"Notes on the Theory of Constraints" - An Executive Summary

(Translation of the executive summary in the book "Seiyaku Riron ni tuite no Noto [Notes on the Theory of Constraints]" by E. Kobayashi, published by the Rassel Inc.)

(Please feel free to use this summary in your company as part of support data to help enhance interest in the implementation of the Theory of Constraints.)

The Theory of Constraints (hereafter referred to as TOC) is said to be a production theory superior to Just-in-Time (hereafter referred to as JIT) production method created in Japan. Some companies in not only USA but also in some other countries, are reportedly said to have shifted from a JIT environment that they constructed with time and energy to that of TOC. An American actually wrote to me that a production system using the Theory of Constraints (TOC, CM or Constraint Management) allows us to realize even better results in 1/4 the time of JIT.

Even in USA, because it is such an effective production system to improve business performance, TOC supporters speaking enthusiastically of the theory have adverse effects - what they say is incredible because it is too good to be true. For example, an American scholar is said to have stated, after viewing a presentation by a well-seasoned TOC practitioner, that TOC was nothing but snake oil, and called the businessman an untrustworthy "evangelist."

Although it is said that many companies implemented TOC since the beginning of the 1990's, they have been said to be reluctant to publicly open their success for fear that other companies might follow suit. Judging from contributions to CMISIG, the CM mailing list of APICS (an educational organization for US production and resource management), companies that introduced TOC are not regionally limited to the USA but are clearly located in England, Germany, the Netherlands, Italy, Spain and other European nations, Australia, New Zealand, South Africa, Central and South America, and Southeast Asian countries. However, almost little of TOC is known to Japan, a nation of production.

The origin of TOC is said to be traced back to software (OPT: Optimized Production Technology) developed by an Israeli physicist, Dr. Eliyahu.M.Goldrattt for production scheduling at a plant. Dr. Goldrattt was asked by his relatives to develop this software at the end of 1974 and succeeded in increasing production 40-50% without adding equipment or labor. This was when he was still a student. After participating in the Middle East War, he graduated from university at the age of 30 in 1978, when he established Creative Output, Inc., urged by the CDC Company which was aware of the superiority of OPT. His first project in USA was a job in the GE Defense System Project Department, where he succeeded in increasing throughput by 30% and decreasing inventory to half. Creative Output, Inc., became a high-growth company.

In 1984, Dr. Goldrattt published an industry novel, "The Goal" (revised in 1986), in which he made public the key concepts of OPT. This book was translated into more than ten languages including Chinese, and became a bestseller, which sold as many as 2,500,000 copies. However, there is no Japanese version as of yet. (Note: the Diamond Company finally published the Japanese translation in May 2001.) "The Goal" is an industry novel in which the main character, Alex Rogo, struggles after being told that the plant under his supervision would be closed in 3 months unless its performance improves. The story is that Alex learned under the instruction of an Israeli physicist named Jonah the concepts of TOC such as the Five-Step Focusing Process, Throughput, Inventory, Operating Expenses, etc., to apply to the plant under his supervision, and improved performance in only 3 months. What should be stressed here is that the main character of the novel, Alex, improved the performance of his plant only in 3 months, and saved it from closure. Many copies of this book were sold, and then a shocking problem happened to Dr. Goldratt. Companies that bought this book for only $15 and applied the concepts in the novel achieved better results than those that purchased and introduced his expensive software with spending additional money for educating employees. The same phenomenon occurred to many companies that practiced the concepts in the book. From this, one may conclude that, with explicit awareness the power of constraint resources existing in the production system, this might mean that, under the initiative of top management, one can start TOC implementation on a trial-and-error basis without thinking too hard, but with a good understanding of the basic principles, keeping them in mind, and one is able to expect to see some good results in a short period of time.

Common effects generally seen in the success stories in which TOC was implemented are as follows:

Increase in Throughput (sales minus real variable costs such as raw material costs, etc.),
Reduction in lead time,
Improvements in quality/reduction in rework,
Improvement in delivery performance,
Reduction in inventory,
Reduction in cycle time,
Reduced expediting,
Increase in capital turnover (from raw material purchases to recovery of cash from customers)
Customer credibility increase, through a decrease in customer inventory as order lot size for deliveries to customers get smaller, and so forth,

These effects fortify competitiveness, and consequently bottom line improvement is made. In many cases people have observed that good signs of performance improvement takes place between 90 and 120 days after the beginning of TOC implementation.

Mabin and Balderstone undertook a comprehensive survey on the effects of TOC implementation by using more than 100 cases and derived the following figures:

Lead-Times: Mean reduction 70%
Cycle-Times: Mean reduction 65%
Due-Date-Performance: Mean Improvement 44%
Inventory Level: Mean reduction 49%
Revenue/Throughput: Mean Increase 63%

TOC has been implemented not only by profit making organizations but also by non-profit making organizations, too. These organizations include companies of various sizes and trades, from super large corporations such as General Motors and Boeing to small donut shops or airline companies, telephone companies, and even include such non-profit making organizations as the US Air Force for rationalization of logistics and improvement of medical services to name a unique one.

Goods and services are made in a production system that is composed of a series of steps using different types of resources. Steps and operations must be completed in a specified sequence to manufacture a certain product. The amount of output for the entire system is limited by a particular resource that has the least capacity. This resource is called as "system's constraint". While the traditional approach to production management views each production task as an independent activity in which performance measurements such as utilization rate or work efficiency is applied to each resource to individually manage the resource activity, TOC considers the whole production procedures as a system, and by taking into consideration the fact that any system cannot produce more than the capability of the constraint, seeks to understand how to utilize the constraint to maximize the throughput (sales minus real variable costs ).

From the TOC point of view, cost performance evaluations based on traditional Cost Accounting Systems and/or Industrial Engineering (IE) are thought to have basically the characteristics of sub-optimization, and the world where these cost performance evaluations are dominant is called the "cost world". In contrast to this, the world of TOC is called to be the "throughput world," claiming that corporate performance can be improved in a short period of time by shifting from the "cost world" to the "throughput world."

Thus, TOC takes the standpoint that all production procedures form a system, and decisions in TOC are made by explicitly understanding the role the constraint performs in a production system. TOC supporters criticize not only the traditional Cost Accounting System, ABC, and IE, but also production management systems such as MRP II and JIT, with the view that they are not explicitly aware of "constraint" in the system.

TOC consists of three major branches. The first is a Logistics Branch that includes the scheduling process; the second branch is a Performance System structured around the three important concepts, namely, Throughput, Inventory and Operating Expenses; and the third is a Problem Solving/Thinking Process that is said to have been developed by Dr. Goldratt. These three branches constitute as a whole what is called the Theory of Constraints and are closely interrelated to each other. However, as the word "Branch" indicates, each covers an entirely different aspect of TOC.

The Logistics Branch consists of Five-Step Focusing Process, Scheduling Process, and VAT analysis; the Scheduling Process consists of Drum Buffer Rope System (DBR) and Buffer Management. The Performance System has three sub-branches, namely, 1) Throughput, Inventory and Operating Expenses; the basic concepts of Throughput Accounting, 2) Product Mix Decision and 3) Throughput-dollar-days and Inventory-dollar-days. The Problem Solving/Thinking Process consists of the ECE diagram (effect-cause-effect diagram) and its components (Negative Branch, Current Reality Tree, Future reality Tree, Prerequisite Tree and Transition Tree), ECE Audit, and Cloud Diagram.

In TOC, right decisions are to be arrived at by following the steps below:

By using the tools in the Problem Solving/Thinking Process Branch, find core causes of undesirable effects in the shop floor and, by removing them, undertake to solve the problems completely to eliminate undesired effects observed in the shop floor.
By using the concepts in the Performance System Branch, find out the optimum product mix that maximizes throughput, and, also, change the Performance Measures so that everyday decisions made by managers can be consistently directed to increase net profit and improve ROI and cash flow. These are the measures of performance of the company as a whole.
By using the Logistics Branch, try to realize a process that is capable of continuously improving corporate performance through the Five-Step Focusing Process, and at the same time, by using Drum Buffer Rope System properly, to come up with a production schedule that maximizes throughput by realizing sales of optimum product mix.

In TOC, constraints are defined as anything that prevents a production system from achieving its goal, that is, to make more money now and in the future. They are not only physical constraints such as limited availability of capacity at a machine center or limited availability of materials, but also policies, management methods, and procedures. In production environments, people are apt to think of physical constraints such as equipment and machines, manpower availability including skills as constraints. However, the "Market" itself can also be a constraint. TOC considers anything that limits increase in throughput as a constraint.

TOC clearly defines the goal of a company as " To make money now and in the future." Although it is not explicitly stated, the TOC definition of a company goal is made on the assumption that it is plainly natural for a company to act as a good citizen of society. Then, one may as well consider that the goal of a profit-making entity would be boiled down to the achievement of a good performance and therefore, the goal, that is, to make money now and in the future, is set as the basis on which the Theory of Constraints is constructed. Without this clearly stated and defined goal of a company, TOC cannot exist.

With the background as above, TOC introduced the concept of "Throughput Accounting," which is structured using the following three concepts; Throughput, Inventory, and Operating Expenses:

Throughput (T): The amount of money a company generates through sales, and not production, that is, Revenue minus real variable costs. [Throughput rate: The amount of money per unit time a company generates through sales. The maximum rate is limited to the amount of throughput generated by the capacity constrained resource in the production system]
Inventory (I): Those items purchased for resale and includes finished goods, work in process and raw materials. Inventory is always valued at purchased price and includes no value-added costs, as opposed to the traditional cost accounting practice of adding direct labor and allocating overhead as work in process progresses through the production process.
Operating Expense (OE): The quantity of money spent by the firm to convert inventory into sales in a specific time period. Direct labor cost is included in OE, as it is a fixed amount that does not vary as volume varies (in short time planning period)..

In other words, "throughput" is "revenue minus real variable costs ". Therefore, those costs, such as raw material costs, sales commissions, piecework payments for temporary workers, and transportation costs that vary as quantity varies are included in calculating throughput. However, if you consider throughput only for a plant, then it can be defined as "revenue minus raw material costs".

"Inventory" consists of finished products, WIP, and raw materials. Direct labor costs and indirect costs are not distributed among products because it is difficult to allocate "direct labor costs" correctly. Also, the allocation of indirect costs is bound to become arbitrary, causing the so-called "product costs" thus calculated to become distorted. Product costs calculated with cost allocations cannot be used for decision-making on optimum product mix, as has been well known for a long time,

"Operating Expenses" are all costs other than real variable costs such as raw materials. OE includes remuneration for board members, wages including direct labor costs for regular employees listed on the payroll, welfare expenses, rent, utilities, consumable expenses (lubricating oils, glue, synthetic products for finishes, etc.), equipment costs, all costs that accrue in indirect departments, interest, and all other expenses. These expenses are considered to be the amount of money that a company spends in converting inventory to revenue in a specified period of time. And, these costs are thought to be constant regardless of an increase or decrease in sales quantity (at least for the short term). Thus, TOC considers "Profit = Throughput - Operating Expenses."

*Variable overhead, both production and nonproduction
(Source: The Theory of Constraints and Its Implications for Management Accounting, by Eric Noreen, et al., The North River Press)

The above table shows the difference between Direct Costing and Throughput Accounting. As seen in this table, contribution margin in the sense of accounting is defined as below:

Contribution margin = Revenue minus direct material costs minus direct labor costs minus direct sales expenses minus variable overhead

Kaikeigaku Daijiten, an Accounting Dictionary (edited by Tetsuya Morita, Kiyoshi Okamoto and Tadashi Nakamura, published by Chuo Keizaisha) notes that marginal profit (= contribution margin) can provide a set of effective data for deciding product combination policies, sales channels/ promotion policies and various plans such as produce-in-house or outsourcing. By using this concept one can more objectively analyze profitability by comparing profitability by product group or sales district (p. 295). One criticism on direct costing from the standpoint of TOC is that direct costing suggests to subtract direct labor costs and variable indirect costs to arrive at contribution margin. Another is that when processing time of products at the system's constraint differ with each other (and this is the most common situation), the rates of contribution margin generation per unit time at the constraint by product is not at all taken into consideration in profitability comparison. Assuming that, even from the standpoint of direct costing, it is now decided not to subtract direct labor costs and variable indirect costs, then contribution margin will be expressed as follows, and now it is the same as Throughput:

Contribution margin = Revenue - direct material costs - real variable costs such as sales direct
expenses
= Throughput

Because processing time at the constraint normally differs by product, in order to compare profitability by product, it is necessary to compare throughput rates by product to correctly make decisions on product mix. Thus, the dimension for comparison should the throughput rate by product at the constraint resource.

However, contribution margin obtained based on the concept of direct costing is calculated without explicitly taking constraint in the system into consideration. Therefore, TOC criticizes this point and says that the statement "marginal profit (= contribution margin) can provide a set of effective data for deciding product combination policies, sales channels/ promotion policies and various plans such as produce-in-house or outsourcing, because it can be more objectively analyzed by comparing relative profitability by product group or sales district" is wrong.

Let's think about this point by using a numerical example shown in the following table. Now, assume that people agreed that in calculating contribution margins direct labor costs and variable indirect costs are not to be subtracted. In the table, there are two products, Product A, Product B, and their unit prices and throughput (note that throughput = contribution margin in this example) are as shown in the table (unit: dollar).

These products both require processing at the constraint resource in the production system. Processing time at the constraint resource is 10 hours for Product A, and 1 hour for Product B. In this case, which product is more profitable? Judging from the values of contribution margin, Product A is clearly more profitable as it is twice as much profitable as Product B.

In Throughput Accounting, profitability judgment is done by comparing the magnitude of throughput per unit time at the constraint by product (referred to as throughput rate). If you compare the profitability of Product A and Product B using the throughput rates, then it is now seen that Product B is 5 times more profitable than Product A. And if you accept this judgment and sell products by giving priority to Product B, then you will get a bigger throughput.

The above idea was not invented by Dr. Goldratt but has been known for many years. For example, Dr. Senjyu and Dr. Fushimi wrote exactly the same thing in their book 30-40 years ago ("Keizaisei Kougaku no Kiso [Basics of Economic Engineering], JMAM, pp. 45-46, 116-118). The rate stated in the book is identical to the throughput rate of TOC. One of the messages we can derive from their book is that, when one is going to make a decision on, say, investment, one should make one's decision based only on variable elements; the same as in TOC.

Conflicts of limited production resources and raw materials among products occur in the production system, which will consequently necessitate priority controls, and therefore TOC claims that a method that does not take into consideration the interactions among products usually will not lead to making the correct decisions.

In TOC implementation, it is intended to continuously repeat the Five-Step Focusing Process shown below and, by doing so continuously increase throughput.

Step 1 Identify the System Constraint
Step 2 Decide how to exploit the System Constraint
Step 3 Subordinate All Else to the Constraint of the System
Step 4 Elevate the Constraint of the System
Step 5 If in Step 4 the constraint is Broken, Go to Step 1
As seen above, "Throughput Accounting " is constructed by using three concepts: Throughput (T), Inventory ( I ), and Operating Expenses (OE). TOC has three ways to improve business performance, that is:

Increase T.
Decrease I.
Decrease OE.

However, TOC has a basic philosophy for managing the improvement of performance where people should try to improve performance by increasing T and decreasing I, and keeping OE the same. This philosophy seems to be rooted in the valuable experience gained in US from BPR in 1980's. In order to decrease OE, it is necessary to achieve Kaizen, that is, truly effective cost reductions through the Five-Step Focusing Process, TQM, etc. In order to do this, it is indispensable to have employees participate actively in the initiatives. A dilemma arises when one tries to convert local improvements thus obtained into bottom-line results. One has to lay off people in the department that have improved the most. In order to avoid this dilemma, it is absolutely better to increase T and decrease I, and not to try to reduce OE to achieve improvements.

If the goal of a company is "to make money now and in the future," a set of local performance measurements must be prepared and made available to managers with which managers can make everyday decisions that contribute to improvements and enhancements in net profit, ROI and cash flow; the overall performance measures as a company.

The followings are some examples of performance measures used in TOC:

Throughput = revenue minus raw material costs,
Inventory,
Operation expenses,
Net profit = throughput - operating expenses,
ROI = net profit/inventory,
Inventory turnover = throughput/inventory,
Productivity = throughput/operating expenses,
Throughput per employee = throughput/number of employees,
Throughput per hour for constraint resources,
Actual hours run divided by hours available at constraint
Operating expenses recovery rate = (monthly operating expenses - cumulative throughput to date) divided by monthly operating expenses
Arrival of materials at the strategic buffer at a designated time (due date performance from upstream)
Arrival of materials at other buffers and other control points
Throughput-dollar-days
Inventory-dollar-days

In TOC, work on the shop floor is executed keeping in mind that throughput is limited by the constraint in the production system. Specifically, it uses a method called Drum Buffer Rope (DBR). The "Drum" means the pace at which processing is done at constraint resources, and the "Rope" plays the role of communicating the Drum pace to the gating operation and it is at this pace that raw materials are to be released. There are two kinds of buffers; one is "a kind of inventory buffer (or more precisely time buffer)" that is placed immediately before the constraint resource. This buffer is set in order to avoid stoppage of operations by raw material starvation due to system's instability (referred to as "statistical fluctuations" in TOC); and the other is a "space buffer" that is placed between the constraint resource and the immediately following resource in order to avoid stoppage of operations at the constraint resource (referred to as blockage) due to stoppages at the next process. If this is likened to a march, the pace of the slowest member (constraint resource) becomes the fastest marching speed of the troop as a whole. It is therefore necessary to keep him walking at his pace to achieve the fastest speed as the troop. He must never be allowed to stop for his own reasons nor for reasons made by soldiers before or after him. Under the circumstances, it is not necessary to say that protective maintenance at the constraint resource is very important.

Throughput of a production system is influenced by lot size and the number of setups, too. Processing time and number of setups must be decided in such a way that delivery lead time expected by customers and the market are met. In scheduling the drum (constraint) the TOC way, the processing time necessary to process optimum product mix required by the market is deducted from the total available hours at the constraint first, and then the remaining available hours are allocated to setups, with the number of setups to be set to the maximum number that is possible by making use of the remaining constraint hours. On the other hand, for non-constraint resources, the number of setups is maximized to the extent that they will not become a constraint, and processing batches are to be minimized. Also, the transfer batch is not automatically made identical to the processing batch, but made as small as possible, for, by doing so, lead-time from raw material release to shipment is shortened.

In TOC, upstream activities before the constraint resource has characteristics of pull system and downstream after the constraint resource has the characteristics of push system.

In TOC, non-constraint resources have idle capacity by definition and, therefore, non-constraint resources shall not be operated full time in the working hours. In TOC, it is thought to be unnecessary to give work schedules to non-constraint resources. What is expected for non-constraints to do is to process jobs flowing from upstream steadily and transfer jobs to the next process as quickly as possible. Therefore, performance of resources, especially that of non-constraint resources, must not be measured by traditional utilization rates and/or work efficiency.

TOC sees production organization as a system in which "products" and the "process" interact with each other, which allows production organization to be classified into product production structure categories referred to as a general "logical product structure" of three types: V, A, and T (V-A-T analysis). Depending on the logical product structure, the locations of control point will be different.

In constraint management, the following six locations in the production system are controlled to manage the production process:

Constraint resource
Diverging points, if any
Converging points, if any
Gating process
Assembly
Shipping

In order to identify constraint resource in a production system, information on labor and machinery loads in MRP II reports can be useful. Or more simply, by walking around shop floor to find where piles of inventory are. When you try to find constraint in the shop floor, managers in charge of shop floor operations and/or those in charge of producing master production schedule can also be good sources of getting clues to locate the constraint. Also, a list of candidates for capacity increase, if available, will be a useful source of information. As constraint resources change as TOC implementation proceeds, their selection at the initial stage may not need to be correct.

It is possible that, at Step 3 of the Five-Step Focusing Process, TOC implementation can be setback. "To subordinate all the rest to the constraint of the system," means to place all other activities under the constraint. Conventional ways of doing things must be drastically changed. For example, one must be sure not to evaluate performance of non-constraint resources by work efficiency or utilization rate. Through that process, three obstacles must be overcome:

Productivity measurement standards used in IE,
Traditional cost accounting system that has a long history, and
Human relations system.

These are very firmly established traditional management policies and work practices on shop floor, all of which are based on the concept of not viewing the whole system as mutually interacting activities. It is necessary for all those concerned to discard them and make decisions and evaluations according to TOC performance measures. Therefore, top-down education and implementation is essential.

The most important key to the success of TOC implementation is education of the management. Education throughout the entire corporate organization and change of management philosophy are necessary to implement TOC. First of all, it is necessary to educate controllers and personnel who are responsible for gains and losses of each function of the firm, and then, educate personnel thoroughly down through each level.

Positive results can be obtained in as short a period of time as a few months after the start of implementation of TOC. TOC implementation to an entire plant may be completed in 1 or 2 years.

In TOC, following Synchronous Management Principles are used:
(Source: "Synchronous Management" by Srikanth and Umble.)

Principle 1: Do not focus on balancing capacities, focus on synchronizing the flow.
Principle 1a: Focus on the flow of work and not the efficiency of individual tasks.
Principle 2: The marginal value of time at a bottleneck resource is equal to the throughput rate of the products processed by the bottleneck.
Principle 2a: The marginal value of a unit of constrained material is equal to the purchased price of the constrained material plus the throughput value of the finished products requiring this material.
Principle 2b: The marginal value of a sales order in a constrained market is equal to the throughput value of that order.
Principle 3: The marginal value of time at a non-bottleneck resource is negligible
Principle 3a: The marginal value of a unit of non-constrained material is its purchased price.
Principle 3b: The marginal value of a sales order in a non-constrained market is minimal.
Principle 4: The level of utilization of a non-bottleneck resource is controlled by the constraints of the system.
Principle 4a: The level of utilization of a non-constrained material is determined by the constraints of the system.
Principle 5: Resources must be utilized, not simply activated.
Principle 5a: Materials must be utilized, not simply consumed.
Principle 6: The transfer batch need not, and many times should not, be equal to the process batch.
Principle 7: A process batch may be variable both along its route and over time.

Many of the above principles are identical to those of the linear programming. Therefore, Synchronous Management Principles may be easy to understand for those who know the concepts of linear programming.

JIT is a production system of which the Japanese are proud. Therefore, criticism as seen from TOC is interesting to Japanese people. Criticism as seen from TOC is shown in the following table:

Criticism of JIT Compared with TOC

Umble and Srikanth remarked that the JIT system has at least 4 limitations as follows:
(See "Synchronous Management", Chapter 7, Vol. 1)

Limited applicability
Effect of disruptions to the flow
Implementation requirements
Unfocused process of improvement

Limited applicability
The implementation of JIT logical system is essentially restricted to repetitive industries. It is not appropriate to implement a JIT system in either continuous-flow (process industry) environments or in plants that do not produce relatively large quantities of standardized products (job shop).
Effect of disruptions to the flow
In a JIT/kanban system, workstations do not work independently and at their own pace. Each station is a link in a logistical chain. Whenever one work station experiences a disruption significant enough to cause a work stoppage such as unavailability of required materials, defective materials, or a machine malfunction or breakdown, the entire product flow is in jeopardy.
Implementation requirements
In order to successfully implement a JIT logistical system, a number of significant changes must occur in the manufacturing environment and management culture. Experience indicates that the length of time necessary to implement a working JIT system is generally several years (average: 7 years). This is a verytrying time, since the implementation process is very disruptive to normal operations, and requires both financial staying power and great patience on the part of management.
Unfocused process of improvement
The JIT approach to attacking waste and supporting the process of continuous improvement is essentially unfocused. The basic JIT approach to improving the process is to wait until a problem occurs and disrupts the system. When a problem occurs, this presents the opportunity to improve the system by taking corrective action on the resource that caused the disruption. However, it is not known whether the problem causing the disruption to the product flow has occurred at a true bottleneck or capacity constraint resource. The disruption can be the result of normal variability at a non-bottleneck resource on non-CCR. There is no guarantee that limited labor and capital resources are being used most effectively to increase throughput and reduce inventory and operating expenses. Managers in a JIT environment are unable to apply Synchronous Management Principles 2 and 3 effectively.

(Principle 2: The marginal value of time at a bottleneck resource is equal to the throughput rate of the products processed by the bottleneck. Principle 3: The marginal value of time at a non-bottleneck resource is negligible.)

The points stated above can be summarized as follows:

JIT does not recognize explicitly the existence of constraints in the production system, and, because JIT is a pull system, the drum is set at assembly, and other resources are subordinated to it. JIT being as this, MPS, the base of production, is to be made without due considerations to the "Constraints". Also, JIT does not meet Synchronous Management Principles 2 and 3. Judging from the JIT standpoint, because JIT theoretically considers all resources are to be balanced where products flow like a river at the speed of tact time, it is natural that there is no concept of "Constraint" exists in JIT. However, whether or not MPS in JIT corresponds to maximum throughput is not unclear.

In this executive summary, I tried to outline TOC, and I hope you are able to graspthe general idea on what TOC is. I would like to end my presentation by saying "To the extent of my knowledge on TOC, it is a production system that the Japanese manufacturers at least should try to thoroughly study and evaluate its implications to them."