Theory of Constraints (TOC), in a nutshell, is anything in the system that slows down or blocks the flow of money, generated through sales, coming to the company.  The theory of constraint process identifies the constraints and restructures the rest of the organization around it.

TOC can clearly be observed in a manufacturing plant. One example would be where material flows in a sequence, such as in an assembly line. The primary work is done in a straight sequence of events, where one work must be finished before next work can start. The constraint in this process is the slowest operation. More complicated processes have multiple lines, which then splits into many assemblies. Most manufactured parts are used in multiple assemblies and nearly all assemblies use multiple parts. Customized devices, such as computers, are good examples. One constraint in these kind of processes is synchronizing the lines in a way that no lines starves from getting material on time. Another constraint is that one line might steel material designated for another line.

For non-material systems, one can draw the flow of work or the flow of processes and arrive at similar basic structures. A project, for example is a sequence of work, culminating in a delivered project.

Some key constraints in an engineering project are

•    Equipment

The way equipment is currently used could limit the ability of the system to produce more. The old equipment with lack of new technology could also slow down the process.

•    People

People can be the most critical constraint in a project. Most importantly, lack of skilled people in the system can stop productivity or linger the process so bad that the company misses the opportunity to enter into the market to sale.

•    Policy

A written or unwritten policy could prevent the system from making more.

By definition, the process of TOC involves five steps:

1.    Identify the constraint

2.    Decide how to Exploit the constraint for making sure the constraint time is not wasted doing other things that should not do

3.    Align the entire organization to support decision made above (Subordinate)

4.    If required and possible, permanently increase capacity of the constraint; "buy more".

5.    If, as a result of these steps, the constraint has moved, return to Step 1.

The constraints should be improved, replaced or removed to increase throughput, which the money is coming into the company. One of techniques used to improve the constraint is to apply buffers. Buffers are placed before the key constraint, thus ensuring that the constraint is never starved. Buffers can 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. The idea here in TOC is to make sure system moves on with constraint. The buffers are considered to be Exploit and Subordinate of TOC process above.