The Theory of Constraints is a popular management methodology that was developed in the 1980s by Eliyahu Goldratt (Stein, 1997). The Theory of Constraints is based on finding and controlling the key limitation of the system that predetermines the success and efficiency of the system as a whole. The main peculiarity of the Theory is represented by the fact that making efforts over the management of a very small number of system aspects leads to the effect far exceeding the result of the simultaneous effect on all or on the majority of the problematic spheres of the system at once.
In point of fact, the Theory of Constraints represents a set of holistic processes and rules based on the systematic approach, the essence of which consists of using the natural simplicity that is peculiar for all complicated systems, and focuses on a small amount of improvement points for providing the synchronization of parts with a view to achieving a constant improvement of the overall functioning of the system (Cox, Schleier, 2010, pp. 457-459).
The approach of the Theory of Constraints is based on revealing this limitation and managing it in order to increase the rate of income generation. The methodological Theory of Constrains comprises a number of logical instruments that allow Chief Financial Officers to find the limitation, to reveal the managerial contradiction that stands behind it, to find solution and implement it considering the interests of all the parties involved. The focus on the final financial result allows achieving quick results for businesses, which usually takes 2-3 months. Furthermore, the focus on mutually beneficial solutions allow Chief Financial Officers to improve the level of interaction and the motivation of personnel. The Theory is applied to the management of production, the control of projects, including the development of new products, construction, and the control of purchases and goods distribution.
One of the methods offered by the Theory of Constraints is the set of rules regarding the verification of personality, the work in an organization, the cause-effect connections between them, the algorithms of building cause-effect diagrams, as well as the method of the critical chain for managing projects (Cox, Schleier, 2010, pp. 951-952) (Stein, 1997).
That is, the Theory of Constraints proceeds from the concept of the natural simplicity of systems and claims that all the components of the system are closely connected with each other by cause-effect links. With that, the Theory covers the following fields of management:
operational processes, production;
the management of projects;
the system of allocation and the chain of delivery;
finances and their indicators;
sales;
marketing;
the management of human resources;
tactics and strategy (Cox, Schleier, 2010, p. 516).
Likewise, the solutions provided by the Theory of Constraints regarding the issues that occur in these aspects are used in the following fields:
industrial production;
distribution;
financial services;
health care;
defense;
education;
governmental organizations, and other fields.
Furthermore, the theory is based on three central presuppositions:
All the components of the system appear to be in the strong connection with cause-effect links. The identification of causes allows converging these causes together into a key problem, contradiction, or conflict.
All contradictions can be solved without a compromise, since contradictions exist as a result of our perception or basic premises on which personnel operate. Generally, compromise is not a solution that can prove beneficial for both parties.
There exists no resistance to improvement. On the contrary, staff do not accept changes due to the fact that Financial Officers could not demonstrate the possible benefit they would have as a result of these changes.
Considering the basic premises of the Theory, it becomes possible to understand the uniqueness of its approach. First of all, the Theory is directed towards logical reasoning. That is, the Theory of Constrains encourages the use of cause-effect connections in order to structurally regulate the train of thoughts, the logical recording of the analysis, and the understanding of the offered solution to any problems, which is based on convergence.
Secondly, the Theory introduces its beneficial way of resolving conflicts. That is, we face the persisting belief that conflicts should not conceptually exist within the frames of reality, and consequently, this represents the persisting intention to find a mutually beneficial solution to any situation that often seems to have no practical solution (Woeppel, 2001). At the same time, there should appear no conflict between the local and global.
Thirdly, the Theory fosters to aspiration towards joint cooperation. With that, it encourages the use of the logics of thinking tools of the Theory for communication. Initially this should take place with oneself, and then with the team in order to establish joint cooperation with a view to achieving improvements that will be based on respect.
In the final analysis, the controller of the system sees his role in the constant improvement of the system which he is responsible for. The improved level of activity is the result of the implementation of a new idea, or solution, to the already existing system (Woeppel, 2001). Therefore, the Theory of Constraints reinforces the controller's ability to develop solutions regarding the improvement of the functioning of their systems. Moreover, the Theory of Constraints strengthens the controller's ability to pass the decision to the people who support and cooperation are crucial for the successful implementation of this solution. The years of experiences of introducing such changes in order to provide the improvements have demonstrated that something can be considered as the resistance to changes, which often appears to be a major problems that the controller faces during the implementation. In most cases, this resistance stems from a person's disagreement with the initiator of these changes.
References
Cox, J. F., & Schleier, J. G. (2010). Theory of Constraints Handbook (pp. 457-459, 516, 951-952). McGraw Hill Professional.
Stein, R. E. (1997). The Theory of Constraints: Applications in Quality and Manufacturing. New York: Marcel Dekker.
Woeppel, M. J. (2001). The Manufacturer's Guide to Implementing the Theory of Constraints. Boca Raton: St. Lucie Press.
