What is Theory of Constraints (TOC)?
The theory of constraints helps manage complex systems, as well as determine the root cause of any problem. Contrary to Six Sigma, the approach is logic driven to analyzing the root causes. There is a probability of a Six Sigma project failing due to wrong selection.
The TOC approach is to manage and identify constraints of the systems; its strength is the qualitative analysis, which is useful in dealing with highly complex situations. The processes are made powerful enough to deal with the variations. The Six Sigma approach to value is that of meeting the customer requirements, while that of TOC is that of using the constraint to define the maximum value for a customer in relation to the constraint.
Six Sigma effectively combines with TOC. Though the two approaches are different to a certain extent, they can be very powerful if implemented together. Six Sigma improvement based on TOC methodology addresses the constraints that exist in systems, as well as future constraints that may arise once the current ones are dealt with.
The five basic steps of TOC are:
1. Identifying constraints: The first step is to find out or look for any constraints if they exist in the system.
2. Determining strategy to exploit the constraint: Once the constraints are identified find out a Six Sigma project which will help minimize waste of the constraint by utilizing the constraint itself.
(e.g. if a machinery in use is a constraint, then a Six Sigma project to reduce defects in it by keeping the machine in the optimal condition can be the strategy followed).
3. Subordinating everything else to the decision made: The next step is to adjust or eliminate those activities that may hinder the utilization of the constraint to its maximum capacity.
4. Elevating the constraint: If the system performance is not satisfactory, efforts or investment should be taken to improve or eliminate them.
5. A broken constraint: When one constraint has been dealt with, move on to the first step of the cycle to handle other constraints. Ensure that old policies and habits are evaluated in relation to the changed circumstances.
The combined utilization of Six Sigma techniques and theory of constraints can work wonders for the team. In the first step of project selection, the theory of constraint helps the Six Sigma team to choose the correct project without wasting Six Sigma resources on strong areas.
The Six Sigma methodology applied on the weak part will help reduce the defects and maximize quality. Additionally, the theory recognizes the constraints in the beginning that helps avoid wastage.
Additionally, those areas that are working properly are not touched and new tools and techniques used to repair or replace the existing constraints. Rather than replacement, a resolution of problem should be found, as replacement would mean wastage in itself.
Six Sigma projects applying the Theory Of Constraint can help bring about a systematic improvement in prioritizing the constraint areas. Carrying out changes at the same time would be detrimental in meeting the needs of the customers at the lowest costs. TOC ensures that the maximum improvement is achieved with the least investment.
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* Source – http://serious-science.org/videos/1939
The Chair for Decision Theory and Economic Theory, Tel Aviv University, Itzhak Gilboa, on the history of probability theories, predicting the behaviour of people, and the links between decision theory and the social sciences
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