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.

Related Courses

Constraint Management
New Manager Guidebook