Bottlenecks Theory vs. Theory of Constraints: Are They the Same Thing?

If you’ve spent any time around operations or supply chain teams, you’ve probably heard someone say, “We need to fix the bottleneck.”

And they’re not wrong.

But here’s where things get interesting: fixing a bottleneck isn’t the same thing as applying the Theory of Constraints (TOC) even though the two ideas are closely related.

We have already spoken about Theory of Constraints in this blog:

- Addressing bottlenecks

- Drum-buffer-rope

- The Goal

But it is worth explaining in detail the differences between Bottlenecks Theory and Theory of Constraints, but first: What’s a Bottleneck?

A bottleneck is simply the slowest step in a process, the part that limits how much your system can produce.

Imagine this:

• Production can make 1,000 units per day

• Packaging can only handle 600 units per day

Packaging is the bottleneck. It doesn’t matter how fast production runs, your total output is capped at 600 units.

Bottleneck theory focuses on identifying that slow step and improving it.

You might add labor, reduce downtime, upgrade equipment etc. The goal is to increase flow by fixing the slowest point.

Now: What Is Theory of Constraints (TOC)?

The Theory of Constraints, developed by Eliyahu M. Goldratt, takes this idea much further.

TOC says: Every system has one constraint that determines its overall performance, and here’s the key that constraint isn’t always a machine, it could be a policy, a forecasting method, a batch size rule etc.

TOC isn’t just about finding the slow step. It’s about managing the entire organization around whatever is currently limiting throughput and profit.

For example, imagine you increase manufacturing capacity, but sales can’t sell more product. The constraint was never production. It was demand.

Optimizing production in that case just creates more inventory.

TOC forces you to look at the whole system before investing time and money.
 
Fixing bottlenecks is good operations management, managing constraints is smart business strategy. One improves a step. The other improves the system, and in today’s volatile supply chain environment, systems thinking wins.

 

The Goal

Today this post will verse about literature!! But you won´t regret, as if you haven´t read the book I will be talking about yet, you will get the priceless chance to discover a book worth its weight in gold!!

I was at home yesterday wondering about what I should read; I had a couple of books piling at my desk and waiting for me to get the time to look over them, when I suddenly glance at one of my favorite novels: The Goal, a Process of Ongoing Improvement, a management-orientated novel written by the Israeli physicist Eliyahu Moshe Goldratt. This novel was originally published in 1984 after months of struggle to get it printed. Since that, four million copies have been sold worldwide and the novel has been revised and republished in 1992 and 2004. In my pinion 4 million copies are way behind what it should have sold!!

The book is based in the Theory of Constraints coined by Goldratt and written as a piece of fiction staring Alex Rego, who manages a production plant which is lagging behind its competitors. At the beginning of the book he is told to have three months to turn his factory from unprofitable and unreliable into a successful one unless he wants to see it closed down. Alex with the help and advice he gets from of one of his former university professors through meetings and telephone calls, finally manage to increase the productivity of the factory turning it into one of the most profitable of the company.

The book points out the importance of the bottlenecks or constraints in the manufacturing process and how identifying them, however not always easy, has a deep impact on any factory´s productivity. Through the identification of bottlenecks and the implementation of measures to reduce the impact of them in the goods flow, Alex and his team mates manage to increase the productivity of the plant at the same time they reduce costs and hit their targets regarding customer orders processing and shipping.

The novel, besides Alex role as a head of a factory, also portraits part of his personal life depicting a sinking marriage at the begging of the book that changes as the book goes by to a trust based relationship at the end.

In my personal opinion this is a book everyone from accountants to production managers to CEO´s should read at least once in their lives, in my case, I try to read it as often as I can, as it´s not only a book from which you will acquire some basic supply chain notions, but also an easy to read and enjoyable book. Furthermore, I have learnt something new each time I have gone through it.

As a bonus, The Goal was followed by three other books “It´s Not Luck”, “Critical Chain” and “Necessary but Not Sufficient”. Although I have not read these sequels yet, as I have recently discovered them in what has been a pleasant surprise, I will hopefully get my hands on them very soon and won´t be long before I have read them all.

As you probably have figured out, I picked out The Goal from the shelf and started reading it again!!