Chain substitution and successive approximation method: Throughput analysis at SMEs

Abstract

The purpose of this research work is to illustrate that using the logic of theory of constraints (TOC) concerning the Throughput is adequate in management decisions to improve performance in the context of small and medium enterprises. The TOC approach assumes the use of Throughput as an indicator of performance, and in this paper the method of chain substitution and successive approximation is proposed to analyze this indicator. After the implementation of the Throughput per hour analysis, the owner-manager changed her perspective about what her priorities should be in the exercise of the administrative process. The identification of the restriction of what prevented him from obtaining more money allowed him to make the decisions or courses of action that maximized the Throughput per hour, thus improving his performance as owner-manager, the performance of his enterprise and the economic situation of his employees. The originality of this article consists in the application of TOC approach through the design of the indicator Throughput per hour to analyse the performance of an entrepreneur and the application of the chain substitution and successive approximation method for the study of the restrictions that inhibit it.