Types of constraints
/A constraint limits the output that an entity can produce. When viewing such constraints, the key issue is whether an expansion of the constraint could result in more sales. If so, proper management of the constraint can lead to more profits. Given the importance of the constraint concept, it is of great importance to understand the types of constraints to which a business may be subjected. For example, a machine that is only able to produce a certain amount of a crucial part will limit sales of the final products that incorporate that part.
Paradigm Constraint
When employees hold a belief that causes them to act in a certain way, this is called a paradigm constraint, and can impact a process to such an extent that the belief is considered a constraint. An example of such a constraint is the belief that the only good work station is one humming along at 100% of capacity, even though there is not enough demand to justify so much work. The result could be the divergence of resources away from the true constraint (perhaps a machine) resulting in suboptimal use of the actual constrained resource.
Physical Constraint
A machine that has a large amount of work-in-process in queue in front of it is obviously maxed out, and so could be a constraint.
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Policy Constraint
A policy constraint is a management-imposed guideline for how a process is to be conducted. For example, there may be a rule regarding the minimum batch size that should be run through a machine, or the economic order quantity to be ordered from a supplier, or the quantity of parts that should build up next to a production cell before it is transported to the next production cell. Unless carefully monitored, these policy constraints can interfere with the orderly flow of work through a business. Policy constraints are difficult to find, since you must track backwards to them by observing their effects on the business. It may be equally difficult to eliminate such a constraint, since it may have been used by employees for many years.
Raw Material Constraint
When there is not enough of a raw material available to meet all customer orders, the raw material is the constraint. This constraint is most likely to arise when there is excessive demand for a particular raw material, and where there are not enough substitutes available to replace the raw material.
Sales Department Constraint
When the sales process is complex, any step in the process that does not have sufficient resources can result in a reduced level of sales. For example, a shortage in sales engineers can result in too few product demonstrations, and therefore in too few sales being completed.
Marketplace Constraint
A company may have worked through all of its constraint issues, in which case obtaining more orders from the market is considered the constraint. This constraint can be overcome by offering better deals to customers in order to spur sales growth.
Example of a Paradigm Constraint
The owners of Industrial Landscaping perceive their company to be in the business of providing landscaping services solely to corporations. The number of local businesses has been declining for years, so the perceived target market of Industrial is shrinking. If the owners can get past the paradigm constraint of only seeing their market as businesses, they could reorient the company to offer the same services to individuals.
Example of a Policy Constraint
The constraint faced by High Noon Armaments is in the hiring of armorers for its production staff. The perception of company management is that the only qualified armorers are those with a certification from one of a few armorer programs in the country. This paradigm constraint can be broken by convincing management that people trained through an in-house apprenticeship program can be just as qualified, thereby increasing the number of skilled staff in the production area.
Parting Thoughts
Management may choose to have a constraint in a particular place within the company. This happens when the cost of increasing the selected constraint is so high that managing and working around this constraint is the most cost-effective way to run the business. For example, the cost of adding another paint booth may be so high that management would prefer to concentrate on managing every last minute of its time and outsourcing all remaining work.