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Have you identified the right system constraint?
I have often heard from supply chain professionals that they identified the system constraint, improved its performance but the business performance didn’t improve. Further discussions revealed that the constraint identified by them was only a local constraint or just an obstacle and not the overall system constraint.
I understand that the process of identifying the system constraint may not be easy. That’s why it’s important to carry out a quick validation whether the identified constraint is indeed the system constraint.
When we improve performance of the identified constraint by a small amount, say 1%, what’s the impact on the overall business performance? We should see a multiplier effect. For example, if the goal is to make more profits now as well as in the future, a 1% improvement in constraint should result in say 5-10% improvement in profits. If not, let’s revisit the constraint identification process.
This validation can be done either in actual practice or in a logical analysis of the impact. Logical impact analysis, however, requires a decent bit of TOC understanding and practice.