Key MBA Models

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Theory of constraints

The ‘theory of constraints’ is a set of tools that allows managers to identify and resolve the bottlenecks – or constraints – in a firm’s processes that hold it back from achieving higher productivity levels.

When to use it

• To diagnose the bottlenecks in a production process.
• To identify ways to make a production process work more efficiently.

Origins

The term ‘theory of constraints’ was introduced in 1984 by Eli Goldratt in his bestselling business novel The Goal. However, the underlying ideas on which the book is based are very old. In the world of business practice, the ideas can be traced back to early innovations in the manufacturing process – for example, Henry Ford’s introduction of the assembly line in ...