Critical Analysis of Theory of Constraints
Theory of Constraints
Performance management in an organization is an essential and required function to improve the functions and overall organizational growth. Performance management provides the employees with the maximum satisfaction of attainment of goals and objectives. Performance in an organization can be improved with the application of the theory of constraints. Theory of management has a vast range of implementation scale. Theory of constraints has the scope of being applied on the major functions of an organization such as logistics and supply chain management, project management, research and development, marketing etc. The theory of constraints is a point of view which states that constraints are barriers or hurdles for an organization which affects it to achieve the objectives and goals of an organization as well as maximum profit. It is assumed that if an organization understands these constraints and overcome these hurdles than it can achieve the organizational aims properly. Theory of constraints provides a better understanding of hurdles which an organization faces and this helps the organization in overcoming them and increasing performance.
Five steps process of constraints
As per Sale& Sale, five steps of continuous improvement is based on analyzing and identifying the constraints or barriers in the system to improve the performance of management. The five steps are the stairs to improvement performance and growth of an organization with the use of the theory of constraints. The five steps which are used in this mainly include:
Finding system’s narrow road- the First step to the continuous improvement in the performance of management is based on finding the narrow roads or the hurdles of the system in the manner to increase the understanding of management lacking part. The three methods can be used for identifying the constraints which are data collection method, plant type method, and manual method.
Deciding to achieve these narrow roads- Another step is to decide and confirm to attain the narrow roads of the system. It seeks to increase the operating efficiency of the existing constraints in the system. It means that management should focus on removing waste and non-productive constraints in the system.
Subordinate everything to overcome roads hurdles- Subordinating everything to overcome hurdles provides the improved performance by providing them a complete analysis of roads to hurdles. This process needs to provide the managers with a shift in thinking to use their capabilities for increasing the performance in the constraint.
Finding the way to these roads- This step can be achieved by enhancing the capacity of the constraining resource. To enhance the capability of constraints the capital is needed. These roads can use the ways such as marketing strategies to be designed and implemented.
Failure leads to back on the step- Somewhere these decisions taken are effective but are failed to work effectively in an organization or system. In such case, the performance of management can be improved by considering these steps back.
For understanding this theory with proper business management and improved performance some of the examples are considered for its illustration. The theory of constraints explains how hurdles or barriers in systems of an organization impact the performance of an organization. It also affects the performance of the employees and growth of an organization.
For example- There are five boxes of chocolates and five students are asked to pick them. The boxes of chocolates are handed to the first student and asked to take the chocolates and pass it to others. For doing this the student took a minimum time to handover the boxes of chocolates. Another student took the chocolates and counts them and put in the box to pass further. In this process, the further students get a chance and time to analyze the work and took the time to complete it. On the other hand, if they are asked to complete the task faster than the students took less time but create a hurdle for the student in between to understand the both time period and task. This increases in losing the efficiency of an organization and increasing constraints.
Implications on Inventory
Inventory is a function of demand which provides the feasibility sometimes for limiting the number of units which enter into the systems. This results in losing the opportunity of earning. There is another way to provide the constraints improvement but puts capital but speed up the work.
Implications on Throughput
The implications on throughput provide that work can be shifted to other person and also provides them speeding up the work and increasing the efficiency of work. This provides the efficiency in work without adding more cost to the organization.