Tuesday, September 9, 2014

Focus and Leverage Part 372

Today’s posting is the start of a series of posts aimed at how the integrated Theory of Constraints, Lean and Six Sigma (TLS) is actually intended to work.  In doing so, I want to start with a basic understanding of the components of TLS which will set the stage for a more in-depth look at TLS.  In today’s posting I will start with the Theory of Constraints by laying out the basic concept of what a constraint is and then end it with Goldratt’s classic Five Focusing Steps.  For those of you who have read Epiphanized, you will recognize that much of what I will write is from Appendix 1 that Bruce Nelson crafted so eloquently.

So for all of my readers who may not be familiar with what a constraint is, I want to start with an image that I have used many times in this blog, a piping system used to deliver water.  In the image below, you will see that there are a series of pipes, all with different diameters.  The water in this system is fed by gravity and enters through Section A.  The water continues its path through Section B, then C until it finally exits the system and is collected in the receptacle at the bottom.

In my training sessions on TOC, I ask my students to tell me what they would do to increase the water flowing through this system and why they would take their actions.  Invariably, the students always answer this correction correctly in that it would be necessary to increase the diameter of Section E.  Likewise, they always explain correctly that the reason behind their proposed solution is because Section E has the smallest diameter, so unless and until this diameter is enlarged, it would not be possible to increase the flow of water.

I then ask the students to answer the following question:  Would increasing the diameter of any other pipe section increase the flow of water through this system?  Again, the students always answer this question with a resounding NO!  So as you can see, the concept of the constraint or bottleneck seems to be intuitive or maybe a better description is, it’s just common sense.  So if this concept is so easy for new students to grasp, then why is this concept not being practiced in most companies?  Good question.

I then depict this same piping system with the diameter of Section E enlarged and ask the students to describe what they now observe within this piping system.  As with the first image, most of the students recognize that Section B is the new constraint or bottleneck.  Most come to the conclusion that if we continue identifying the constraint and fixing it, water flow will continue to increase.  Once again, this concept seems to be intuitive.  So I ask the same question, if the concept of identifying and “fixing” the constraint is so easy for students to grasp, then why is it not being practiced in most companies?

After presenting the piping diagram images to the students, I then show them an image of an imaginary process used to produce some kind of product such as the image below.  Raw materials enter this process into Step 1 and are processed for 1 hours and then passed on to Step 2 where 2 hours later they are passed onto Step 3 which takes 4 hours to process.  At the end of 4 hours, the semi-finished product is passed onto Set 4 which takes a half hour to process and then exits the process as a finished product.

The first question I ask my students is to tell me what the capacity of this process actually is.  Usually there is someone in the class that gets this question right by stating one product every four hours.  After some discussion as to why this is the capacity of this process, the class understands that because Step 3 takes four hours to complete its processing time, and because the processing times for the other three steps are less than four hours, the process is limited by Step 3.

I then ask the students to describe to me what must happen if they needed to increase the output of this process and why they would do so.  I remind them of the piping diagram so as to use it as a reference point.  Typically about half of the class recognizes that Step 3 is the constraint or bottleneck and that they would have to reduce the time in Step 3 in order to increase the output of this process.

I then take the discussion one step further by asking them what would happen if each step was run at its full capacity, meaning that Step 1 would continue producing at a rate of one part every hour?  Again, usually half of the class sees that the only thing that would happen is that the process would become “clogged” with work-in-process (WIP) inventory like the figure below.

I then ask the students how they would avoid this WIP explosion and some of the students correctly explain that they would have to “slow down” the steps in front of the constraint to run at the same speed as the constraint.  Once there is a discussion about why this must happen, usually all of the students see this concept.  But as before, if the students understand this concept, then why do most companies still insist on running all steps in the process at maximum capacity?
To complete this discussion on the Theory of Constraints, I then present Goldratt’s Five Focusing Steps or as it is also known, Goldratt’s Process of On-Going Improvement (POOGI).  In reality, the students have executed the first three steps, by first, identifying the system constraint, deciding how to exploit the system constraint and then subordinating everything else to the system constraint.  The five steps are outlined below.

The Theory of Constraints operates under what Goldratt refers to as his Five Focusing Steps:

Step 1: Identify the system constraint. The constraint is commonly considered anything within a system that limits the system from achieving higher performance relative to its goal.

Step 2: Decide how to exploit the System Constraint. Exploitation implies getting more from what you already have. It requires that you understand why you are currently getting what you are get­ting, and what steps are necessary to maximize the throughput of the constraint. How do you get more from this constraining operation?

Step 3: Subordinate everything else to the System Constraint. The subordination implies that all other nonconstraint processes ac­tivate to the same level as the constraint. It seems contrary to popular belief, but sometimes in order to go faster, you have to go slower.

Step 4: If necessary, elevate the system constraint. Elevation implies more constraint capacity or resources, if the market demand on the system still exceeds current capacity. At this point, it may be required to spend some money to increase throughput—but only during Step 4 and not during Step 2.

Step 5: Return to step 1. When the constraint has rolled (moved) to a new location in the system, then go back to Step 1 and follow the sequence again.


So, you may be wondering why these Five Focusing Steps are im­portant to someone who uses Lean, Six Sigma or the hybrid, Lean-Sigma. The facts are simple— without the understanding of the glob­al system focus provided by TOC, many of the Lean and Six Sigma initiatives will fail to deliver significant bottom line improvement.

In my next posting we’ll continue discussing some of the true benefits of integrating TOC, Lean and Six Sigma.  I’ll lay out the basics of Lean and Six Sigma and how they fit into the TLS model that Bruce and I have been using for quite a few years.

Bob Sproull

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