Theory of Constraints

A Tool for Project Selection and Continuous Improvement

Across industries and disciplines, one challenge remains constant: how to prioritize the right improvement projects to drive meaningful, measurable progress. Whether you work in continuous improvement, reliability, quality, or manufacturing engineering, you have more ideas and opportunities than time or resources to pursue them. This is where the Theory of Constraints (TOC) shines. Developed by Dr. Eliyahu Goldratt, TOC offers a focused methodology for identifying the best opportunities for improvement, allocating resources wisely, and sustaining continuous advancement.

Understanding the Theory of Constraints

At its heart, the Theory of Constraints is based on a fundamental principle: 

Every system has at least one constraint that governs its performance.

A constraint is any resource, policy, or practice that limits a system from achieving its highest potential.

Rather than trying to optimize every part of a process equally, TOC teaches us to focus first on the constraint. Improving the constraint—even incrementally—produces outsized improvements in the overall system. Improvements elsewhere, while well-intentioned, often lead to local efficiencies that have little or no impact on overall throughput, quality, or reliability.

TOC and Smart Project Selection

Choosing which improvement projects to pursue is one of the most important decisions professionals make. With hundreds of possibilities, how do you ensure you’re spending your time and budget where it matters most?

TOC suggests starting by identifying your constraint and focusing improvement efforts there. Projects that alleviate or better manage the constraint have the highest potential return. Projects that don’t impact the constraint—even if they achieve local improvements—might add complexity without advancing system goals.

For example, improving the efficiency of a final inspection station is beneficial. But if the primary constraint is a bottleneck earlier in assembly, the inspection improvements won’t increase total throughput. Instead, focusing on the assembly bottleneck directly addresses the system’s limiting factor.

The Five Focusing Steps of TOC

TOC offers a repeatable framework for continuous improvement called the “Five Focusing Steps”:

1. Identify the Constraint: Find the process step, policy, resource, or issue that limits the system’s performance.
2. Exploit the Constraint: Maximize the performance of the constraint without major investments—improve scheduling, eliminate downtime, prioritize the highest value work.
3. Subordinate Everything Else: Align all other processes and resources to support the constraint’s maximum performance.
4. Elevate the Constraint: If the constraint is still limiting after exploitation, make targeted investments to increase its capacity or capability.
5. Repeat the Process: Once the current constraint is resolved, a new one will emerge. Begin the process again.

This cyclical approach ensures that continuous improvement efforts are always targeted at the system’s most critical needs.

A Practical Example Across Fields

Imagine a quality engineering team facing long delays in releasing final product certifications. An investigation shows that while several steps could be made more efficient, the true constraint is the manual data verification process. By focusing their efforts there, the team automates some checks, cross-trains additional staff for peak periods, and restructures the workflow to prioritize time-critical certifications.

As a result, certification lead times drop by 30%, unlocking faster shipments and higher customer satisfaction. If the team had focused instead on non-constraint areas—like formatting final reports—the gains would have been far less significant.

Similarly, a maintenance engineering group might discover that work order approvals—not technician availability—are the bottleneck limiting preventive maintenance completion. Addressing this policy constraint could dramatically improve asset performance without hiring additional personnel.

Why TOC is Essential for Today’s Professionals

In many organizations, “continuous improvement” becomes synonymous with “continuous busyness.” Without a strategic framework, teams can fall into the trap of chasing symptoms instead of causes.

TOC provides a system-level lens, ensuring that improvements are meaningful, not just measurable. It also helps prioritize resources when budgets, headcounts, and time are constrained—which is to say, always.

When used for project selection, TOC naturally leads to smarter investment decisions. If a capital expense or process redesign can be tied directly to relieving the system constraint, it becomes easier to quantify benefits and build a persuasive business case.

Enabling TOC with Modern Tools

The rise of real-time monitoring, advanced analytics, and digital management systems has made applying TOC even more powerful. Data visualization can help identify true constraints based on evidence rather than intuition. Predictive analytics can show when and where new constraints are likely to appear, allowing proactive action.

Many continuous improvement and reliability software platforms now include modules or features inspired by TOC thinking—such as constraint dashboards, bottleneck analysis, and throughput-based key performance indicators.

Conclusion: Focusing Where It Counts

The Theory of Constraints reminds us that improvement efforts should not be scattered, but concentrated. Whether your goal is better throughput, higher quality, greater reliability, or all of the above, TOC helps you direct your energy where it will make the biggest difference.

In a world where change is constant and resources are always limited, mastering the ability to choose the right projects is a competitive advantage. The Theory of Constraints offers a practical, repeatable framework to do exactly that—helping continuous improvement, reliability, quality, and manufacturing engineering professionals deliver results that matter.

Ray Harkins is the General Manager of Lexington Technologies in Lexington, North Carolina. He earned his Master of Science from Rochester Institute of Technology and his Master of Business Administration from Youngstown State University. He also teaches manufacturing and business-related skills such as Quality Engineering Statistics, Reliability Engineering Statistics, Failure Modes and Effects Analysis (FMEA), and Root Cause Analysis and the 8D Corrective Action Process through the online learning platform, Udemy. He can be reached via LinkedIn at linkedin.com/in/ray-harkins or by email at the.mfg.acad@gmail.com.