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The Theory of Constraints (TOC) is a management philosophy aimed at maximizing system performance towards organizational goals, typically profit generation. TOC posits that every organization faces a key constraint that limits its effectiveness. These constraints can be internal or market-based. Proper management of these constraints is crucial and follows five steps: 1) Articulate the goal, 2) Identify the constraint, 3) Exploit the constraint, 4) Subordinate all processes to the decision, and 5) Elevate the constraint if necessary. Continuous evaluation ensures the system’s growth and efficiency.
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THEORY OF CONSTRAINTS (TOC) BYAMAR P. NARKHEDE
The theory of constraints is an overall management philosophy that aims at continually achieving more of the goal of a system. If that system is for profit business then the goal becomes one of making more money, in the present as well as in the future Accordingly to TOC, every organization has one key constraint which limits the system performance relative to its goal. The constraints can be either internal constraints or market constraints. In order to manage the performance of the system, the constraint must be identified and managed correctly as per the five focusing steps INTRODUCTION
Step zero: Articulate the goal of the organization • Step 1: Identify the constraint • Step 2: Decide how to exploit the constraint • Step 3: subordinate all the processes to the above decision • Step 4: elevate the constraint if required permanently increase capacity of constraint • Step 5: if, as a result of these steps, the constraint has moved return to step 1. Don’t let inertia becomes the constraints THE FIVE FOCUSING STEPS
