Concepts and
methodology aimed (like lean production) mainly at achieving most efficient
flow of
material in a
plant through 'continuous process improvement' (CPI). Basically a
scheduling and
inventory control philosophy, it proposes that (1) a firm is a 'chain' of interdependent links (departments, functions, resources) some of which may have potential for greater
performance but cannot realize it because of a weak
link that is an (2) external or internal
bottleneck (constraint) and every firm has at least one. (3) The highest
priority of a
management is (or should be) to maximize the firm's
throughput (rate of generation of revenue) and not just
output (rate of generation of
goods or services).
(4) The
primary goal of a firm is to realize ever higher
net income now and in future. And (5) ignorance or disregard of distinction between
constraint factors and non-constraint factors inevitably leads to wrong decisions. Whereas the central idea in lean
production is identification and
removal of wastes (non value-adding activities), in TOC it is identification and removal of bottlenecks often through
purchase of additional
production capacity. Proposed by the Israeli-US physicist
business consultant Dr. Eliyahu Goldratt in his 1991 book 'The Goal' and
developed in his later
books 'Critical Chain' and 'Theory Of Constraints.'