In this posting I will continue on with Appendix 1 from Epiphanized, and we will now discuss the concept of focus and leverage in the context of this integration. This posting is the essence of why I named this blog Focus and Leverage.
Focus and Leverage
From what has been stated so far, you might think we have a negative view of Lean and Six Sigma, but such is not the case. In fact, TOC by itself cannot deliver sustainable bottom-line improvement. But it does provide the needed global system focus, and that focus is paramount to facilitating organizational growth. In fact, the primary reason why Lean and Six Sigma have failed to deliver acceptable ROI is they try to improve everything all at once, rather than focusing on the most important leverage points. They promote improvement because they can, and not because they must. It’s like trying to solve world hunger—it’s a tough job when you try to do it all at once. So let us discuss leverage points and what they mean.
The foundational concepts of TOC can be presented in a simple, but understandable way as a reference environment. If you understand the reference, you understand the concept. If we use a diagram showing a simple piping system with the primary goal of delivering water, then the reference is defined. By presenting the concept in this format, the basic principles will be much easier to comprehend for people who have not yet had any experience with the Theory of Constraints.
[Note: This was our original view of the piping diagram as published in Epiphanized]
The above figure describes the piping system with different diameter pipes connected together supporting the water flowing through this system. The water flows from left to right from Section A through the entire length of the system until it exits at Section G. If you were given this water system and asked what you would do to increase the flow of water, or the throughput of water, through this system—how would you answer the question? For most responders, the answer would be to increase the pipe diameter of Section C since it is the choke point, or bottleneck, or constraint of this system. If you increased the diameter of any other pipe section, it would have absolutely no effect on the throughput of water through this system.
If you were asked how much you would increase the diameter of Section C—how would you answer that question? Most responders would answer by saying that the increased diameter of the Section C pipe would be determined by how much more water the system needed to deliver (loads on the system). So in order to satisfy the need (demand) for more water, you must have some type of metric for how much more water is needed (increased loads on the system). Let’s say that you increased the diameter of the pipe in Section C to the same diameter as the pipe in Section D. What if the measured throughput of water out of Section G was still not enough to satisfy the new demand—what then? The new focus for system improvement would shift to the new constraints (the constraints have moved) which are now both Sections A and E. These two sections become interactive with each other. The diameter of these two pipes now becomes the new system constraint, and they need to be improved to meet the increased demand. So how does all of this apply to the real world?
The basic principles of understanding constraints are all around us. For example, instead of using the piping system to demonstrate the constraint, we could have substituted an electric circuit with different sized resistors and measured the flow of electricity through the circuit. The resistor location with the highest resistance to electrical flow would be the equivalent of Section C in the piping diagram. You could easily demonstrate that the flow of electricity through that system is completely dependent upon how much more electrical current was needed to satisfy the demand. And in order to increase the electrical output, you need to reduce the resistance of the resistor that was limiting the electrical flow.
The figure above is another simple visual example of the same concept. Here we have a four-step process used to produce some kind of product or service. If we apply the same systems thinking and ask the same series of questions about this system, then we can effectively conclude that Step 2, at 17 days, is the process that is limiting the output from this system. By understanding this concept you now know where to focus your improvement efforts. Improving any other process in this system, except for Step 2, yields no system improvements at all. Globally, the system will improve only when Step 2 requires less time.
In my next posting we’ll roll all of this up together to better understand just why this integration is so very powerful. We’ll also discuss a ground-breaking study that was run in a global electronics company that offers proof of the superiority of TLS.