LOVELY

PFOFESSIONAL
UNIVERSITY
TERM PAPER:MPOB
TOPIC:CONSTRAINT
MANAGEMENT
SUBMITTED TO:
SUBMITTED BY:
MS.DEEPALI SHARMA
PRIYANKA SHARDA
 CLAS
S:MBA{1ST SEM}

Acknowledgement
Making this term paper was a fantastic
journey. Let me begin my acknowledgement
by thanking my teacher Ms. Deepali
Sharma for providing suggestions on how to
proceed with the term paper and clearing the
doubts whenever they accumulated in my
mind. She has been a guideline throughout
the process. I am extremely thankful to her
as she has been a source of inspiration for
me.
I am equally thankful to my friends who have
been very helping and supportive throughout
the process. I also take this opportunity to
thank my roommates who were very co-
operative and also helped me to complete
this term paper.
At last a big thank you to LOVELY
PROFESSIONAL UNIVERSITY for making me a
small part of it. I was blessed as after
coming here only I was able to understand
the main aim of my life. I am highly obliged
to be a part of India’s largest university.

Contents
 Management

 Constraint

 Types of constraint

 Types of internal constraint

 Constraint management

 Theory of constraint management

 Putting theory into practice to make organization more productive

 The five focusing steps in constraint management

 Buffer in constraint management

 Toc tools
  Theory of constraint management and thinking process

 What to change

 What to change to

 How to cause the change

 Overcoming resistance to change

 Toc centre using THEORY OF CONSTRAINT

 Dynamic constraint management

 Systems and methods for consistency in constraint management

 Constraint management system

 Benefits of constraint management

 Conclusion

INTROdution
Management:
Management is simply the act of getting people together
to accomplish desired goals and objectives. Management comprises planning, organizing,
staffing, leading or directing, and controlling an organization(a group of one or more
people or entities) or efforts for the purpose of accomplishing a goal. Resourcing
encompasses the deployment and manipulation of human resources, financial resources,
technological resources and natural resources.

Management can also refer to the person or people who perform the act(s) of
management.
Constraint:
Constraints are the limitations that are outside the
control of the project team and need to be managed. They are not necessarily problems and
they are not necessarily risks. However the manager should be aware of the constraints
because they refer to limitation that the organization must execute within. Data constraint,
for instance, imply that certain events must occur by certain dates. Resources are almost
always a constraint since they are not available in an unlimited supply. for instance, once
your project is set, it becomes a constraint what the project must live within.

Various types of constraints:

There are many ways that a constraint can
show up, but the core principle within TOC is that there are not tens or hundreds of
constraints. There is at least one or at most a few in any given system.
Constraints can be internal or external.

An internal constraint is in evidence when market demands more

from the system that it can deliver. If this is the case then the focus of the organization
should be on discovering the constraint and following the five steps to open it. An external
exists when the system can produce more than the market can bear. If this is case then the
market should focus on the mechanism to create the demand for its product.

Types of internal constraint:

1) Equipments : the way the equipment is currently used limits the ability of the system to
produce more goods.

2) People: lack of skilled people limit the system

3) Policy: a written or unwritten policy that prevents from making more.

Constraint is used as a focusing mechanism for the management of

the system.

Constraint is a rule that is used for optimization purposes. There are five
types of constraint, these are:

• A not null.

• A unique constraint.

• A primary key constraint.

• A foreign key constraint.

• A check constraint.

 A null not constraint is a rule that prevents null values from

being entered into one or more columns of the table.
 MONEY CONSTRAINT NOT NULL

 A unique constraint is a rule that prevents the duplicate

values in one or more columns of the table.

 A primary key constraint is a rule that shows the
relationship between the tables.

 A foreign key constraint develops relationship between and

within the table.
 • A check constraint is a rule that specifies the values allowed
in one or more columns of the table.

A check constraint

Constraint management: it is a process methodology that is

especially useful for planning, organizing, evaluating and controlling complex systems.CM
cuts through departments, viewing the entire process of interdependent parts with a focus
on increasing throughputs, decreasing operating expenses, and decreasing inventory.

Human resources are very important for enterprise growth. This

becomes increasingly important the higher up in the organization one gets. Thus, the
general manager will be the key person, ensures that the staff gets the right incentives, and
maintain adequate controls. He will also make sure that complacency in work performance
does not spread throughout the organization.
 The main employee problem relates to skill and commitment. This
problem often starts with recruitment. Thus, constraint management becomes an
important for an enterprise to grow as through CM only they can learn how to identify and
select the employees they require. Systems for controlling theft and encouraging
commitment are also required and this can be achieved through proper management i.e
constraint management.

Theory of constraint
management{toc}:
It is an overall management philosophy
introduced by Dr. ELIYAHU M.GOLDRATT in 1984. The TOC process seeks to identify
the constraint and restructure the rest of the organization around it through the use of
FIVE FOCUSSING STEPS.

The underlying assumption of the theory is that organization can be measured and
controlled by three factors: throughput, operating expense and inventory. Throughput is
the money generated through sales. Operating expense is the money that goes into the
system. Inventory is the money that system invests in order to ensure the sales.
Putting theory into practice to make
organization more productive

A simple model showing the practice of TOC

The five focusing steps in constraint
management:
TOC is based on the premise that rate of goal achievement is
based on at least one constraining process. Only by increasing flow through constraint can
overall throughput can be increased.

Assuming the goals of the organization have been articulated(e.g “making

money now and in future”)the steps are:

1) Identify the constraint(the resource or policy that prevents the organization to

achieve its goal)

2) Decide how to exploit the constraint(make sure that constraint time is not wasted
doing the things that should not done)

3) Subordinate all other processes to above decision(align the whole system or

organization to support the decision made above)

4) Elevate the constraint(if required or possible; permanently increase the capacity of

constraint; “buy more”)

5) If, as a result of these steps constraint has moved, return to step 1. Don’t let inertia
become the constraint.

The five focusing steps aim to ensure the ongoing

improvement are centered around the organizations constraint. In the TOC
literature it referred to as “process of ongoing improvement(POOGI). These are
called the 5 Steps of TOC and provide the foundation for many of TOC’s generic
solutions, which include, the management of processes, inventory, supply chains,
product development and projects (single and multiple), personnel, and decision-
making. Although the 5 Steps of TOC can be applied to every process at every level
in an organization, which is how TOC is frequently often implemented, the true
power - and results - comes from: Understanding the interdependencies between and
across processes that contribute to delivering a product or service, Understanding
the impact that those interdependencies and normal variability have on their
combined, overall performance, and Appropriately buffering for interdependencies
and normal variability so that that performance can be predictably and consistently
high.
 Understanding these three points allows the 5 Steps of TOC to be
much more than simply another methodology for managing processes, but in fact,
to be a methodology for consistently and significantly increasing the
overall performance of systems.

The 5 Steps of TOC implemented in this context enables an

organization to create a stable and reliable value delivery system from which its leadership
can quickly respond to any opportunity that presents itself. The TOC Thinking Processes
enable it to develop strategies to seize those opportunities in a way that result in significant
strategic advantage and value to all stakeholders. An organization using TOC is only
limited by how big it dares to think.
Buffer in constraint management:
Buffers are used throughout the theory of
constraint. They appear as a part of EXPLOIT AND SUBORDINATE steps of five
focusing steps. Buffers are placed before the key constraint thus ensuring that constraint is
not always starved. Buffers used in this way protect the constraint and should allow for
normal variation of processing time and the occasional upset before the constraint.

Buffers can be a bank of physical objects before a work center,

waiting to be processed by that work center. Buffers can also be represented by time, as in
the time before work reaches the constraint. There should always be enough (but not
excessive) work in the time queue before the constraint.

Buffers are not the small queue of work that sits before every work
center in KANBAN system. The assumption in THEORY OF CONSTRAINT is that with
one constraint in the system, all other parts of the system have sufficient capacity to keep
up with the work at the constraint. In a balanced line, as dictated by KANBAN, when one
work center goes down, then the entire system must wait until that work center is restored.
In a TOC system, the only situation where work is in danger is if the constraint is unable to
process (either due to malfunction, sickness or a "hole" in the buffer).

OUTLINE OF BUFFER MANAGEMENT

Toc tools:
TOC uses a long list of techniques to meet its ends. Goldratt offers five focusing steps to
locate bottlenecks, and an equal number of thinking processes, along with the Evaporating
Clouds, Reality Trees and a number of other tools. A systems approach characterizes
Goldratt's style. The five focusing steps, for example, start with identifying the system's
constraint. Managers are urged to decide how to exploit that constraint, to subordinate
their other decisions to that goal, to elevate or add capacity to the constraint, and finally to
start over again.

The thinking process tools are especially effective for improving problem-solving
techniques that is usually employed, according to McMullen. They are based on cause-and-
effect diagrams, complex flow charts, some of which, TOC orthodoxy maintains, can only
be properly prepared by a certified Jonah.

While occasionally arcane, the TOC tools are well worth learning for any manager.
McMullen believes they will eventually become standard business tools: "Goldratt has
basically articulated a structured way to work through problems on any level

LEARNING LESSONS

Enterpreneurs interested in learning more about TOC have a myriad of sources, ranging
from The Goal to consulting contracts that may run to two years and six figures. Seminars
that teach TOC in detail typically cost $500 to $1,000 per person per day.

Originally presented in a manufacturing context, TOC has since been applied to service
industries and other areas such as marketing. It is recommended as a tool for daily
problem-solving as well as strategic planning. Still, says Covington, "TOC is not a panacea
for everything. It's not going to solve cultural problems within an organization."

That is a significant limitation, given the often-patriarchal, control-oriented cultures found

in many entrepreneurial firms. Entrepreneurs in any culture will also need accurate insight
into their businesses to uncover the appropriate bottlenecks. And McMullen cautions that
introducing TOC into a company is likely to result in considerable disruption of established
practices.

Indeed, says Stillahn, constraint management has affected everything from where his
printing presses are located to what they're running. Products he once thought were stars
are now considered losers, and vice versa. But he plans to push ahead against his
constraints.

"In every business, there's a bottleneck," says Stillahn. "If you don't relieve that
bottleneck, you don't do any better anywhere else."
Theory of constraint management
and thinking process:
Theory of constraint applies the cause-and-
effect thinking process used in hard science to understand and improve all systems, but
particularly organization. The Jonah program is for individual and management teams
that want accelerate the improvement process in the area of responsibility and throughout
their organization. It is also for those who want to accelerate improvement process in
subject matter or specific area of interest.

The TOC process used to improve the health of the

organization(or solve any problem)are almost identical; however the terminology has
changed to better suit the language of problem solving in the organization. In TOC process
is described via the use of three question:

1) What to change?

2) What to change to?

3) How to cause the change?

What to change:
From the list of observable symptoms cause- and-effect
is to identify the underlying common cause, the core problem of all of the systems. In
organizations, however, the core problem is

Inevitably an unresolved conflict that keeps the organization trapped and/or distracted in a
constant tug-of-war (management versus market, short term versus long-term, centralize
versus decentralize, process versus results). This conflict is called a Core Conflict. Due to
the devastating effects caused by Core Conflicts, it’s common for organizations to create
policies, measurements, and behaviors in attempts to treat those negative effects (often
referred to as band-aid fixes) that, when treating the Core
Conflict, must be removed, modified, or replaced.

What to change to:

By challenging the logical assumptions behind the Core
Conflict, a solution to the Core Conflict is identified. This is only the starting point for the
development of a complete solution – a strategy – for resolving all of the initial symptoms,
and many others, once and for all. As in the design of a treatment plan above, the strategy
must also include the changes that must be made alongside the solution to the Core Conflict
to ensure that the solution works and that the organization is restored to its
“Best possible health.” Respectively, these are often the changes to the policies,
measurements, and behaviors identified in what to change? As well as the organization’s
strategic objectives. Lastly, the strategy is not complete until all potential negative side-
effects of the strategy have been identified, and the means for preventing or mitigating
them become key elements of the strategy. Trimming these negatives side-effects allows an
organization to intentionally and systematically create strategies that are a win for all those
affected.

How to cause the change:

Taking into consideration the unique culture which
exists in every organization, a plan is developed to transition an organization from where it
is today to realizing the strategy. In other words, a plan for successfully implementing the
strategy is created, including what actions must be taken, by whom and when. Because
resistance to change can block even the most perfectly laid strategies
and plans, building active consensus and collaboration, or buy-in is crucial.

Overcoming resistance to change:

TOC has developed a process based on the psychology of change that
acknowledges and systematically addresses the questions people intuitively ask when
evaluating a change.
a. Is the right problem being addressed - mine?
b. Is the general direction that the solution is heading a good one?
c. Will the solution really work to solve the problems and what’s in it for me?
d. What could go wrong? Who might get hurt?
e. How the heck are we going to implement this thing?
f. Are we really up to this? Do we have the leadership and the

Commitments to pull this change off successfully?

If these questions aren’t answered frankly and

effectively with both the people who must implement the change and those who will be
affected by it, the proposed change will not have the buy-in and support to succeed. Like
most changes, no matter how great the idea or tremendous the value, the strategy and
tactics are doomed from the outset. The three questions, WHAT TO CHANGE? WHAT
TO CHANGE TO?HOW TO CUASE THE CHANGES?, provide the framework for
what’s called the TOC Thinking Processes. The Thinking Processes are a set of tools and
processes that allows an individual or group to solve a problem and/or develop an
integrated strategy using the rigor and logic of cause-and-effect, beginning with the
symptoms and ending with a detailed action plan that coordinates the activities of all those
involved in implementing the solution.
 As a result of applying TOC’s Thinking Processes
to countless organizations over three decades, generic TOC solutions have emerged that
have applicability across all organizations, both for-profit or not-for-profit. To this day
these applications continue to evolve, resulting in more and more significant and
sustainable overall and bottom line performance improvements where Implemented.

TOC CENTRE USING THEORY OF

CONSTRAINT:
THE TOC centre uses powerful THEORY OF CONSTRAINT to accelerate process
concept in manufacturing and project operations. Theory of constraint makes it possible
for companies to improve their operations far faster and to greater heights than any other
approach in market today. A myriad of factors divide the needs of the company to take
dramatic steps to improve their operations.
• Global competition that is driving down price and lead times.
• Need to develop more products, faster to keep pace in market.
• Growing sale values that strain capacity and jeopardize service levels.
• Escalating material and labor cost that trim margins.
• Ever increasing shareholder expectation for profit and sales growth.

TOC offers a way forward for manufacturing and project operations copying with
these and other market forces. To be successful more and more companies have
recognized that they must “do more with less”. The TOC CENTRE has a 15 year
track record of helping companies to accelerate operational performance in
manufacturing and project operations, quickly and without increasing labor cost of
investment. The TOC CENTRE philosophy is simple “YOU GET THE RESULTS
OR YOU DON’T PAY”. The majority of our projects are conducted on results
basis, with the lions share our fees as bonuses payable only when they have gained
the targeted results. So company large and small can capitalize on TOC and our
expertise without jeopardizing cash flow or profits.

TOC CENTRE has worked with more than 100 companies using
THEORY OF CONSTRAINT making large leaps in operational performances in:

Manufacturing operations: TOC clients typically realize “increase of at least 25% in

manufacturing throughput within three months” without adding labor or capital.
Applying TOC typically results in increasing on –time deliveries to near 100%, and
to reducing manufacturing lead times by 20 -50%.

Project operations: TOC clients in project operations like new product

development, construction, IT, and engineered –to-order products achieve similar
results with output increasing between 25% and 100%, on time completion moving
95+% and lead times collapsing by 20%to 40%.
 Finance and accounting: The solution for finance and accounting is to apply holistic
thinking to the finance application. This has been termed the throughput accounting.
Throughput accounting suggests that one examine the impact of investments and
operational changes in terms of the impact on the throughput of the business. It is an
alternative to cost accounting.

The primary measures for a TOC view of finance and accounting are: Throughput
(T), Operating Expense (OE) and Investment (I). Throughput is calculated from
Sales (S) - Totally Variable Cost (TVC). Totally Variable Cost usually considers the
cost of raw materials that go into creating the item sold.

Marketing and sales: While originally focused on manufacturing and logistics, TOC has
expanded lately into sales management and marketing. Its role is explicitly acknowledged
in the field of sales process engineering. For effective sales management one can apply
Drum Buffer Rope to the sales process similar to the way it is applied to operations (see Re
engineering the Sales Process book reference below). This technique is appropriate when
your constraint is in the sales process itself or you just want an effective sales management
technique and includes the topics of funnel management and conversion rates.

Using the proven focusing techniques of THEORY OF CONSTRAINT

enable us to deliver such dramatic process improvement gains in the fraction of time,
typically, within 3-4 months, of other methodology such as six sigma and lean.

THE TOC-LEAN
Dynamic constraint management:
Constraints can be managed dynamically with the ALTER TABLE
clause. The sub-clauses that can be used are:

• ADD CONSTRAINT. This clause adds a named constraint to a table.

• DROP CONSTRAINT. This clause removes a named constraint from a table.
Note: In solid DB®, when the keyword CONSTRAINT is used, the constraint name is
mandatory.
• CHECK. This constraint allows you to specify rules to your tables or table columns.
Each rule is a condition that must not be false for any row in the table on which it is
defined. Otherwise the table cannot be updated.

The rules are Boolean expressions. The rule can check, for example, a range
of values, equity, or the rule can be a simple comparison. You can use several
checks in one statement. The following expressions and operators are available:

Table 1. Expressions and operators

Expression Explanation

< less than

> greater than

= equal to

<= less than or equal to

>= greater than or equal to

<> not equal to

AND Conjunction

ANY in the list that follows or in the table specified

BETWEEN Between

IN in the list that follows or in the table specified

MAX maximum value

MIN minimum value

NOT Negation

OR Disjunction

XOR exclusive or

• UNIQUE. The UNIQUE constraint requires that no two rows in a table contain
the same value in a given column or list of columns. You can create a unique
 constraint at either the table level or the column level. Note: primary keys
contain the unique constraint.

• FOREIGN KEY. The FOREIGN KEY constraint requires that each value in the
foreign key column must have a matching value in the referenced table.
Note: solid DB automatically generates names for unnamed constraints. If you want to
view the names, use the command sold d -x hidden names.

For constraint syntax information and examples, see the CREATE TABLE and ALTER
TABLE sections in solid DB SQL syntax.

SYSTEMS AND METHODS FOR

CONSISTENCY IN CONSTRAINT
MANAGENENT:
Consistency constraints are implemented in database systems to ensure that the stored data
is "correct" with respect to the real world reflected by the data, such that applications and
users of the data are shielded from incorrect data. For example, a database constraint
might be that an employee cannot be paid more than the employee's manager, and any
attempt to enter into the database a salary for the employee that is higher than the salary
of the employee's manager would be forbidden by the database constraint manager by, e.g.,
aborting the transaction that caused the constraint violation.

Moreover, when a database system includes plural data sources, constraints might exist for
ensuring that the data in the sources is consistent across the sources. To support
consistency constraint management, the sources might notify a constraint manager every
time an update has taken place, so that the constraint manager can access the source and
check the new data for consistency. If a violation occurs, the constraint manager typically
has authority to write a correction to the affected source, to remedy the constraint
violation. Or, the constraint manager might from time to time monitor the sources for
constraint violations by evaluating an entire data source for consistency on a periodic basis.
In any case, the present invention makes the critical observation that in the case of
database middleware, i.e., systems that respond to external user-generated queries for
information by accessing multiple data sources, the middleware might access many diverse
types of data sources. Some of the sources might notify the middleware of updates, some
might permit the middleware to only monitor the sources for updates, and some sources
(e.g., Internet-based sources) might not support either notification or monitoring and in
any case might not grant middleware the privilege to repair inconsistencies at all, even
when the inconsistencies are identified, thus depriving the middleware of the authority to
enforce constraints at the source level. The present invention makes the further critical
observation that partially inconsistent data might nonetheless be useful to an application,
as when, for example, residence data violating a zip code constraint but nonetheless
properly listing telephone numbers is supplied to a telemarketer. Accordingly, the problem
addressed by the present invention is how to manage consistency constraints in middleware
that uses various types of data sources to respond to queries from various different
users/applications, some of which might have constraint compliance requirements that are
different than other users/applications.

Constraint management system:

Constraint management system is a management consulting & technology that increases
cash flow of the firm also by increasing capacity, optimizing inventory and improving
product availability.

The approach is driven by the THEORY OF CONSTRAINT application for operations

management and supply chain replenishment.

A temporal constraint management system (TCMS) is a temporal network together with

algorithms for managing the constraints in that network over time. This paper presents a
practical TCMS, called MYSYSTEM, that efficiently handles the propagation of the kinds
of temporal constraints commonly found in real-time applications, while providing
constant-time access to “all-pairs, shortest-path” information that is extremely useful in
many applications. The temporal network in MYSYSTEM includes special time-points for
dealing with the passage of time and eliminating the need for certain common forms of
constraint propagation. The constraint propagation algorithm in MYSYSTEM maintains a
restricted set of entries in the associated all-pairs, shortest-path matrix by incrementally
propagating changes to the network either from adding a new constraint or strengthening,
weakening or deleting an existing constraint. The paper presents empirical evidence to
support the claim that MYSYSTEM is scalable to real-time planning, scheduling and
acting applications.
 OUT CONSTRAINT MANAGEMENT

Benefits of constraint management:

The basic promise of constraint management is to identify and help remove obstacles to
any business's objective. Typically, that goal is to increase profits, and TOC identifies three
ways to achieve it: increase throughput, cut inventory or lower operating expenses.

Throughput is a key concept in constraint theory, much of which is devoted to finding and
dealing with bottlenecks. TOC throughput differs from other throughput concepts,
however. Rather than, say, the number of units that pass through a manufacturing stage,
throughput in TOC terms refers to finished products that generate sales. It is also
described as related to cash flow, similar to gross margin in distribution companies.

Constraints may be found internally, often in the form of company policies, or externally,
which generally means the market. Market limitations may, for instance, arise from the
presence of competitors. Internal limits may result from physical production ceilings, as in
the case of West Tape, or from less tangible factors such as corporate policies.

Of the two, internal constraints are often the most easily dealt with and produce the most
rapid and marked results, says independent educator and management consultant Thomas
McMullen. He cites one case of a company whose management used TOC to identify a
policy against overseas expansion as a limiting factor. Merely deciding to enter foreign
markets helped the company significantly, he says.

Often, companies achieve major benefits simply by changing outdated performance

measurement methods. Says McMullen, "There have been many cases where companies
used TOC thinking to identify one or two policy constraints and with a stroke of a pen,
really turned things around."

Constraint management covers a variety of issues, often relying on vivid imagery. The
Evaporating Clouds, for instance, are used to settle disputes, which Goldratt likens to
clouds covering the real motivations behind the participants in the conflict.

Conclusion:
In recent years a growing number of firms have reported dramatic results from an
operation's improvement technique called Constraint Management (CM). For example,
Ford Motor Company's Electronics division attributes reductions in manufacturing cycle
time as high as 89 per cent, 76 per cent fewer product returns, reductions in inventory of 49
per cent and 43 per cent lower freight costs to its implementation of CM. Others such as
GM, Grand Rapids Spring and Wire, Valmont/ALS, and Kent Moore Cabinets report
similar results. Constraint Management has also been referred to as synchronized
manufacturing; the Drum, Buffer, Rope technique; OPT (Optimized Production
Technology); the Theory of Constraints, and to explore its potential impact on logistics
managers.

Constraints are bound to occur in any organization. The organization establishes many
goals for its organization, but there are many obstacles, called as constraint, that prevent it
from achieving those goals. Since the organizations are mostly concerned with making huge
profits and these constraints become a kind of threat to the organization

Thus, it becomes very necessary for an organization to follow an effective way of

management to overcome those constraint in the organization. This effective management
is called as constraint management. Thus constraint management can be a way to manage
those obstacles and helps the organization to achieve its’ goals. With the perfect constraint
management the organization is able to perform and gain profits from all aspects.
References:
• Websites:
• http://www.cwi.in/
• http://ibm.in/
• http://faircom.com/
• http://managementparadise.com/
online journal:
• International journal of zogistic
management