Theory of Constraints (TOC)

The approach was formulated by Eliyahu M. Goldratt in the 1980s and works in five focusing steps:

• Identify the constraint.
• Exploit it: remove every minute it loses to waiting, breaks, changeovers and processing defective parts.
• Subordinate everything else to it: other resources work at the pace of the constraint, not at their own maximum.
• Elevate it by adding capacity, and only after the first three steps.
• Repeat, because once the constraint is lifted, another resource takes its place.

In scheduling, subordination is implemented as drum‑buffer‑rope: the constraint sets the rhythm (drum), a time buffer of work protects it from upstream disruptions (buffer), and material is released into the process only at the rate the constraint consumes it (rope).

Theory of Constraints in practice

The exploit step works with money that is already spent. If the constraint stands for 30 minutes per shift during breaks, staggering breaks across the crew returns that time without any investment. Quality inspection moved in front of the constraint stops it from spending minutes on parts that will be scrapped anyway.

TOC also changes product priority. Take product A with a throughput (price minus truly variable costs) of 40 EUR per unit that needs 4 minutes on the constraint, and product B with 60 EUR that needs 10 minutes. Per unit B looks better, but per constraint minute A earns 10 EUR and B 6 EUR. In a 480‑minute shift the constraint produces either 120 units of A for 4,800 EUR or 48 units of B for 2,880 EUR. Ranking by unit margin or cost per piece pushes the plant toward the product mix that earns less.

Subordination collides with local efficiency targets, which reward every station for running at full speed. A non‑constraint resource that keeps running produces work‑in‑process that the constraint cannot absorb.

Logio finds the constraint in a production or warehouse flow and tests what each change does to output with dynamic simulation before capacity is added. Exploit and subordinate steps are part of production capacity planning and intralogistics and material flow projects.

Related terms

• Bottleneck
• Capacity Planning
• Production Scheduling
• Master Production Schedule (MPS)
• Overall Equipment Effectiveness (OEE)
• Lean Manufacturing