Theory of Constraints was developed in the 1980s as an approach to optimize production processes. It assumes that the performance of a system is limited by at least one restriction. According to its founder, Goldratt, a chain is only as strong as its weakest link. Consequently, optimization efforts should be aimed at strengthening the weakest link in the chain in order to improve the result of the entire chain.
All restrictions on the performance of a system with regard to the achievement of its objectives are called constraints. These can be related to behavior, management, capacity, market or logistics. Every system and therefore every company has at least one such restriction that can be justified both externally (e.g. demand for a product) and internally (e.g. capacity of a machine).
According to Goldratt, a company's primary goal is simple: make money! This is expressed in his earnings driver model, which focuses on profit, return and liquidity. These are determined by the result driver variables throughput, inventory and operating costs. In order to optimize the result indicators, throughput is to be maximized and operating costs and inventories are to be minimized. Throughput is a priority for achieving corporate financial goals. The company must address those bottlenecks that prevent throughput from being maximized.
When interpreting the result driver model, the definition of the quantities used by Goldratt must be observed:
Throughput: The throughput describes the (monetary) performance that a company achieves through sales (products or services). For the calculation, the direct material costs, sales commissions, external transport costs and all other revenues that were not generated by the company are deducted from the sales.
Inventory: Inventory size refers to all of the funds that the company invests in items that are intended for sale. This includes physical stocks such as raw materials, work in progress or finished products. In a somewhat broader definition, all investments made by a company fall under the inventory - including buildings, office equipment, tools, etc. The inventory only includes the costs of externally procured goods, but not the added value generated by the company.
Operating Expenses: Operating costs include all means necessary to turn inventory into throughput. These include, for example, production wages, production overheads, inventories, depreciation and interest.
Die Identifikation und Bewertung von Engpässen erfolgt mit Hilfe des Throughput Accounting (TA), dass eine methodologische Ähnlichkeit mit dem Direct costing aufweist, wie die Abbildung zeigt. Die Zielsetzung ist jedoch eine andere: Das TA strebt die Erhöhung der Systemleistung und nicht die Verbesserung der Produktkalkulation an. Ein weiterer Unterschied liegt in der engeren Definition der variablen Kosten (je nach Definition fallen hierunter nur die Direct material costs oder es werden unterschiedliche Stufen der Variabilität unterschieden).
The Theory of Constraints is geared towards the short term. Since their roots are also in production, their relevance as a decision-making tool decreases with their importance within the value chain. In the German-speaking area it has received little attention. This is certainly due to the differentiation of German internal accounting and the similarity to (bottleneck-related or step-by-step) contribution margin accounting, which means that there seems to be no need for throughput accounting.