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