Theory of Constraints


A company was loosing customers. Rather than embark on one of the flavor-of-the- month productivity initiatives, and mobilize the whole company, they decided to use a more surgical approach, The Theory of Constraints. Per this approach they asked their employees, “What UnDesirable Effects, UDE’s, are causing us to loose money?”

UDE Input:

  1. Our employees are incompetent,
  2. Our products are very difficult to build,
  3. We have too much fallout,
  4. It’s impossible to meet customer delivery dates,
  5. We need more workers,
  6. Our manufacturing lead times are too long, and
  7. Our prices are too high.

Next, we link the above UDE’s (dashed boxes) with other legitimizing, real world, requirements (solid boxes), in a cause-effect-cause…… chain back to the root cause, “We hire temporary workers”. This diagram, called a Current Reality Tree, CRT, is shown below.

NOTE: We read the CRT from the bottom: IF (box @ tail of arrow) Then (box @ tip of arrow). Multiple arrows going into one box are OR’d, e.g. IF (A) OR IF (B) OR IF (C) Then (D)……

Arrows that have a “doughnut” around them are AND’d, e.g. IF (A) AND IF (B) AND IF (C) Then (D)...

Current Reality Tree

One of the most important benefits of the CRT is its ability not only to define the root cause of our problem but more importantly, to unearth the conflict that has prevented us from solving this problem in the first place. From this CRT we can see that the company is caught in a self-feeding downward spiral of two conflicting requirements, the need for more workers on one hand and cost containment on the other (i.e. not able hire expensive, “more competent” full time employees).

Next, we start to show how we might solve this conflict, or CLOUD.
As mentioned in the above CRT description, we see that the root cause of our problem is our temporary employee hiring policy. What is particularly frightening is that we are in a “death spiral” or loop that will make things go from bad to worse. We are caught in a conflict, or “CLOUD”, where on the one hand we need more employees to build product, and on the other hand, because of cost pressures, we can only hire “low cost”, and inefficient temporary workers.

Below we show how to build:

  1. A generic cloud, and
  2. The cloud for our problem. A couple of possible solutions (in red) to our dilemma are also shown between Wants, and Needs.