How does the Theory of Constraints relate to Lean Thinking?

lean thinking

Introduction

Project management (PM) is the application of knowledge, tools, and skills that help in completing a project successfully. Project management techniques are vital for any company. Popular PM concepts include the Theory of Constraints and Lean Manufacturing. By applying the concepts and using the techniques, companies have become efficient and improved the company’s profit.

Getting a lean six sigma black belt certification will help you get a managerial role in any prestigious company and work on complex projects. In this article, we will see how the concepts of Lean Manufacturing, Lean Thinking, and Theory of Constraints are related to each other.

What is Lean Manufacturing?

Lean manufacturing is also called lean production, is a method that is focused on reducing the amount of wastage in terms of material and labor. This is done to enhance the manufacturing process and increase production levels. This increases the productivity of the project.

So, what is considered waste in the manufacturing process?

Waste is anything that does not add value at the customer’s end. It is something they will not pay for. According to the Lean Enterprise Research Centre (LERC), about 60 % of the production activities of a manufacturing process are waste. They are of not of much value to the customer.

The roots of the lean manufacturing concept come from the Toyota Production System. Toyota used a just-in-time manufacturing system, where they kept their inventory low and acquired materials when they needed them. This helped them eliminate the unnecessary materials, keep the vital components, and increase their overall productivity.

The 5 principles of lean manufacturing are as follows –

  1. Identifying the value of a product or a service from a customer’s perspective.
  2. Analyze the value stream that is the total flow of information and materials required to develop a product or service, to remove waste.
  3. After the elimination of waste, the other steps of the manufacturing process have to run smoothly without interruptions or delays.
  4. Establishing a pull-based system that manufactures products and services only when the demand arises.
  5. Pursuing perfection by continuous improvement of the products which involves detecting quality issues, understanding customer demands, and updating product quality.

Why is Lean Manufacturing Popular?

Lean manufacturing has become a very popular technique for companies to increase customer satisfaction and gain an edge over their competitors. The top reasons why Lean manufacturing is widely adopted by organizations all over the world are –

Streamlining organizational processes

Companies can streamline their processes with lean principles. They can manage the activities from the front office and to the distribution department. The manufacturing department can work at its full potential. This eventually increases the manufacturing speed and reduces costs.

Waste elimination

Eliminating waste from the manufacturing processes enables organizations to increase their productivity, effectiveness, seek better opportunities, and reduce time spent on irrelevant tasks. Lean manufacturing focuses on eliminating waste from nine areas:

  • Motion
  • Inventory
  • Waiting time
  • Transportation
  • Information
  • Quality
  • Overproduction 
  • Creativity
  • Processing

Employee satisfaction

When unnecessary tasks are removed from their daily schedule, employees are more interested in their duties. As they are no longer packed with loads of work, they can focus more on the important tasks at hand. This boosts their morale and increases their productivity. Thus, companies adopting lean manufacturing are bound to have satisfied employees.

Team building and cooperation

To implement lean manufacturing techniques, companies have to focus on all the departments and the members. Companies use lean techniques to conduct a complete organizational assessment that enhances team building and cooperation.

 

What is the Theory of Constraints? 

The Theory of Constraints (TOC) states that there are some constraints in every firm that prevents it from reaching its goals. The theory uses a focusing process to identify the constraint and aims to address it for the company’s benefit. It was introduced in a book called The Goal by Eliyahu M.Goldratt and Jeff Cox in 1984.

This theory is used for implementing change in an organization that will enhance its business. Those who have the responsibility of making changes can answer these questions using the theory:

  • What is required to be changed?
  • What will it be changed to?
  • How to implement the change?

According to this theory, a firm can be managed by tackling three aspects:

  • Throughput – This is the rate of profit earned through sales.
  • Investment – This is the money spent on developing products that bring in the profit.
  • Operational Expense – This is the amount invested in machinery and inventory.

Steps of the Theory of Constraints

The five steps of the Theory of Constraints are –

Identification of the system’s constraint 

The constraint which is hindering the growth of the business is identified. It gives an idea about the area to improve.

The exploitation of the constraint

Without undergoing costly changes and upgrades, the constraint is exploited to get the most out of it.

Subordinating the non-constraints

The non-constraint components need to be adjusted so that the constraint can work effectively.

Elevating the constraint

This means making major system changes to eliminate the constraint. This is done when steps 2 and 3 have not been successful.

Prevent inertia and return to the first step

This is a process of continuous improvement. Once the constraint is identified and removed from the system, the next constraint has to be identified. This takes you back to the first step and allows you to continue the process.

How does the Theory of Constraints fit with Lean Methodology?

The Theory of Constraints and Lean Methodology are on the same page when it comes to one aspect – they are both aimed at maximizing the company’s profit. TOC focuses on figuring out the constraints, Lean thinking identifies which are the wastes. So the constraints identified in TOC can be considered as the areas of wastage according to the Lean Methodology.

Both Lean thinking and TOC agree upon the fact that the change must be identified first, and then the change agent must be put to work. So, using the two techniques, an organization can increase its production and reduce costs.

Conclusion

The Theory of Constraints and Lean Methodology can be used by the agents of any company to implement significant organizational modifications. But it is extremely important to stay updated with the latest industry trends and customer requirements, to deliver the best products.

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