New Book Part 5

In my last post, I discussed the basics of how best to combine Lean (L), Six Sigma (SS) and TOC to achieve breakthrough profits and return on investment (ROI).  I laid out what this ultimate improvement cycle looks like as three concentric circles which combine Lean, Six Sigma and TOC. In this post we will continue this discussion by presenting some of the tools and actions needed to make this integrated methodology successful.  This material is from my newest book, The Focus and Leverage Improvement Book.

In the figure below, I have laid out the improvement tools, actions and focus for our improvement initiative. These are the tools to use, and the actions you will use, at each step of the UIC. As you can see, there are no new or exotic tools being introduced. Instead, in creating the UIC, one of my objectives was to keep things simple. Please keep in mind that there are other tools available that can be used to drive this improvement engine. My point here was to list some of the more common ones.

In Step 1a, I recommend using either a Value Stream Map (VSM) or a Current State Process Map to identify your value stream, plus your current and next constraint. I also recommend selecting performance metrics that are based upon Throughput Accounting, plus an analysis of your current inventory. In addition, I recommend using TOC Thinking Process (TP) tools as well as a Gemba Walk. 

In Step 1b, we are performing a Value Stream Analysis (VSA) to determine both locations of waste and excess inventory. My recommendation in this step is to use a Current Reality Tree (to be explained in a later chapter) to identify areas of concern and to identify Undesirable Effects (UDEs) that will impede your performance efforts. In Step 1c, I recommend performing capability studies and implementing Control Charts where necessary. I also recommend performing a Pareto analysis, and then using tools like a Cause and Effect Diagram to perform a causal analysis. Causal Chains and Why-Why Diagrams are highly effective in this step, as we work to identify cause and effect relationships.

In Step 2a, we will now develop our plan on how best to exploit our current constraint. Some of the tools we will use in Step 2b are organizing the current constraint using 5S (Sort, Set in order, Shine, Standardize, Sustain), standardized work and visual aids. If necessary, in Step 2c, sometimes we will perform a Design of Experiment (DOE), and/or create Causal Chains to identify cause and effect relationships. Sometimes it is necessary to create Conflict Diagrams to identify conflicts.

In my next post, I will continue discussing this integrated method by presenting other necessary tools and actions required to improve your current system.

Bob Sproull

New Book Part 4

I just realized that I haven't stated the title of my newest book.  The title is, The Focus and Leverage Improvement Book.  In this post, I want to discuss how best to combine Lean (L), Six Sigma (SS) and TOC to achieve breakthrough profits and return on investment (ROI).

The major difference between Lean, Six Sigma and TOC improvement initiatives is simply a matter of focus and leverage. While L and SS, or their combined LSS, implement improvements and measure reductions in inventory (I) and operating expense (OE), as well as increases in throughput (T), TOC focuses up front on T and looks for ways to achieve higher and higher levels.  The only way to increase T is to focus on the operation that is limiting it, the constraint. We then use Lean to reduce waste and Six Sigma to reduce and control variation, but we do so mainly in the constraint (or on the operation(s) feeding the constraint).  Let’s look at what the best way is to combine all three of these improvement methods.

So, if you were to combine the best of all three improvement initiatives into a single improvement process, what might this amalgamation look like? Logic would tell you that you would have an improvement process that reduces waste to make value flow (i.e. through Lean) and reduces and controls variation (i.e. through Six Sigma), but the improvement effort would be focused (i.e. through TOC) on the operation that is constraining throughput. So, think about what this improvement methodology might look like, and I’ll show you my version of this integration and then discuss how it all works.

The figure below is a visual of what this integrated methodology looks like, so let’s now begin walking through how it all works. This integration weaves together the DNA of Lean and Six Sigma, with the focusing power of TOC, to deliver a powerful and compelling improvement methodology. All of the strategies, principles, tools, techniques and methods contained within all three methodologies are synergistically blended and time-released to yield improvements that far exceed those obtained from doing these three initiatives in isolation from each other.

The Ultimate Improvement Cycle (UIC) [1] is not simply a collection of tools and techniques, but rather a viable manufacturing strategy that focuses resources on the area that will generate the highest return on investment. The UIC is all about focusing on and leveraging the operation or policy that is constraining the organization and keeping it from realizing its full financial improvement potential.

In the figure above, in Step 1a, we start by identifying the value stream and the current and next constraint and developing appropriate performance metrics to enable us to measure the impact of our improvement efforts. Why is it that we recommend identifying the current and “next” constraint? We do so because as soon as we have improved the current constraint, a new one will immediately appear. So, by identifying the next most logical location of the “new” constraint, we will be prepared to begin improving it immediately (i.e. apply Goldratt’s 5 Focusing Steps).

In my next post, I will continue discussing this integrated method by presenting more of the necessary tools and actions required to improve your current system.

Bob Sproull

New Book Part 3

How’s your improvement effort working for you? If you’re like many companies, you’ve invested lots of money on improvement training, but you’re not seeing enough of your investment hitting the bottom line. Like any other investment, you expected a fast and acceptable return on investment (ROI), but it just isn’t happening, or at least not fast enough to suit you or your board of directors. Maybe your investment was in Six Sigma, and you’ve trained hundreds of people to become Yellow, Green and Black Belts, and maybe even a few Master Black Belts? Maybe you’ve invested a large sum of money training people on Lean Manufacturing and have several Lean Senseis? Or maybe you’ve gone the Lean Six Sigma route? So why aren’t you seeing an acceptable return on investment? You know improvements are happening, because you’ve seen all of the improvement reports. But you’re just not seeing the return on investment that you expected, or at least hoped for.

I too have experienced this dilemma early in and throughout my career. So, early in my career, I performed an analysis of both failed and successful improvement initiatives. What I found changed my approach to improvement forever. In Chapter 1 of my new book, I discuss what I discovered and it was all about focus and leverage. By knowing where to focus my improvement efforts, I was transformed.  In this chapter (and others), we’re going to demonstrate what the Theory of Constraints (TOC) is and exactly how TOC can work for you.  We’re going to show you how to use the power of TOC, to truly jump-start your improvement efforts. Better yet, we’re going to help you turn all of those training dollars (or whatever currency you use) into immediate profits, and then show you how to sustain your efforts over the long haul.

If you’re like many companies, there seems to be a rush to run out and start improvement projects without really considering the bottom-line impact of the projects selected. Some companies even develop a performance metric that measures the number of on-going projects and attempt to drive the number higher and higher. Instead of developing a strategically focused and manageable plan, many companies, in effect, try to “solve world hunger.”  They do this instead of focusing on the areas of greatest payback. 

Across-the-board cost cutting initiatives are pretty much standard for many businesses. Companies spend inordinate amounts of money on external consultants and in-house training programs, and then focus on ways to reduce costs. Focusing solely on cost reduction is an absolute mistake! So, if this misguided focus isn’t right, then what is the right approach? In Chapter 1, we’ll demonstrate why this focus is misguided, but more importantly, where the right focus should be.

Bob Sproull

New Book Part 2

Sorry for the delay on my next blog post, but I have been very busy.  But I am back now and will continue my series of blog posts on my new book.  As I said in my last post, I will be presenting the highlights of my new book entitled The Focus and Leverage Improvement Book.  In this post I will complete a summary of the contents of this book, so that you have a general idea of the book's contents. And just so you know, even though I am the only author listed for this book, much of what's in it were written by Bruce Nelson and it's why I use the term "we" so much.  Bruce was unable to work with me on this book, but rest assured, I consider him a co-author.

Throughout this book, we have presented case studies which were based mainly on work that both Bruce and I have been a part of in our careers. For example, in one of our chapters, we present case
studies on Aviation Maintenance, Repair and Overhaul (MRO) as well as a Hospital Emergency Department setting. You’re probably thinking that we may have lost our minds thinking that Healthcare and MRO should be discussed in the same chapter, as though they were related in some way. But as you’ll see, they are not so dissimilar after all.

We also discuss our technique on how to achieve a motivated work force to actively participate in improvement initiatives. We discuss something we refer to as active listening. In presenting this
technique, we described how it has never failed us and how usually it left the leadership team scratching their heads, wondering why such a simple technique has eluded them for all these years.

Another subject that is very important for any organization is which performance metrics they should be using to measure and track their performance. Performance metrics stimulate organizational behaviors, so it’s important that an organization selects metrics that result in behaviors that benefit the organization. Closely related to selecting the right performance metrics is the type of accounting system being used.  Traditionally, Cost Accounting (CA) has been the system of choice for most organizations. We discuss in detail another brand of accounting known as Throughput Accounting (TA), which will dramatically influence your organization’s profitability. We demonstrate that the
key to organizational profitability is not through how much money you can save, but rather through how much money you can make. And the two approaches are dramatically different!

There are other discussion topics added as needed, but the ultimate objective is to share the information that has guided us throughout our careers. We value knowledge and experience sharing above all else, and it is our hope that as you read this book and see all that it has to offer, you will share your learning experience with others. But equally important, it is our hope that you will learn and apply these subjects to improve your company’s products and services. Good luck, but as we have written in our other books, luck is Laboring Under Correct Knowledge. You make your own LUCK!
Bob Sproull