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Chapter 17
Constraint Management

 

Chapter Overview

Chapter 17 examines constraint management, also known as the theory of constraints.  Constraint management provides a focusing framework for the management of complex business systems by focusing on the most important component of those systems: the constraint. Constraint management employs a five-step process to obtain the most from a constrained system by first identifying the constraint, then exploiting it, and then subordinating other business decisions to the exploitation of that constraint.  The recognition of the role the constraint plays in a system leads to better decisions regarding process improvement, system productivity improvement, and investment in capital resources to improve system productivity.

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Chapter  Resources

Esources 
Esource  17.1  CMG: The Thoughtware People provides and example of the services offered by a consulting firm specializing in constraint management.
Esource 17.2 Goldratt-TOC, the website of a U.K. consulting firm, provides a comprehensive glossary of constraint management terms.

Interactive Models 
Interactive Model 17.1 

The Constraint Management Interactive Model
Constraint management, covered in Chapter 17, includes a very effective approach to using inventory buffers to protect a constraint from being idle. This interactive model provides an opportunity for exploring the use of buffers in systems with constrained resources.

Excel Tutors 
note: network users may see a dialog box requesting "Please enter your authorization information." Just click "cancel" and your browser will automatically load Excel.
Excel Tutor 17.1 Excel Tutor 17.1  Using Excel for the Constraint Management Product Mix Problem

Supplementary Readings 
Supplementary Reading 17.1 Constraint management has significant implications for financial decision making. An Application of the Theory of Constraints (by Gregory Bushong and
John C. Talbott, The CPA Journal Online, 1999), provides a straightforward small business example of how a constraint management analysis of products and constraints resulted in an improvement in profitability.
Supplementary 
Reading 17.2		 In Managing Constraints, by Jack M. Ruhl, The CPA Journal Online, 1997), the author provides a concise definition of constraint management's financial implications, as well as a critique of the strengths and weaknesses of the approach.
Supplementary 
Reading 17.3		 "Using TOC to Solve Healthcare Problems," Journal of Management Accounting, Spring, 2000, provides an overview of a healthcare application of constraint management.

Links to Operations On Site Companies
Operations On Site 16.1 Amazon.com utilized constraint management to improved distribution.
Operations On Site 16.2 Oregon Freeze Dry has integrated constraint management and enterprise resource planning.

 

OM Exploration

Check it out: Internet Reference Sites for Chapter 
Constraint management has existed long enough to motivate several resource sites on the Internet.  The following list provides a sampling.
Crazy About Constraints The TOC Center
The Goldratt Institute  

OM in Action 
OM in Action  17.1 Many consulting firm specialize in constraint management as an approach to helping companies improve performance.  Examples include Productivity Partners, Goal Systems International, and the Constraints Management Group. Select two from this group or from other consulting firms specializing in constraint management. 

a. What appears to be their focus? 
b. How do they differentiated themselves from each other and from other business consulting firms?

Online Business Tours 
Online Business Tour 17.1 Endot is a producer of polyethylene water pipe.  Take the Endot tour.
a. Create a flow diagram for the tour.
b. If the constraint in the process was at the extruder step, what practices could be employed to aid in exploitation of the extruders?
c. How could the constraint be exploited if it was at the packaging stage? What implications would that have for other workcenter utilization? Which constraint location would be easiest to manage?

Letter from the Top 
Letter from the Top 17.1 In the International Paper CEOs 2000 letter to shareholders, (page 3 to 6 of the annual report pdf file), John Dillon mentions "marginal economics" as a way International Paper has made decisions on products to produce at some plants. How does this relate to constraint management?

Putting It All Together:  Virtual Case Study
Putting It all Together 17.1:   

Additional Reading
Additional 
Reading 17.1		 Using Drum-Buffer-Rope Scheduling Rather than Just-in-time Production, By Patricia Huff,CPA, Ph.D,  The Management Accounting Quarterly, winter, 2001, describes how constraint management's DBR approach can be used to enhance productivity and reduce WIP inventory