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The theory of constraints is applied within an organization by following what are called ‘the five focusing steps.’ These are a tool that Goldratt developed to help organizations deal with constraints, otherwise known as bottlenecks, within the system as a whole. The five focusing steps are as follows:
Step 1: Identify the system’s bottlenecks : Bottleneck may be any thing of resources eg. Labor hours, machine hours, time, raw materials etc
Step 2: Decide how to exploit the system’s bottlenecks
This involves making sure that the bottleneck resource is actively being used as much as possible and is producing as many units as possible. So, ‘productivity’ and ‘utilization’ are the key words here.
Step 3: Subordinate everything else to the bottleneck resource as decided in Step 2
The main point here is that the production capacity of the bottleneck resource should determine the production schedule for the organization as a whole. Remember how, new bottlenecks seemed to be appearing at the plant, because non-bottleneck machines may produce more parts than the bottleneck resources could absorb. Idle time is unavoidable and needs to be accepted if the theory of constraints is to be successfully applied. To push more work into the system than the constraint can deal with results in excess work-in-progress, extended lead times, and the appearance of what looks like new bottlenecks, as the whole system becomes clogged up. By definition, the system does not require the non-bottleneck resources to be used to their full capacity and therefore they must sit idle for some of the time.
Step 4: Elevate the system’s bottlenecks
Step 5: If a new constraint is broken in Step 4, go back to Step 1, but do not let inertia become the system’s new bottleneck
When a bottleneck has been elevated, a new bottleneck will eventually appear. This could be in the form of another machine that can now process less units than the elevated bottleneck. Eventually, however, the ultimate constraint on the system is likely to be market demand. Whatever the new bottleneck is, the message of the theory of constraints is: never get complacent. The system should be one of ongoing improvement because nothing ever stands still for long.
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