Tuesday, February 25, 2014

Focus and Leverage Part 312


In this posting I'm going to demonstrate how I integrate Lean, Six Sigma and the Theory of Constraints as described in The Ultimate Improvement Cycle – Maximizing Profits Through the Integration of Lean, Six Sigma and the Theory of Constraints.
 

Identify, Define, Measure, and Analyze the Process

The actions in steps 1a to 1c, in the figure below, serve to characterize the process value stream by identifying which step is limiting the full potential of the process (the constraint operation), defining value, pinpointing the potential sources of waste, and locating and measuring potential sources of defects and variation. There will be a compelling urge to make changes during this phase, but resist this temptation! In this phase of the improvement cycle you are simply trying to define, analyze, and understand what is currently happening in your process. Taiichi Ohno used a technique known as “standing in the circle,” which emphasized going to the process to observe and understand. It was not uncommon for a person to have been left standing for eight solid hours or more before Ohno was satisfied that he or she had seen the waste in the process and the reasons why the waste exists.  During this standing in the circle exercise, I believe it is best to simply acknowledge that the waste exists without trying to eliminate it just yet.


 
 
By the same token, you are also looking for sources of variation within the process. What is preventing your process from being consistent and stable? Keep in mind that the next phase deals with stabilizing the process by reducing both waste and variation in the constraining operation. So it is important, for now, to remember that you are simply trying to understand what is happening in your current process and, more specifically, in your constraint operation.  Although you will be focusing your attention primarily on the operation that is limiting your throughput, because the upstream and downstream process steps could be contributing to this limitation, they must be observed as well.  For example, if an upstream process consistently stops the flow of product to the constraint, you cannot ignore it. Conversely, if a downstream operation is consistently losing constraint output to scrap, it cannot be ignored either. In both cases, the result would be less than optimal throughput.
 

Create Stability

Before any process can be improved, there must be a focused plan developed or improvement efforts will be disjointed. In steps 2a to 2c in the above figure, you are attempting to simultaneously stabilize and improve your process. What does stabilize actually mean? Quite simply, stabilizing means that you are attempting to make your process more predictable, reliable, and consistent. In this sense, the actions in steps 2a to 2c serve primarily to reduce waste and variation within the constraint operation so that a new level of consistency and reliability are achieved. What you observe in the analysis phase will form the basis for your plan to achieve stability.
 

It is important to remember that true and lasting improvement will never occur unless and until the process is consistent and stable over time. You will use a variety of tools and techniques during this phase of the Ultimate Improvement Cycle to accomplish this end. In order to achieve improved process flow, you must be patient and deliberate when reducing waste and variation.
 

Create Flow and Pull

The actions in steps in the 3a to 3c are intended to optimize flow. Flow in this phase includes the flow of materials, information, and products through the process.  Although you are seeking to create flow, creating it will also bring to the surface any problem that inhibits it. So, in order to sustain flow, you must stop and solve these problems. Because of your past experiences, you might be tempted to fix these problems on the fly, but do not do it. You must begin to view problems as opportunities for long-term improvement and not as a failure.

Control the Process to Sustain Gains

The actions in steps 4a to 4c serve to both increase constraint capacity, if you need to, and ensure that all the changes made and improvements realized will not be squandered. What a shame it would be to make big improvements that you cannot sustain. Sustaining the gains is a hallmark of great organizations.
 

The Objectives of UIC

The Ultimate Improvement Cycle accomplishes five primary objectives that serve as a springboard to maximizing revenue and profits:
 
  1. It guarantees that you are focusing on the correct area of the process or system (i.e., the constraint operation) to maximize throughput and minimize inventory and operating expense.
  2. It provides a road map for improvement to ensure a systematic, structured, and orderly approach to ensure the maximum utilization of resources to realize optimum revenue and profits.
  3. It integrates the best of Lean, Six Sigma, and the Theory of Constraints strategies, tools, techniques, and philosophies, to maximize your organization’s full improvement potential.
  4. It ensures that the necessary, up-front planning is completed in advance of changes to the process or organization so as to avoid the “fire, ready, aim” mindset.
  5. It provides the synergy and involvement of the total organization needed to maximize your return on investment.


If you are seriously committed to following the steps of the Ultimate Improvement Cycle, in the sequence illustrated, I am convinced that you will see bottom-line improvements that far exceed what you have experienced using stand-alone initiatives. Just like any new initiative, it requires the entire organization’s focus, discipline, determination, and a little bit of patience. This is new territory for you, so follow the path of least resistance that I have provided for you—it truly does work.
 

In my next posting, I will demonstrate which tools and/or techniques used to facilitate your implementation of the Ultimate Improvement Cycle.
 

Bob Sproull

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