Wednesday, June 20, 2012

Focus and Leverage Part 126

I received so many positive comments about my last posting, I’ve decided to carry this theme a little further.  Liker and Meier, when discussing why the Toyota Production System is so successful, told us, “A sporadic removal (of waste) will yield pockets of improvement, but the system-wide benefits that Toyota enjoys are achieved by following a cyclical method of continuous improvement.”  I absolutely support Liker and Meier’s contention and it is precisely the reason I believe the integration of the Theory of Constraints, Lean and Six Sigma (TLS) is the indispensable “cyclical method of continuous improvement” of the future!  Like the Toyota Production System, TLS delivers system-wide benefits that result in maximum throughput at minimum inventory levels and less operating expenses.

I am positive that some of you, or maybe many of you, are saying to yourself, “Is he crazy, I can’t do even one initiative right, let alone all three at the same time!”  Although this may be a concern, the reality is that by integrating Lean, Six Sigma and the TOC life simply becomes much easier on the shop floor.  Because you are typically limiting your focus on only one operation at a time (i.e. the system constraint) and not attempting an enterprise-wide improvement initiative, you will:

·         Have fewer resource allocation problems

·         Have fewer problems to solve at any one time

·         Have fewer amounts of waste to remove at any one time

·         Have less organizational chaos and disorder

·         Have products that flow through your operation much faster and more efficiently

·         Have your rate of revenue generation improve dramatically

·         Have more motivated employees

·         Have much faster and much better return on investment

·         Have much more impressive bottom line results!

One additional point relative to this integration.  Again, Jason Thompson explained, “I see TOC, Lean and Six Sigma as key features of a single technology.  It is in our industry’s interest to promote and support this transition.  My conclusion is that these are not exclusive approaches; they are simply different entry points and tributaries to the same body of knowledge.  We, as an industry, must learn to recognize each of these methodologies as different steps of the same dance.  Perhaps it is time to establish an industry-wide consortium that integrates these as a common technology.”  Although I don’t necessarily agree that Lean, Six Sigma and TOC are different entry points, I do believe that TLS captures the essence of a common technology.  It is my belief that going forward, using this integrated methodology your organization will realize its full potential much faster and more effectively than you could have ever dreamed possible.  Think about it, less waste, less variation, less defective product, less inventory, less operating expense, higher throughput, better on-time delivery, etc. which all translate into a faster revenue stream and higher and higher profits.

Suppose you are interested in implementing this integrated approach in your company?  I’m not talking about a full-blown implementation, but rather a simple one.  What’s the best way to begin this implementation?  Think about it for a minute.  What it is that you need to know first?  The simple answer is, you need to know where your system constraint resides…..enter a tool from Lean, the process map or even a value stream map.  Once you've done that, you should have seen and recorded where you work-in-process (WIP) inventory is stacking up.  This may be your system constraint.  If you’ve collected cycle times, then select the longest one and that’s probably your constraint.  I say probably because there may be a policy that is your true constraint.  For example, if you use the common metric efficiency, this could be a major problem.

Assume that you have located your constraint and it’s one of the steps in your process and not a policy constraint…..what now?  The simple answer is that you simply focus all of your improvement efforts directly on the constraints.  That is, look for waste and excessive variation.  As you remove waste and variation in your constraint, what happens to your cycle time?  Clearly it is reduced and when this happens, your system throughput improves.  And when your constraint’s cycle time gets reduced, eventually your constraint will move to a new part of your process.  What do you do then?  You move your effort to the new constraint and start again.  Think about what’s happened?  Since you haven’t added more labor, your bottom line improves.  Since your cycle time is reduced, your on-time delivery improves and maybe to the point that you can go out and get more business.  Believe it or not, a TLS implementation really is this simple.

I know I’ve painted it in very simple terms, but my point is, don’t make it harder than it really is.  I’ve done this many, many times and the bottom line has always moved in a positive direction with very little effort.  Try it… won’t regret it.

Bob Sproull

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