Are These Constraints Holding Your Business Back?

As the Theory of Constraints states, every system has a constraint that dictates the overall output of the system. They prevent the business from performing at higher levels. Most businesses are not aware of their constraints and spend significant amounts of vital resources to improve their processes but do not achieve the desired results. This is because the constraint was not identified and managed. As a result, the output is lower than the maximum output of the constraint, and as the constraint controls the overall output, the entire plant’s output suffers as a result. Most people assume constraints to be a physical thing, like machinery, or employee strength. This could not be farther from the truth. As any practitioner of the theory of constraints consulting in India will tell you, constraints come in many sizes and shapes. Primarily:

•   Physical/Resource constraints

•   Market constraints

•   Policy constraints

•   Dummy constraints

•   Material constraints

Physical/Resource Constraint: This is the constraint that we are most familiar with or associate with a constraint. It is the most heavily loaded resource in the system that is unable to meet market demand. It could be a lack of equipment, labour shortages or other physical factors. Physical constraints can also be temporary as in peak time resource constraints. This happens when the shortage in meeting market demand occurs during specific times. One easy way to solve this issue is by partly outsourcing one’s work or increasing the overtime. In the same manner seasonal shortages that occur during certain times of the year.

Market constraint: This exists when market demand is lower than the output capacity of each resource, which thus prevents the organisation from reaching its goal. How to identify a market constraint? Simple. Check if the market demand increases the system's output. If the answer is yes, then a market constraint exists. To combat this a business must focus on gaining the competitive edge in the market, advertisements and more.

Policy Constraints: While physical and market constraints are relatively easy to identify, policy constraints are significantly harder to detect and combat. These are policies that are adopted by a company that in turn prevents the organisation from performing at its best.

Dummy Constraints: These are constraints that exist because of a low-value resource cost like a shortage of phone lines, computers etc.

Material Constraints: This happens when a business has less raw material than required to fulfil market demand. Another material constraint element is where one receives defective raw material. They can also occur due to poor planning and a sudden rise in demand.

Identifying a constraint requires expertise and experience, which is why it is best to reach out to firms that practise theory of constraints consulting in India to get the best results.