Goldratt’s Theory of Constraints

Dr Eli Goldratt is the originator of the Theory of Constraints (TOC). His first book, The Goal, remains to be a bestseller for more than 20 years after its inaugural publication. Dr. Goldratt was an educator, author, scientist, philosopher and business leader but he was, first and foremost, a thinker who provokes others to think. Often characterized as unconventional, stimulating, and "a slayer of sacred cows". Dr Goldratt had exhorted his audience to examine and reassess their business practices with a different perspective and new vision.

Theory of Constraints(TOC)

Every business has at least one constraint (or leverage point) which limits the output of the entire business operation – Constraint limits business profitability – just as chain’s weakest link limits its strength.

Theory of Constraints (TOC) is systematic management approach which focuses on improving a few physical and logical leverage (constraints) points of an organization in order to achieve an order of magnitude improvement in the performance of the system as a whole. TOC is mainly about focus – focusing your efforts in the right place to achieve maximum benefit.

Dr. Eliyahu Goldratt first introduced TOC through his book "The Goal". Even after 25 years of its release, The Goal is still considered a classic must-read, common-sense manual for people at all levels in companies worldwide. Dr. Goldratt's subsequent books mark the major phases of TOC's evolution, expanding its scope and application to inbound supply chain, production/operation, outbound supply chain, new product development, marketing & sales, distribution & retail management, finance & measures etc.

Pillars of TOC

  • Reality is exceedingly simple and harmonious with itself.
  • An hour lost in the bottleneck is an hour lost on the entire  system. An hour gained in the non bottleneck is just a mirage...
  • When conflicts are not resolved and put under a carpet, they do not disappear.  They grow. 
  • Not every change is an improvement, but every improvement is a change
  • The most profound obstacle that we need to overcome is our ingrained perception that reality is complex
  • Activating a resource and utilizing a resource is not synonymous
  • A decisive competitive edge is gained by a company when a company satisfies a significant need to an extent that non of its competitor can
  • Be aware  of changing environments. When you are good with a hammer, everything looks like a nail.
  • Tell me how you will measure me,  I will tell you how I will behave.
  • As long as the end customer has not bought, no one in the chain really sold
  • To adjust price is relatively easy for competition. To change a rooted policy is difficult for the competition
  • There is no point in imposing certainty on the situation which contains high uncertainty
  • Striving to ensure that no resource is idle is the biggest generator of Waste 
  • Intangible is not synonymous with unimportant. Intangible is just an expression where we cannot attach a numerical value
  • Productivity is meaningless unless you know what your goal is
  • Not repeating the same mistake is only valid apology
- Dr. Goldratt