Constraint analysis definition
/What is Constraint Analysis?
Constraint analysis focuses on the bottlenecks within an organization. Under this viewpoint, a manager should only focus on maximizing the utilization of a bottleneck, since the bottleneck controls the overall profitability of the business. Focusing on any other aspect of the business has no impact on profits. This is an important concept, since bottlenecks can be found anywhere within (or even outside of) a business. For example, if sales require a high degree of technical knowledge and all salespeople are fully utilized, then a business will not achieve an incremental increase in sales unless it can somehow hire and train additional salespeople. Similarly, a company will not be able to produce any additional units of a widget if a key part is only available from one supplier, and that supplier is operating at its maximum capacity level.
Constraint Analysis Best Practices
The main point of constraint analysis is to maximize bottleneck utilization. This involves the use of several best practices, which are as follows:
Calculate current throughput. You should determine the maximum amount of throughput that can be processed through the bottleneck, which in turn maximizes profitability.
Note outsourcing opportunities. You should note any opportunities to outsource work away from the bottleneck, and whether this will result in increased overall profitability for the business.
Evaluate throughput expansions. You should identify every possible action that increases the throughput of a bottleneck, such as running extra shifts and overstaffing it, and provide an analysis of the financial impact of these actions.
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FAQs
Can Constraint Analysis be Applied Outside of Manufacturing?
Constraint analysis can be applied outside of manufacturing in sectors such as healthcare, finance, logistics, and service industries. In these environments, constraints may include staffing shortages, limited technology, or regulatory barriers. Identifying and addressing these constraints helps organizations improve service delivery, reduce delays, and enhance overall efficiency.