Focused Operations Management

Chapter 4. Managing the System by Its Constraints

Management by constraints is an innovative and very effective approach developed by Goldratt (Goldratt and Cox, 1988). We consider it a managerial breakthrough that has brought about significant improvements in organizations worldwide in the past two decades. The seven focusing steps of management by constraints are based on the conceptual foundation of operations research methods such as linear programming (Ronen and Starr, ). The methodology of management by constraints is typical for the satisficer approach (Chapter 2). It provides satisfactory solutions that bring about significant and rather rapid improvements in organizational performance.

Management by constraints is based on a seven‐step process:

1. Determine the system's goal.

2. Establish global performance measures.

3. Identify the system constraint.

4. Decide how to exploit the constraint and break dummy and policy constraints.

5. Subordinate the rest of the system to the above decision (the constraint).

6. Elevate and break the constraint.

7. If a constraint was broken return to step 3. Do not let inertia become the system constraint.

Step 1—Determine the System's Goal

The goal of the organization is of the utmost importance and should guide every decision and action in the organization. Once the goal has been determined, every person in the organization must evaluate the congruence of every decision or action with this goal. Unfortunately, not enough attention is devoted to this important area. ...