Theory of Constraints (TOC) is an overall management philosophy introduced by Dr. Eliyahu M. Goldratt in his 1984 book titled The Goal, that is geared to help organizations continually achieve their goal.[1] The title comes from the contention that any manageable system is limited in achieving more of its goal by a very small number of constraints, and that there is always at least one constraint. The TOC process seeks to identify the constraint and restructure the rest of the organization around it, through the use of the Five Focusing Steps.

The underlying assumption of Theory of Constraints is that organizations can be measured and controlled by variations on three measures: throughput, operating expense, and inventory. Throughput is money (or goal units) generated through sales. Operating expense is money that goes into the system to ensure its operation on an ongoing basis. Inventory is money the system invests in order to sell its goods and services.

The five focusing steps
Theory of Constraints is based on the premise that the rate of goal achievement is limited by at least one constraining process. Only by increasing flow through the constraint can overall throughput be increased. 

Assuming the goal of the organization has been articulated (e.g., "Make money now and in the future") the steps are:

1. Identify the constraint (the resource or policy that prevents the organization from obtaining more of the goal)
2. Decide how to exploit the constraint (make sure the constraint's time is not wasted doing things that it should not do)
3. Subordinate all other processes to above decision (align the whole system or organization to support the decision made above)
4. Elevate the constraint (if required or possible, permanently increase capacity of the constraint; "buy more")
5. If, as a result of these steps, the constraint has moved, return to Step 1. Don't let inertia become the constraint.

The five focusing steps aim to ensure ongoing improvement efforts are centered around the organization's constraints. In the TOC literature, this is referred to as the "Process of Ongoing Improvement" (POOGI).

These focusing steps are the key steps to developing the specific applications mentioned below.

Constraints
A constraint is anything that prevents the system from achieving more of its goal. There are many ways that constraints can show up, but a core principle within TOC is that there are not tens or hundreds of constraints. There is at least one and at most a few in any given system. Constraints can be internal or external to the system. An internal constraint is in evidence when the market demands more from the system than it can deliver. If this is the case, then the focus of the organization should be on discovering that constraint and following the five focusing steps to open it up (and potentially remove it). An external constraint exists when the system can produce more than the market will bear. If this is the case, then the organization should focus on mechanisms to create more demand for its products or services

Buffers
Buffers are used throughout Theory of Constraints. They appear as part of the EXPLOIT and SUBORDINATE steps of the five focusing steps. Buffers are placed before the key constraint, thus ensuring that the constraint is never starved. Buffers used in this way protect the constraint and should allow for normal variation of processing time and the occasional upset (Murphy) before the constraint.

Buffers can be a bank of physical objects before a work center, waiting to be processed by that work center. Buffers can also be represented by time, as in the time before work reaches the constraint. There should always be enough (but not excessive) work in the time queue before the constraint.

Buffers are not the small queue of work that sits before every work center in a Kanban system. The assumption in Theory of Constraints is that with one constraint in the system, all other parts of the system have sufficient capacity to keep up with the work at the constraint. In a balanced line, as dictated by Kanban, when one work center goes down, then the entire system must wait until that work center is restored. In a TOC system, the only situation where work is in danger is if the constraint is unable to process (either due to malfunction, sickness or a "hole" in the buffer).

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