Critical Chain

Richard and Jim attend Johnny Fisher’s lecture on the Theory of Constraints, or TOC. Johnny notes previous fads in management, like Just-In-Time and TQM, noting that TOC is a new philosophy with new research methods and a variety of applications. Johnny defines good management as controlling cost and ensuring throughput, keeping cost at a minimum while providing a quality product or service. Using an analogy of a chain to represent a company, Johnny demonstrates how controlling cost, focusing on the “cost world,” measures the weight of each link in the chain, trying to make the whole chain lighter by reducing the weights of individual links. This focus makes each local improvement seem like an improvement to the overall operation. Johnny notes that the value of the chain lies in its strength, which is the concern of the “throughput world,” in which only improvements to the weakest link in the chain result in an overall improvement to the operation. This second perception is the premise of TOC, in which the weakest link, or biggest constraint, is strengthened to strengthen the chain. The steps of TOC are to identify the biggest constraint, decide how to exploit the constraint, subordinate all other processes to that decision, then elevate the constraint to increase total efficiency, with a fifth step of repeating the process on the next biggest constraint.