Gilmore: The results of many company initiatives and strategies illustrate that point.

Goldratt: Illustrate it beautifully.

Gilmore: It seems to me that originally the Theory of Constraints had a theme that for any system at a given point in time, there was a single constraint. Is that notion evolving?

Goldratt: It depends on how you define a system. For me, in most companies a system is a one-directional flow, and therefore in most companies you have only one constraint. In conglomerates, there can be more than one constraint but this is because there is more than one system.

But the fact that in a system there is one constraint that makes it simple.

Gilmore: I talk with lots of supply chain executives, and right now for many of them there is a strong focus in simplifying their supply chains…

Goldratt: Good grief! OK, there are two different definitions of complexity. The mere fact that both exist serve to confuse everything.

One definition is that the more data elements needed to define the system, the more complex it is. So, if you can describe the system in five pages, that’s a simple system. If you have to take a hundred pages, that’s complex. In this regard every company and process is amazingly complex. Even in a small company, how many pages would it take to describe how to make very part, how to work with suppliers, manage channels, etc.

So, if it is enormously complex and we try to simplify it, there’s not much point. It would be a million complexities minus two or three. We haven’t done a thing.

But there is another definition of complexity, which is the degrees of freedom of the system. If the system has even five degrees of freedom, that is very complex to manage. If we have only one degree of freedom, that is so easy.

The problem is that people look at simplifying the system not reducing its degrees of freedom, but by the first definition, which is a total waste of time.

Gilmore: Let’s get back to a supply chain example.

Goldratt: In the past decade, all we hear about is supply chain, supply chain, supply chain. Before that, there wasn’t a peep about it. So let’s analyze this for a second. Consider that product lifecycles are shrinking rapidly in almost every area, but especially electronics. As product lifecycles shrink, we hit the first huge barrier, because the lifecycle of products in the market is shorter than the time to develop the product.

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Article key words: Theory of Constraints, supply chain strategy, supply chain excellence