Understanding Constraints and Bottlenecks

Nov 15, 2024

Lecture Notes: Constraints, Bottlenecks, and Theory of Constraints

Introduction

  • Constraints: A resource whose capacity is less than or equal to the demand for that resource.
    • Example: Pandemic mask demand leading to a constraint.
  • Types of Constraints:
    • Demand Constraint: High demand with inadequate production capacity.
    • Supply Constraint: Insufficient supply affecting production (e.g., car microchip shortage).
    • Process Constraint (Throughput): Maximum output achievable within a production process.

Bottlenecks

  • Definition: The most limiting constraint on a system.
  • Process Bottleneck: Related to the theory of constraints, a process bottleneck occurs at the point of longest time or slowest production rate.
    • Example: If three departments have varying times, the one with the longest time is the bottleneck.
    • Shifting Bottlenecks: Improvements in one part can shift the bottleneck elsewhere.

Identifying Bottlenecks

  1. Time Involvement: Identify which task takes the longest.
  2. Types of Bottlenecks:
    • Regulatory Bottleneck: Government-driven, affecting import/export.
    • Technology Bottleneck: Problems arising from software/hardware failures.
    • Labor Bottleneck: Lack of workforce affecting production.
    • Financial Bottleneck: Insufficient capital to increase capacity.
    • Physical Bottleneck: Environment-related issues (e.g., traffic, weather).
    • Decision-Making Bottleneck: Delays due to indecision.

Theory of Constraints

  • Five-Step Process to overcome bottlenecks:
    1. Identify the System's Constraint: Determine where the bottleneck exists.
    2. Exploit the System's Constraint: Fully utilize existing capacity.
    3. Subordinate Everything to the System's Constraint: Cross-functional resource management and communication.
    4. Elevate the System's Constraint: Collaborate to increase capacity and address the bottleneck.
    5. Avoid Inertia: Continuously improve to prevent new constraints from forming.

Key Takeaways

  • Constraints limit capacity relative to demand, and can be demand, supply, or process-related.
  • Bottlenecks are the most limiting constraints, often marked by the longest time or slowest production rate.
  • The Theory of Constraints offers a structured approach to identifying and overcoming bottlenecks, focusing on continuous improvement.