The Theory of Constraints (TOC) was developed by the Israeli physicist E. Goldratt in the 1970s. Initially, TOC was a concept used only in the production environment (production scheduling), but today examples of its applications can be found in distribution, procurement, and marketing, and thus in various areas of supply chain management.
According to the basic assumption of the theory of constraints, an enterprise (supply chain) is treated as a set of interconnected elements. Each element is dependent on another, and the operation of the entire enterprise (group of enterprises) depends on the joint efforts of all elements. In every system, one can also distinguish the weakest element – a constraint, which determines the efficiency of the entire system. The creators of the theory of constraints postulate that this constraint should be identified and then managed appropriately in order to improve the efficiency of the entire system.
A constraint in the sense of TOC is anything that limits the system’s ability to achieve its goal, which is profit maximization. Every enterprise has at least one constraint; if it were not so, companies would achieve unlimited profits.
The article comes from the magazine “Logistyka” 5/2005.