TOCSA Overview
TOC Southern Africa is an educational business consultancy. We disseminate and implement the Theory of Constraints. Our GOAL is to enable companies to improve their bottom line results through the implementation of the methodologies embodied in the Theory of Constraints. The company was established on 1 January 2000 at the request of Dr Eli Goldratt. TOC SA is the sole representative for Dr Goldratt’s company, Goldratt Marketing, for the entire Southern African region.
What is TOC
The Theory of constraints (TOC) is an overall management philosophy introduced by Eliyahu M. Goldratt in his 1984 book titled The Goal, that is geared to help organizations continually achieve their goals. Goldratt adopted the concept with his book Critical Chain, published 1997. The concept was extended to TOC with respectively titled publication in 1999
Key assumptions
The underlying premise of theory of constraints is that organizations can be measured and controlled by variations on three measures: throughput, operational expense, and inventory. Throughput is the rate at which the system generates money through sales. Inventory is all the money that the system has invested in purchasing things which it intends to sell. Operational expense is all the money the system spends in order to turn inventory into throughput.
Before the goal itself can be reached, necessary conditions must first be met. These typically include safety, quality, legal obligations, etc. For most businesses, the goal itself is to make money. However, for many organizations and non-profit businesses, making money is a necessary condition for pursuing the goal. Whether it is the goal or a necessary condition, understanding how to make sound financial decisions based on throughput, inventory, and operating expense is a critical requirement.
The five focusing steps
Theory of constraints is based on the premise that the rate of goal achievement by a goal-oriented system (i.e., the system’s throughput) is limited by at least one constraint. The argument by reductio ad absurdum is as follows: If there was nothing preventing a system from achieving higher throughput (i.e., more goal units in a unit of time), its throughput would be infinite — which is impossible in a real-life system. Only by increasing flow through the constraint can overall throughput be increased.
Assuming the goal of a system has been articulated and its measurements defined, the steps are:
1. Identify the system’s constraint(s) (that which prevents the organization from obtaining more of the goal in a unit of time)
2. Decide how to exploit the system’s constraint(s) (how to get the most out of the constraint)
3. Subordinate everything else to the above decision (align the whole system or organization to support the decision made above)
4. Elevate the system’s constraint(s) (make other major changes needed to increase the constraint’s capacity)
5. Warning! If in the previous steps a constraint has been broken, go back to step 1, but do not allow inertia to cause a system’s constraint.
The goal of a commercial organization is: “Make more money now and in the future”, and its measurements are given by throughput accounting as: throughput, inventory, and operating expenses. The five focusing steps aim to ensure ongoing improvement efforts are centered on the organization’s constraint(s). In the TOC literature, this is referred to as the process of ongoing improvement (POOGI). These focusing steps are the key steps to developing the specific applications mentioned below.
Dr Eliyahu M. Goldratt
Dr Eli Goldratt (March 31, 1947 – June 11, 2011) was an educator, author, scientist, philosopher, and business leader. But he was, first and foremost, a thinker who provoked others to think.
Avraham Y. Goldratt Institute (AGI)
Eli Goldratt was the founder of the Avraham Y. Goldratt Institute and was an internationally recognised leader in the development of new business management philosophies and systems. He developed a unique set of ‘Thinking Processes’ – a set of logical and systematic thinking methods designed to understand the true goal of an organisation, to identify and improve the root causes of problems, and to implement continuous improvement strategies that lead organisations to reach their goals.
Goldratt the Author
Eli Goldratt’s book ‘The Goal’ has been a best seller since 1984, and has sold more than 1,5 million copies. He is also the author of ‘It’s Not Luck’, the sequel to ‘The Goal’, ‘Critical Chain’, ‘The Haystack Syndrome’, ‘The Race’ and ‘What is this thing called the Theory of Constraints’.
His last book, ‘Isnt it obvious’, has just been released.
Goldratt the Educator
Eli Goldratt become a sought-after educator by many of the world’s largest corporations, including General Motors, Proctor & Gamble, AT&T, NV Philips and Boeing. He obtained his Bachelor of Science degree from Tel Aviv University and his Masters of Science, and Doctorate of Philosophy from Bar-Ilan University. In addition to his pioneering work in business management and education, he held patents in a number of areas ranging from medical devices to drip irrigation to temperature sensors. Also the founder of TOC for Education, a non-profit organization dedicated to bringing TOC ideals to teachers.
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Contact us to explore how an in-house workshop can take your organisation to the next level. Our TOC experts will help you configure an effective workshop design.
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TOC SA operates throughout SA