Limitations of the Theory of Constraints

You can use the theory of constraints to analyze your business and identify possible weaknesses that might be causes your company to perform below optimum levels. Eliyahu Goldratt introduced the theory in his 1984 bestseller "The Goal" and subsequently published additional papers expanding the concept. While the theory can be a useful tool for improving business performance, you have to be aware of its limitations before implementing its recommended solutions.

The theory of constraints maintains that a few major constraints keep complex processes such as business functions from reaching optimized performance. Managers have to identify the constraints that affect their business and work to mitigate their impact or remove them. There is always one constraint that has the biggest effect. When a business deals with it, another constraint becomes the most important. Managers can reduce the effects of constraints as they identify them and use the theory of constraints to guide them in continuously improving company performance.

A key process in the theory of constraints is the identification of constraints that reduce performance. A major challenge involves how to identify those constraints. The theory might either work on a constraint that is in fact caused by another constraining factor, or it may focus on a constraint that is irrelevant to existing production bottlenecks. This limitation of the theory could encourage you to spend time and waste resources on problems that are not critical to the success of the company.

A second limitation of the theory of constraints is its lack of consideration of variable factors. Constraints such as demand for a product might vary independently from any action taken through implementation of the theory. If product demand is a temporary constraint and rises because of market dynamics, resources invested in increasing the demand might have been more beneficial in expanding production capacity. You have to use other data, such as market studies, to verify whether constraints targeted by the theory will remain fixed.

The theory of constraints works effectively to address the current time frame for a business. It looks at actual situations and therefore limits itself to short-term effects. To overcome this limitation, you have to examine the long-term effects of your work on constraints that the theory identifies. If the short-term effect remains valid over a longer time-frame, the strategy indicated by the theory may be valid. If the short-term effect doesn't last, or causes long-term deterioration in other business variables, you have to identify other constraints that, if reduced, result in long term benefits.