The theory of constraints is a tool to remove bottlenecks in a process that limits production or throughput. To start with, draw the value stream map for the process and follow the five steps mentioned in the theory of constraints.
First step is to identify the system's constraints. A system constraint limits the business system from achieving its performance and goals.
Second step is to exploit the system's constraint. This would mean running that particular equipment to its full capacity. The next step is to subordinate everything else to the decision of step 2. This would mean to align the whole process or system to the decision of Step 2. Then elevate the systems constraint and check whether the constraint is still valid. If the constraint is broken or resolved, then go to step 1 and find a new constraint.
This whole process of Theory of constraints helps to de-bottleneck the system. Lets understand this with an example.
The diagram shows a fifteen-step process. This process produces both product A and B, which are then assembled in the last step and sold as a complete product. The numbers in the figures are maximum production rates in units per hour. The flow of product A is blue line, and flow of product B is the red, dotted line. The last step is shown in the black box.
Now if the customer demand says that this process should produce 50 units per hour, then that would be 50 units per hour of both A and B. One look at the process would tell us that this can be easily achieved. In this case the demand is the constraint. This is known as external constraint. This can be resolved by formulating a marketing plan or sales plan for the product.
If the customer demand says that the process should produce 150 units per hour of the final product then that would be 150 units per hour of both A & B. First step is to identify the constraint. So whenever A & B flow together through a step, that step should be capable of producing 300 units per hour. The first equipment of the process has a capacity of 150 units per hour. So it is a constraint. Constraint identified in step 1 is known as the active constraint.
Next step is to exploit the systems constraint. In this step we run the active constraint to its full capacity. In doing so, the first equipment would produce 150 units per hour i.e., 75 units of both A & B. Step 3 says subordinate everything else to the decision of step 2. Going through the process of both product A and product B, one can find another constraint in the process of product A. It is the equipment with capacity of 70 units per hour.
Step 4 of the theory of constraints talks about elevating the active constraint. Which means to increase the capacity of the active constraint so that it ceases to be a constraint. This can be achieved by either speeding up the equipment, by adding more available time to the equipment or by reducing downtime. Since we already have another constraint in process of product A, lets first elevate it by increasing its capacity to 150 units per hour. Now lets elevate the active constraint by increasing its capacity to 225 units per hour. Now our process is free of any constraint and we can say that the constraint is broken. If the customer demand increases now, we will have new constraints in the system.
Once the constraint is broken, go to step 1 and repeat the process. One more constraint in the above example can be cycle time. B encounters 8 less equipment on the way to the assembly point and hence would reach the assembly point faster than A. If the time taken by A and B to reach the assembly point is different, then this would again be a constraint as one part of the assembly would pile up at the assembly point. So anything that hinders the flow to the desired output is a constraint and can be dealt with using the steps in Theory of Constraints. As with other improvement tools, theory of constraint is also a continuous improvement tool.