In this posting from Appendix 1 of

*Epiphanized*, Bruce Nelson ties TOC, Lean and Six Sigma together using an IO Map. This is the final posting in this series.**Rolling it ALL Up**

With the foundational concepts of the three improvement initiatives
laid out and defined, where does this take us? If you apply the methods of TOC
first, and use TOC to analyze the system, and spend the necessary time to do it
correctly, then you can employ the other methods of Lean and Six Sigma to help
exploit the constraints. If the constraint quickly moves to a new location,
then go back to Step 1 and start over. It is possible that the “fix and move”
cycle can repeat several times before the system is stabilized and requires the
implementation of Step 3—subordination.

If your current Lean or Six Sigma initiatives are suffering from a
lack of real bottom-line improvement, then what is being presented here should
be of interest to you. Why? Because the biggest reason many Lean and Six Sigma
improvement initiatives fail to deliver sustainable bottom line improvement is
that they are primarily focused on the

*wrong*improvement point. The mistaken assumption is— if you improve everything, then hopefully you will achieve the benefit of something. This notion of improving something in hopes of saving a few dollars should be abandoned as wasteful. There is a better way.
The necessary condition is that you take the time to understand
what the problem really is. If you don’t understand and

*focus*on the real problem, it will be impossible to come up with the correct*leverage*to implement a solid solution. Take the time to slow down your thinking and understand precisely where to focus your improvements. If you think in terms of TLS (that is, the combination of TOC, Lean and Six Sigma), your results will be much more gratifying.
Just for a moment, imagine what would happen using the focusing
power of the Theory of Constraints coupled with the improvement potential
of both Lean and Six Sigma. The crucial component to real bottom-line
improvement is to increase throughput through the sys-tem. Remember, throughput
is not the same as output. Throughput only materializes when the sale occurs
and fresh money is received from the customer and put back into your system. So
by identify-ing and focusing the full improvement potential of Theory of Constraints,
Lean and Six Sigma on the global system, it is possible to increase the
throughput— perhaps exponentially.

**The Importance of Three**TLS effectively combines all three methodologies into a single im-provement consortium, and it allows you to use the best practices of each to solve most of the problems involved with implementing improvements.

**Figure 3: The Combined TLS Approach**

But
exactly how does this integration of methodologies work? Figure 3 provides the
comprehensive answer. Using the IO Map you can define each of these methods as
being a critical success factor to achieving your goal. Each supports the other
in being able to move to the next level, which is the creation of the Optimum
Process Improvement Methodology (OPIM). Each method, if used only in isolation,
will fall short of the optimum method. But when these methods are combined, the
optimum method can be realized. Having just one method or even two methods is
not sufficient to complete the journey to the Optimum Process Improvement
Method. All three working in tandem provide the optimum approach.

The
IO Map succinctly defines the Critical Success Factors (CSFs) that must be in
place to achieve Optimum Process Improvement Methodology. The CSFs are
supported by the necessary conditions of the need for an improvement-focusing
strategy, a waste-reduction strategy and a variation-reduction strategy. The
first layer of necessary conditions translates into the need to have a working
knowledge of the Theory of Constraints, Lean and Six Sigma. TOC provides the
methods used to focus your improvement efforts (the constraint) while Lean and
Six Sigma, with their many tools and techniques, can be used to reduce the
waste and variation at the constraint and eventually in the system, as the
constraint rolls from one location to another.

Russ
Pirasteh and Bob Fox have published a wonderful new book on the integration of
TOC, Lean and Six Sigma entitled Profitability with No Boundaries.1
Pirasteh and Fox outline the results of a significant study (the first of its
kind) aimed at providing a head-to-head comparison of Lean, Six Sigma and an
integrated TOC-Lean-Six Sigma (iTLS) methodology. The response variable for the
individual studies conducted during this project was the measurement of the
financial benefits gained. It is the only documented study that demonstrates
the potential power of this TLS integration. This two-and-a half-year study was
performed at the facilities of a global electronics manufacturer with
twenty-one different plants participating. In order to negate potential
cultural effects, all twenty-one facilities were located within the U.S. It was
a double-blind study with none of the team leaders knowing they were
participants.

The
authors used a variety of statistical tools to analyze the data, with the
primary response variable being a coded, cost-accounting based metric tied
directly to cost savings. Their null hypothesis was a straightforward
comparison of means whereby μ1 = μ2 = μ3 corresponding to the average savings
for Lean equal to the average savings for Six Sigma equal to the average
savings for an integrated TOC, Lean and Six Sigma (iTLS). Their alternative
hypothesis was that the three averages were not equal (μ1 ≠ μ2 ≠ μ3). The
authors first used One-Way ANOVA to demonstrate that there was no statistical
difference between Lean and Six Sigma (μ1 ≠ μ2) results. Since statistically,
the Lean and Six Sigma results appeared to come from the same population, they
combined both sets of results and compared the combined results to the iTLS
results. The results of this comparison clearly indicated that there was a
statistically significant differ-ence between Lean, Six Sigma and iTLS. In
fact, the savings contribution from iTLS accounted for 89 percent of the total
savings. The inescapable conclusion from this study was that the interactive
effects of iTLS were superior to the individual results obtained from using
either Lean or Six Sigma.

For the last decade we have been using a comparable improvement methodology - first reported in the book,

*The Ultimate Improvement Cycle [2] -*and we have achieved analogous results. Although our step-by-step method, or pathway, is somewhat different than the Pirasteh and Fox method, the basic beliefs are exactly the same. Significant bottom-line improvement can be achieved when using an integrated approach of TOC, Lean and Six Sigma, as compared to using individual TOC, Lean, Six Sigma or Lean-Six Sigma methodologies.
If you are truly interested in improving what your company does and how they do it, then arming yourself with the concepts of the TLS methodology should certainly point you in the right direction. The TLS approach is most likely not the end point in this game, but rather just a step to achieve the next level of understanding. There will be more and possibly even better methods proposed for future use. But as it stands today, understanding and implementing TLS carries the potential to lift your organization to heights not even dreamed of a few years ago. Good luck on your adventure!

1
Pirasteh, Reza (Russ) M., Fox, Robert E.,

*Profitability with No Boudaries*, ASQ Quality Press. (2010)
2
Sproull, Robert A.

*The Ultimate Improvement Cycle,*CRC Press. (2009)
Bob Sproull

## No comments:

Post a Comment