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When the Theory of Constraints (TOC) was introduced in the mid-1980s, both business practitioners and academicians credited it with pointing out the flaws in some of the calculations commonly used to measure manufacturing performance. Today, its concepts are looking even more relevant as companies seek to improve their bottom lines.
Developed by Eliyahu Goldratt, an Israeli physicist who set out to solve seemingly intractable problems in production scheduling, TOC was presented as a novel, The Goal (1984, North River Press).
TOC contends that every business has at least one resource that is preventing it from making infinite profits. For a manufacturer, the constraining resource might be a poorly designed machine, misallocated workers, or a distribution bottleneck. Remove the constraint, the theory goes, and you increase the rate of production and boost the bottom line.
What makes TOC even more relevant today? Time. As in speed. Time has become a critical concern for most companies, notes Jeffrey...