Constraints
Constraints in business refer to limitations or restrictions that affect the operations, decision-making, and growth of a company. These can include financial constraints, resource limitations, regulatory requirements, or market conditions. Identifying and managing constraints is crucial for businesses to optimize their performance and achieve their objectives.
3 Key excerpts on "Constraints"
eBook - ePubThe Business Analysis Handbook
Techniques and Questions to Deliver Better Business Outcomes
- Helen Winter(Author)
- 2019(Publication Date)
- Kogan Page(Publisher)
...The more types of people involved the longer it will take to arrange meetings to understand the different points of view. The more external systems the more likely the need to understand system Constraints and how and what data need to be shared. How do you identify Constraints that might influence the solution? Constraints are limitations to what options and solutions can be considered. If there are too many Constraints, then the options will be so restricted that it could impact the benefits of the changes and make the project less worthwhile. If there aren’t enough Constraints considered, then understanding what options could be used will be very difficult. It is important not only to identify the Constraints but also to establish whether there is any flexibility that can be applied to them and the amount of tolerance that could be allowed. This is important because options could otherwise be discounted that the business would find more beneficial. Hence, it could be willing to compromise on some of the Constraints. There are several different types of Constraints. The main project ones often cited are: time; budget; scope; quality. There may be regulatory time Constraints or a strong desire from the business to implement the change by a set date. There may be budgetary Constraints. Scope itself is a constraint. Quality is also sometimes listed, because if you cannot compromise on time, cost or scope then quality is impacted. Quality Constraints can be uncovered by looking at the success criteria for the change and what are known as non-functional requirements (NFRs). NFRs should be investigated early, as they define the quality required, which can impact the options available. NFRs will be covered in more detail in Chapter 6. There are other Constraints that are worth investigating...
eBook - ePubThroughput Accounting
A Guide to Constraint Management
- Steven M. Bragg(Author)
- 2012(Publication Date)
- Wiley(Publisher)
...CHAPTER 1 OVERVIEW OF THE THEORY OF Constraints Every now and then, a completely new idea comes along that can be described as either refreshing, disturbing, or both. Within the accounting profession, the theory of Constraints is that change. It originated in the 1980s through the writings of Eliyahu Goldratt. His training as a physicist, rather than as an accountant, appears to have given him a sufficiently different mind-set to derive several startling changes to the concepts of operational enhancement and cost accounting. The theory of Constraints is based on the concept that a company must determine its overriding goal, and then create a system that clearly defines the main capacity constraint that will allow it to maximize that goal. This chapter describes the operational and financial aspects of the theory of Constraints. DEFINITIONS FOR THE OPERATIONAL ASPECTS OF THE THEORY OF Constraints Comprehending the operational aspects of the theory of Constraints requires some understanding of a new set of terms that are not used in traditional company operations. The terms are as follows: Drum. This is the element in a company’s operations that prevents the company from producing additional sales. This is the company’s constrained capacity resource or bottleneck operation. It will most likely be a machine or person, though it also might be a short supply of materials. Because total company results are constrained by this resource, it beats the cadence for the entire operation—in essence, it is the corporate drum. Buffer. The drum operation must operate at maximum efficiency in order to maximize company sales. However, it is subject to the vagaries of upstream problems that impact its rate of production. For example, if the drum is located in the production department, then if the stream of work-in-process generated by an upstream work center is stopped, the inflow of parts to the drum operation will cease, thereby halting sales...
eBook - ePubThe Economics and Management of Small Business
An International Perspective
- Graham Bannock(Author)
- 2004(Publication Date)
- Routledge(Publisher)
...The financial environment for SMEs was in seventh position. However, government spending on SME policy heavily reflects the preoccupations with finance, information and support (see Chapter 7). SME owners’ perceptions of Constraints There have been many surveys on barriers to growth and on the problems experienced by SMEs in general. Constraints and problems are not necessarily the same things, and somewhat different results are obtained from the two types of survey. 2 A survey of major business Constraints conducted across the whole of the European Economic Area (EEA) by the Observatory of SMEs (EUROPEAN COMMISSION 2002b) ranked ‘lack of skilled labour’ followed by ‘access to finance’ and ‘administrative regulations’ as the most often selected Constraints, though many respondents selected ‘other’ and 15–22 per cent of respondents had no Constraints. Other surveys (using different lists), for example those of the UK Cambridge Small Business Research Centre, bring out the importance of market demand, but also suggest that access and cost of finance is an issue, indeed of first rank for fast-growing firms. Marketing, management skills and the availability of skilled labour were also ranked quite highly again, especially by fast-growth firms (reviewed in STOREY 1994). The World Bank surveys mentioned in the Appendix allow us to look at the relative perceived importance of various Constraints on a global basis (Table 4.2), and SCHIFFER and WEDER’s (2001) analysis of the large database of the 1999–2000 survey further allows us to see how perceived Constraints vary with firm size. These authors, on the basis of regression analysis, conclude that ‘smaller firms face more obstacles than medium-sized firms, and these in turn face more obstacles than large firms’. This was particularly true for financing, taxes and regulations, corruption and anti-competitive practices. There were ‘no significant differences in how much infrastructure, policy instability. . ...
