic to any system and are not easy to remove. For example, in maintenance, we know aircraft will break and sometimes tasks will take longer than planned—that is reality.

Self-inflicted causes: In real-world systems, the majority of the flow disruptions are due to the way we react to and manage the natural delays. When things get delayed and we start missing our commitments (deadlines), there is pressure to start or release work sooner in order to meet the deadlines. When we release work too early, work piles up in front of resources resulting in wait times (i.e., the flow is getting blocked). As wait times increase and things get delayed, more work becomes urgent. As a result, there are priority conflicts and leaders increase multi-tasking. As queues build up, the same resources (crews, teams, etc.) are now “spread thin” over more jobs. As a result, each job gets fewer resources than needed and therefore takes longer. The net impact of multi-tasking, priority conflicts, and spreading thin is that work takes much longer than planned and the productivity of resources is low, which results in more delays than we started. The vicious cycle of delays leading to more delays is shown below:

The pressure to start work sooner comes from an assumption that the “sooner we start, the faster we can finish.” Unfortunately, when there is limited capacity, starting work sooner increases the amount of “work-in-process” (WIP) in the system. High WIP leads to long wait times, priority conflicts, fire-fighting, multi-tasking, and spreading thin. Together, these lead to increased delays and poor throughput.

 

 

How do you improve FLOW dramatically?

There are four common techniques for improving flow quickly:

• Control WIP
• Full Kit (everything you need to complete the job) before starting work
• Focus & Finish jobs before picking the next tasks
• Establish clear and stable priorities

The following illustration (derived from actual experiences) shows the impact of employing FLOW techniques—controlling WIP, ensuring full kit before starting work, focus and finish, and setting clear priorities.  The positive impact on Mission Capable rates is clearly seen as you move from the high WIP environment (left side) to the controlled WIP environment (right side).

FIVE FOCUSING STEPS

A fundamental assumption is that every system is like a chain and the strength of the system is equal to its weakest link (constraint). Unless we are able to improve the constraint, the overall system will not improve.

• Step 1 – Identify the Constraint: Identify the constraint in the process. Typically the constraint has the lowest throughput and often work piles in front of it. The constraint also experiences severe multi-tasking and changing priorities.
• Step 2 – Exploit the Constraint (i.e., maximize constraint usage): An hour lost on the constraint is an hour lost for system throughput. It is critical to squeeze the max out of the constraint. Usually, this involves obtaining the immediate maximum potential from the constraint without significant investment.
• Step 3 – Subordinate Everything to the Constraint: Since the constraint is the main resource that determines the system’s throughput, subordination of the remaining resources/steps in the process is required. The best way to subordinate everything to the constraint is by controlling the release of work into the process.
• Step 4 – Elevate the Constraint by Expanding Constraint Capacity: Once we have subordinated everything else to the constraint, we expect to see big improvements in system speed and throughput. It is now time to invest money (NOT before) to increase capacity at the constraint.
• Step 5 – Go Back to Step 1: If a constraint still exists, these steps must be repeated until all constraints are removed.

Constraints-Based Thinking is a powerful tool leaders can use to help drive their organizations to Breakthrough Results. The concepts of FLOW and the FIVE FOCUSING STEPS have proven themselves in repeated applications in a variety of business and operational settings.

 

By Sridharan Chandrasekaran, Partner, Goldratt Consulting