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The Theory of Constraints (TOC) can help your business "Make more money, now and in the future".

Not just make money, but make more money, more quickly than you thought possible.

You don't need to buy any equipment or expensive computer software.

Theory of Constraints is just knowledge!

But knowledge is power, so it is not "just" something to dismiss out of hand. It has a proven track record around the world and surely is worthy of just a little of your consideration.

The way you plan, assemble, organise, measure and control your 5 business resources will dictate your performance and how much money you make.

Have you constrained your ability to make money?

Is it possible to make more money using your existing business resources?

Can you do it with what you know now?

Do you already know what TOC can offer? Many people make invalid assumptions about TOC. Click the button below to see some.

Invalid assumptions about TOC

 

Wouldn't the following diagram represent a better situation to be in (how to read the diagram is explained below)?

Image

 

Using the TOC Thinking Processes, the above diagram is called a Future Reality Tree.
 
The arrows represent the cause and effect relationships of sufficiency logic. You read the logic between two boxes (called entities) connected by an arrow by saying "IF entity1 THEN entity2 ".
 
The ellipse represents an AND condition between two entities which you read by saying "IF entity1 AND entity2 THEN entity3.
 
An entity shown in a square box is called an "injection". This is an entity which does not yet exist in your current reality. It represents a change you need to make to move from your current reality towards your future reality.
 

Can you answer this correctly?

Find out if your cost accounting methods are leading you to make the wrong decisions, time and again.

Beware - you may be in for a surprise!

This will challenge some of the things you believe to be "true".

 

Difference between the cost world and the throughput world

Quiz

I answered the above cost accounting question.
 

What is TOC?

TOC is a multifaceted management philosophy. It is a systematic reexamination of some of the most fundamental beliefs in business management, culminating in a new approach to address problems facing us today.

TOC is more than a set of tools or techniques although it certainly contains these. It is more fundamentally a paradigm shift which demands that we think about our problems and solutions, our goals and objectives, policies, procedures and measures, in a different way.

Operating Expense, Inventory and Throughput

In TOC, a business can be considered in terms of just three measures, T, I and OE.

  1. T, or Throughput, which is the rate at which money flows into the organisation from sales.

  2. I, or Investment (or Inventory), which is the amount of money invested or tied up in the system, including equipment and machinery, raw materials, work in process, finished goods and so on.

  3. OE, or Operating Expense, which is the amount of money that must be applied to the business to convert I into T.

Theory of Constraints (TOC) is the name given to a large body of knowledge centred on the concept that any (indeed every) system must have a constraint - a single factor that more than any other limits the ability of the system to achieve its goals.

This idea is not new, indeed it is a very old concept, well understood in the pure sciences (such as physics), where the search for basic, fundamental relationships is the very essence of the science. What is more recent (TOC development started in 1982) is the application of these principles to systems that previously defied such approaches, such as the study of human systems and businesses in particular.

TOC can be applied to determine the constraint of each business system and then modify that system to improve performance at the constraint and overall. TOC principles of cause and effect logic, as well as sufficiency and necessity logic, also allow the location of the constraint to be controlled and can buffer out the negative effects of natural system variability. But TOC is not for the faint hearted. Installing TOC management and measurement systems requires a paradigm shift in thinking from the traditional cost accounting approach.

TOC introduces significant change into an organisation but brings with it powerful tools necessary to answer the following questions: What to Change? What to Change to? How to Cause the Change?

TOC introduces a completely new way of thinking about problems and implements solutions that have a dramatic and immediate impact on the bottom line. TOC changes bring measurable benefits in days and weeks, instead of the usual months and years (if at all). Improvements come so fast because TOC works on the key leverage point in your business; the constraint. To find out more you can Google "Theory of Constraints", "Drum Buffer Rope" and "Critical Chain Project Management".

The best online resource for TOC is the one written by Kelvyn Youngman. 

Open Standards Software

You'll be amazed at the quality of open source and open standards software which you can get for:

  • No software licencing costs (yes, it's free!)
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From BI to ERP, CRM, Workflow, a complete office suite and much, much more.

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