I believe the Theory Of Constraints is a very powerful methodology for improving just about any business and was developed by a physicist, Eliyahu Goldratt who became fascinated by the concept of business improvement.
The idea is that every business is a system and the output of the system is limited by a constraint inside or outside the business.
These constraints can create a wide variety of different symptoms or undesirable effects (UDEs), which make the underlying issue harder to see.
The ideas were originally introduced in “The Goal” by Eliyahu Goldratt and Jeff Cox in a manufacturing environment and this is my recommended place to start.
A number of connected ideas have been developed:
- Process improvement by the Drum-Buffer-Rope method.
- Project management by the idea of the Critical Chain rather than the critical path as resources are taken into account.
- Distribution /supply chain improvements through TOC replenishment ideas.
- Performance measurement and decision support using Throughput Accounting.
- Problem solving using the Theory of Constraints Thinking Processes.
- Strategic planning with the Strategy & Tactics Trees.
The Theory Of Constraints has been mainly applied in big businesses and large government organisations but I believe that there is a vital role for TOC to play in the small business arena although it is under-developed. Please see The Theory Of Constraints For Small Businesses, an article I’ve written on my blog.
FIVE STAR BOOKS
Forget the Urgent!: Rather focus on the important by Matias Birrell and Javier Arevalo – A great summary of TOC told in a story form that’s like listening in on their coaching sessions.
The Goal by Eliyahu Goldratt and Jeff Cox – the brilliant book that introduced the Theory Of Constraints. It is set in a manufacturing business but the lessons can be applied to all kinds of businesses.
Thinking for a Change: Putting the TOC Thinking Processes to Use by Lisa J. Scheinkopf – this builds on the ideas of Eliyahu Goldratt who developed the Theory Of Constraints and wrote the business novel The Goal. It is challenging but very rewarding if mastered.
Goldratt and the Theory of Constraints.: The Quantum Leap in Management by Uwe Techt – a very helpful summary for those who have read the business novels of Eli Goldratt and need the ideas pulled together.
Theory of Constraints Handbook – the serious guide to TOC with over 1,100 pages of small print and diagrams.
FOUR STAR BOOKS
The Race by Eliyahu M. Goldratt and Robert E. Fox – The Goal told you what to do and why, The Race tells you how to do it. Amazon.co.uk
Critical Chain: A Business Novel by Eliyahu M. Goldratt – Interesting ideas about project management in this management novel.
Where Is The Constraint? by Henry Havel – a different perspective on TOC as a practitioner shares his experiences.
Absolute Certainty: How To Give Your Clients Exactly What They Want by John Haylock – Ideas for improving service businesses based on TOC and value pricing contained within a novel.
The Cash Machine: Using the Theory of Constraints for Sales Management by Richard Klapholz and Alex Klarman – Explains the idea of using constraints to improve the sales process and increase sales revenue. Amazon.co.uk
THREE STAR BOOKS
TOC Thinking: Removing Constraints for Business Growth by Yishai Ashlag – A nice introduction to the Theory Of Constraints but anyone with much knowledge of TOC won’t get much out of it.
Accounting For Throughput by David Dugdale and T Jones – An early look at Accounting for Throughput consistent with the Theory of Constraints.
It’s Not Luck by Eliyahu M. Goldratt – A story using the Theory of Constraints in the market where lack of demand is the constraint. This book also introduces the TOC Thinking Processes.
Reaching The Goal: How Managers Improve a Services Business Using Goldratt’s Theory of Constraints by John Arthur Ricketts – A complicated book suitable for very big companies only.
Traditional Measures in Finance and Accounting, Problems, Literature Review, and TOC Measures (Chapter 13 of Theory of Constraints Handbook) by Charlene Spoede Budd – Interesting but the layout of the examples could be better.
TWO STAR BOOKS
5 Steps to Continuous Improvement by Allen Pratt – This should be free as it reads like a lead generation pdf available for the price of your email address.
ONE STAR BOOKS
Continuous Improvement to Company Financial Performance The Human Factor: Understand and deploy Value Stream Mapping, Theory of Constraint and Lean6Sigma to transform your company into a cash machine by Yann Ginon – The author should start again with this business novel made up of confusing conversations.
Pinocchio Becoming Human with the Theory of Constraints by Seong Am Moon, Dong Jin Kim and Aaron Rae Stephens – Sorry the idea of trying to turn children’s stories into business novels doesn’t work.