The evolution of a management philosophy: The theory of constraints
Kevin J. Watson a,*, John H. Blackstone b,1, Stanley C. Gardiner c,2
University of New Orleans, College of Business Administration, New Orleans, LA 70148, United States b University of Georgia, Terry College of Business, Athens, GA 30601,United States c California State University at Chico, College of Business, Chico, CA 95929, United States Available online 12 June 2006
Abstract In 2004, the Theory of Constraints celebrated its Silver Anniversary. In twenty-ﬁve years, what started out as a scheduling software has evolved into a management philosophy with practices and principles spanning a multitude of operations managementsubdisciplines. As the Theory of Constraints has grown, so has its acceptance by both practitioners and academicians. At this point in its development, as it transitions from niche to mainstream, it is important to review what has been accomplished and what deﬁciencies remain so that both the promise and problems impeding greater acceptance can be examined. To that end, we review the evolution ofprincipal TOC concepts and practices in an objective fashion. # 2006 Elsevier B.V. All rights reserved.
Keywords: Theory of constraints; Accounting/operations interface; Manufacturing control systems; Operations strategy
1. Introduction In 1979, development of the Theory of Constraints (TOC) management philosophy began with the introduction of Optimized Production Timetables scheduling software(Goldratt and Cox, 1984). TOC has evolved from this simple production scheduling software program into a suite of integrated management tools encompassing three interrelated areas: logistics/ production, performance measurement, and problem solving/thinking tools (Spencer and Cox, 1995). Due to its simple yet robust methodology, application of TOC
* Corresponding author. Tel.: +1 504 280 3121.E-mail addresses: KWatson@uno.edu (K.J. Watson), JBlackst@terry.uga.edu (J.H. Blackstone), SGardiner@csuchico.edu (S.C. Gardiner). 1 Tel.: +1 706 542 3718. 2 Tel.: +1 530 898 6747. 0272-6963/$ – see front matter # 2006 Elsevier B.V. All rights reserved. doi:10.1016/j.jom.2006.04.004
techniques have been discussed in the academic literature and popular press across a variety of operationsmanagement subdisciplines, including: project management (Goldratt, 1997; Leach, 1999; Umble and Umble, 2000; Steyn, 2001; Cohen et al., 2004), retailing (Gardiner, 1993; Goldratt, 1994), supply chain management (Rahman, 2002; Watson and Polito, 2003; Simatupang et al., 2004), process improvement (Schragenheim and Ronen, 1991; Atwater and Chakravorty, 1995; Gattiker and Boyd, 1999), and in a variety ofproduction environments (Jacobs, 1983; Koziol, 1988; Lambrecht and Segaert, 1990; Raban and Nagel, 1991). Studies reporting anecdotal evidence from early adopters suggested that TOC techniques could result in increased output while decreasing both inventory and cycle time (Aggarwal, 1985; Johnson, 1986; Koziol, 1988). Rigorous academic testing has validated those early ﬁndings revealing thatmanufacturing systems employing TOC techniques exceed the performance of
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those using Manufacturing Resource Planning (MRP), Lean Manufacturing, Agile Manufacturing, and Just-inTime (JIT) (Ramsay et al., 1990; Fogarty et al., 1991; Cook, 1994; Holt, 1999; Mabin and Balderstone, 2000). The results of these studies indicatethat TOC systems produce greater levels of output while reducing inventory, manufacturing lead time, and the standard deviation of cycle time. TOC techniques have been applied at a number of Fortune 500 companies; 3M, Amazon, Boeing, Delta Airlines, Ford Motor Company, General Electric, General Motors, and Lucent Technologies have publicly disclosed signiﬁcant improvements achieved through...