FRIDAY, MARCH 24, 2017
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Methodology Theory of Constraints Use Theory of Constraints to Better Focus Lean Six Sigma Efforts

Use Theory of Constraints to Better Focus Lean Six Sigma Efforts

From time to time, Belts may meet people who strongly oppose the implementation of Lean Six Sigma. These people may have had bad experiences, such as failed projects or losses on investment, which planted seeds of doubt regarding the usability of the Lean Six Sigma framework. But when projects or deployments fail, is it really Lean Six Sigma itself that is to blame?

A closer look at these negative experiences will lead to the real root cause of failure. Often it is not the Lean Six Sigma methodology at fault, but the false belief in change for the sake of change.

Not all change is good; change is worthwhile only if it brings improvement. To be successful, Belts must understand the difference between making changes that lead to improvements, and simply making changes. To do this, it may help to integrate Lean Six Sigma with the Theory of Constraints to help focus project efforts on the areas that are hampering business.

Change for the Better

What is a good change? The first answer that many Belts think of is a change that is in line with business objectives. But how foolproof is this statement? What if one business objective contradicts another, bettering one but worsening the other?

For example, consider a project aimed at process standardization and control, which is one of the business’ objectives. However, the project also increases process wait time, which is not value added. Is it correct to say, then, that the project failed because it increased non-value-added time? Further, is it worth improving the efficiency of a process step if it is going to increase the wait time before the next step picks up the job? Is it worth increasing the speed of a procedure to generate a file by 9 a.m., even when the file is not needed until noon? Was the cost of implementing the improvement justified?

Clearly, it is not always necessary to implement an opportunity that meets one of the business’ objectives. More thought must go into selecting any opportunity. A project with the goal statement, “Reduce the cost of process ABC by 10 percent by the end of July 2010,” may sound tempting, but Belts also need to think of the implications that this project would involve. In this case, if the end product’s quality suffers, the cost reduction will decrease sales and, in turn, revenue.

Finding a Solution

The problem in the example above is not one of failure or success of Lean Six Sigma. It is not a problem of application of the right tools. It is a problem of focus; Belts must focus their attention on the areas, or constraints, that are causing the real problem.

Project and deployment failures happen not because of the methodology, but because they are implemented in the wrong places. The focus of a deployment should be on achieving global, rather than local, optimization. Belts can increase the efficiency and design of multiple business gears and achieve local optimization, but these efforts do not always help the organization achieve business objectives (such as increasing revenue, cutting cost and increasing throughput). To understand whether a particular improvement brings global optimization, Belts can integrate their current process improvement efforts with the Theory of Constraints (TOC).

Introducing Theory of Constraints

TOC is based on the concept that a chain always has one weakest link. Similarly, in any complex system, at any point in time, there is most often only one aspect of that system that limits its ability to achieve its goal. The same is true for an organization. Thus, for any organization to attain significant improvement, the constraint must be identified and the whole system must be managed to keep that constraint in mind.

The five-step TOC process is:

  1. Identify the constraint – Anything that delays or stops a process from achieving its goal.
  2. Exploit the constraint – Get the most out of the constraint resource.
  3. Subordinate the complete system to the constraint – Let the resources that have excess capacity remain idle, or spend capacity to help the constraint. Avoid unnecessary inventory.
  4. Elevate the constraint – Raise the throughput rate of the constraint.
  5. Do not let inertia become the constraint – If Belts keep improving the same link of the chain, there will come a time when this link becomes stronger than some other link. To ensure that Belts are always working on the current constraint, the TOC process should be repeated.

An integrated approach to process improvement can be:

  1. Define the problem and business objective.
  2. Measure the current position. Ask relevant questions and collect the data.
  3. Analyze the problems: Use a cause-and-effect diagram to determine undesirable effects. Create a current reality tree, which illustrates the interrelationship of undesirable effects and identify the constraint. Identify assumptions and challenge them.
  4. Improve the system performance by: a) exploiting the constraint, b) subordinating the system to the constraint and c) elevating the constraint. Execute Lean and Six Sigma projects as a part of the Improve phase.
  5. Control current performance and repeat the process.

At Step 4, Belts use the Lean Six Sigma methodology. Other steps integrate TOC with Lean Six Sigma to ensure that the correct focus is on business objectives.

Example: Work Distribution and Resource Management

The following case study shows how TOC can be integrated with Lean Six Sigma. The objective of the project is maximum output with zero defects. The project has four associates: three programmers and one tester. The tester can test two modules per day, and each programmer produces one module per day. The tester is available for half a day, while the programmers are available full time. The workload distribution is even, and each resource works on its own task.

Step 1 – Define the problem and business objective

Problem: Low productivity of the team, low bottom-line and top-line performance
Business objective: 100 percent productivity and higher profit and revenue

Step 2 – Measure current position

Work is piling up for the tester:

Output = 1 module/day = 1.5 person-days of work/day
Input = 3.5 person-days of work/day
Productivity = 42.85 percent
WIP inventory growth = 2 person-days of work/day

Step 3 – Analyze the problems – Identify the constraints

It is easy to see that the constraint is the tester. The inventory problem and restricted throughput stem from low tester effort/efficiency.

Step 4 – Improve

a. Exploit the constraint: The project leader works on increasing the availability of the tester. After working with other teams, the project leader succeeds in getting this tester full time. The team productivity is now:

Output = 2 modules/day = 3 person-days of work
Input = 4 person-days of work
Productivity = 75 percent
WIP inventory growth = 1 person-day of work/day

b. Subordinate to the constraint: The Project leader reduces the number of programmers to two, and utilizes the programmer somewhere else. Now:

Output = 2 modules/day = 3 person-days of work
Input = 3 person-days of work
Productivity = 100 percent
WIP inventory growth = 0 person-days of work/day

c. Elevate the constraint: The project leader purchases a testing tool, so that the tester can now test three modules per day. Because of this, the team productivity is now:

Output = 3 modules per day = 4 person-days of work
Input = 4 person-days of work
Productivity = 100 percent
WIP inventory growth = 0 person-days of work/day

By raising the throughput rate, the organization elevated top-line as well as bottom-line performance.

Step 5 – Control current performance and repeat the process

After improving the performance of the tester, the leader did not give up. There is always another bottleneck; the constraint can shift to the other resources. So, the project leader started again from the beginning and kept observing the process for new constraints. The constraint can shift to marketing and sales or even lie upstream with the policies of the company.

Thus, any organization can adopt this generalized yet powerful framework to improve its performance continually and reap the benefits of Lean Six Sigma and TOC.

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Comments

Jeff SKI Kinsey

Thanks for sharing this article. Thatte and Salekar highlight one of the major benefits of TOC: ability to focus other process tools on the proper leverage point (aka the weakest link) for achieving a system’s goal(s).

-ski

P.S. A series of articles (and probably a few White Papers) could be written on the damages of policies within organizations. Both “up stream” as the authors mention, but down through the supply chain too.

Reply
Rajiv Panigrahi

good write-up Dushyant

Reply
Profile photo of Arun sathish RS
Arun sathish RS

This is Very Useful for us thank U

Reply
Profile photo of Arun sathish RS
Arun sathish RS

The Example given is very useful for the understanding point of view

Reply
Adriel

Could you please elaborate om how to calculate the output in person work day?

Output = 1 module/day = 1.5 person-days of work/day
Output = 2 modules/day = 3 person-days of work
Output = 3 modules per day = 4 person-days of work

Reply


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