There has been push-back by some people on the whole concept of Throughput Accounting (TA). As a result, they don’t buy into using TA as a reason for integrating TOC, Lean and Six Sigma. So, let’s put the financial side of this integration to the side for a moment. In addition to the financial case made for integrating these three improvement methodologies, there are other rational and logical reasons why this integration works so well. In attempting to answer which of these three initiatives a company should use, or “which tune a company should dance to,” Thompson presents an excellent summary of the fundamental elements, strengths and weaknesses for each improvement initiative. In doing so, Thompson has inadvertently (or perhaps purposely) answered the underlying question of why the three improvement initiatives should be combined and integrated, rather than choosing one over the other.
The first four columns in the table below, reflect the summary of Thompson’s comparison (i.e. the initiative, fundamental elements, strengths and weaknesses). I have added a fifth column, “Counter Balance,” that demonstrates how the strengths of one initiative, counter-balance or compensate for the weaknesses of the others. As a matter of fact, by comparing each of the weaknesses and strengths of each of the three initiatives, we see that all of the weaknesses of each individual initiative, are neutralized by one or both of the strengths of the other two. This is such an important point for those companies that have experienced implementation problems for any of the three individual improvement initiatives done solo.
Initiative
|
Fundamental
Elements
|
Strengths
|
Weaknesses
|
Counter
Balance
|
Lean
|
The cause of poor performance is
wasteful activity. Lean is a
time-based strategy and uses a narrow definition of waste (non-value-adding
work) as any task or activity that does not produce value from the
perspective of the end user. Increased
competitive advantage comes from assuring every task is focused on rapid
transformation of raw materials into finished product.
|
1.
Provides a strategic approach to
integrated improvements through value stream mapping and the focus on
maximizing the value-adding-to-waste ratio.
2.
Directly promotes and advocates
radical breakthrough innovation.
3.
Emphasis on fast response to
obvious opportunities (just go do it).
4.
Addresses workplace culture and
resistance to change through direct team involvement at all levels of the
organization.
|
1.
May promote risk taking without
reasonable balance to consequence.
2.
May not provide sufficient
evidence of business benefit for traditional management accounting.
3.
Has a limitation when dealing with
complex interactive and recurring problems (uses trial and error problem
solving)
|
1.
Six Sigma strength # 3
2.
Six Sigma strength # 2 and TOC
strength # 4
3.
Six Sigma strength # 1 and TOC
strength # 3.
|
Six
Sigma
|
The cause of poor performance is
variation in process and product quality.
Random variations result in inefficient operations causing
dissatisfaction of customer from unreliable products and services. Increased competitive advantage comes from
stable and predictable processes allowing increased yields, improving
forecasting and reliable product performance.
|
1.
The rigor and discipline of the
statistical approach resolves complex problems that cannot be solved by
simple intuition or trial and error.
2.
The data gathering provides strong
business cases to get management support for resources.
3.
The focus on reduction of
variation drives down risk and improves predictability.
|
1.
Statistical methods are not well
suited for analysis of systems integration problems. I can calculate sigma for a product
specification, but I am not sure how to establish sigma for process
interactions and faults.
2.
The heavy reliance on statistical
methods by its very nature is reactive, as it requires a repetition of the
process to develop trends and confidence levels
3.
The strong focus on stable
processes can lead to total risk aversion and may penalize innovative
approaches that by their nature will be unstable and variable.
|
1.
Lean strength # 1 and TOC strength
# 2
2.
Lean strength # 2 and Lean
strength # 3
3.
Lean strength # 2
|
TOC
|
The cause of poor performance is
flawed management technique. Systems
logic is used to identify constraints and focus resources on the
constraint. The constraint then
becomes the management fulcrum.
|
1.
Provides simplified process and
resource administration through a narrow focus on the constraint for
management of a process as well as improvement efforts (exploitation).
2.
Looks across all processes within
a systems context to assure that limited resources are not overbuilding
non-constraint capability (the local optimization problem).
3.
Distinguishes policy vs. physical
constraints.
4.
Provides direction on appropriate
simplified measures (throughput, inventory and operating expense).
|
1.
Overemphasizing exploitation of
the constraint may lead to acceptance or tolerance of wasteful non-constraint
tasks within the process.
2.
If the underlying process is
fundamentally inadequate no matter how well managed it may not achieve the
goals and objectives.
3.
Does not directly address the need
for cultural change. TOC change
process is very technically oriented and fully acknowledges the need for TQM
and other improvement methods.
|
1.
Lean strength # 1 and Six Sigma
strength # 2
2.
Lean strength # 2
3.
Lean strength # 4
|
Let’s look at several examples on how these counterbalances work so well. In the above table, we see that Weakness 1 in Lean, “May promote risk taking without reasonable balance to
consequence,” is counter balanced by Six Sigma Strength 3, “The focus on
reduction of variation, drives down risk and improves predictability.” One
thing we know for certain is that as we reduce variation in our process, we
reduce risk and our ability to predict future outcomes improves dramatically.
This is the cornerstone of statistical process control, which means that risks
can be minimized if we rely on this Six Sigma strength to do so.
Continuing,
Lean Weakness 2 tells us that we may not provide sufficient evidence of
business benefit for traditional Cost Accounting. This weakness is countered by
both Six Sigma Strength Number 2, the data gathering provides strong business
cases to get management support for resources and by TOC Strength Number 4,
provides direction on appropriate simplified measures (Throughput, Inventory
and Operating Expense). As we have stated many times before, traditional Cost Accounting
induces us to make incorrect decisions, so by adopting Throughput Accounting
practices, from the Theory of Constraints, we will have sufficient evidence to
make changes to our process, assuming we are focusing on the constraint
operation.
Lean Weakness 3 states that,
Lean has a limitation when dealing with complex interactive and recurring
problems (uses trial and error problem solving) and is countered by Six Sigma
Strength 1, the rigor and discipline of the statistical approach resolves
complex problems that cannot be solved by simple intuition or trial and error
and TOC Strength 3, (distinguishes policy vs. physical constraints). One of the
Six Sigma tools that permit us to solve complex interactive and recurring
problems is Designed of Experiments
(DOE). DOE’s identify significant factors that cause problems, and identifies
insignificant factors that do not. TOC Strength 3 helps us in two ways. First, if the problem we
are facing is a policy constraint, we use TOC’s Current Reality Tree to
identify it, and TOC’s Conflict Cloud to solve it. Both of these strengths will
compensate for this weakness in Lean.
Now let’s look at one of
the Six Sigma and TOC weaknesses and see how they are compensated for by other
strengths. For example, look at Six Sigma Weakness 2, the heavy reliance on
statistical methods, by its very nature is reactive, as it requires a
repetition of the process to develop trends and confidence levels. This
weakness is off-set by Lean strength 2, directly promotes radical breakthrough
innovation, and by Lean Strength 3, emphasis on fast response to opportunities
(just go do it). Likewise, TOC Weakness 3, TOC’s inability to address the need
for cultural change, is off-set by Lean strength 4.
In the same way, if we
compare all of the weaknesses in Lean, Six Sigma and TOC to the strengths found
in the other initiatives, the three initiatives not only complement each other,
but they rely on each other. The table above, is from Steven
W. Thompson, Lean, TOC or Six Sigma Which
tune should a company dance to? It is from an article in e-newsletter, Lean
Directions. So, in addition to the
demonstrated financial benefits of this symbiotic trilogy, we now see evidence
from a logical perspective, as to why they should be implemented in unison as a
single improvement strategy.
In my next post, I will discuss the various types of system's constraint that you must identify and deal with as you continue on your improvement journey.
Bob Sproull
No comments:
Post a Comment