Theory of Constraints: Was Goldratt Wrong?

While I don’t normally focus here on the books we publish, I wanted to discuss one new book because of its intriguing challenge to a long-accepted idea regarding the theory of constraints (TOC).

            As many of you are aware, TOC was pioneered more than 20 years ago by Eli Goldratt and Jeff Cox in the business novel The Goal.

Theory of constraints focuses on maximizing throughput and does so by identifying and eliminating constraints on production, often referred to as bottlenecks.

            (Disclaimer: I am not an expert on TOC, so if you believe I don’t explain it very well, by all means please post a comment on the blog.)

            In TOC, you first identify the system’s constraint(s), then decide how to exploit the constraint(s). Next, subordinate everything else to that decision. Then elevate the constraint. If, in any of the preceding steps, the constraint has been broken, go back to the first step.

            One concept of TOC comes under fire in Beyond the Theory of Constraints: How to Eliminate Variation and Maximize Capacity. This book, which we have just added to our website (copies will be available in August), is written by William Levinson, a manufacturing expert and the author of several other books, including Henry Ford’s Lean Vision: Enduring Principles from the First Ford Motor Plant.

            The TOC concept at issue here has to do with variation. The following description from the Superfactory website explains it:

 

            Another key concept of the Theory of Constraints is that variation (in production and material transfer times) prevents the operation of a balanced factory at 100 percent capacity. This concept is illustrated in Goldratt and Cox's The Goal by a matchsticks-and-dice simulation in which the players represent production stations.

During each turn, each player passes the lesser of his dice roll (his station's capacity for that turn) and the number of matchsticks he has (work waiting at his station) to the next person. Although each station has a theoretical average capacity of 3.5 units per turn, the simulated factory's overall production is somewhat less because high die rolls, which are wasted when no work is available, do not make up for the low ones.

 

But Levinson sees things differently. He contends that much of the variation in processing and material transfer times comes from special or assignable causes that can be eliminated through traditional quality management techniques. He points to the success of Henry Ford, whose product system was designed explicitly to suppress variation in processing and material transfer times.

Levinson believes that the matchsticks-and-dice exercise is useful in teaching the effects of variation on throughput and inventory. However, he contends it may also teach the lesson that the factory is at the mercy of this variation. The purpose of Levinson’s book is to teach the reader how to identify and remove these assignable causes and, as he puts it, “roll a six every time.”

Do you agree? Do you believe it is possible to eliminate these types of variation? Please post your comments, and I’ll hope to revisit this issue after Levinson’s book has been out long enough for people to be familiar with it.