Update to Part 11 of my new book.

Thanks to John Hudson, I have updated Post 11 of my new book.  In the post I mad reference to a sample of part of a constraint improvement plan, but I failed to include it in the post.  My thanks to John for pointing this out.  I have included it in Post 11, but I am including it here for convenience.

New Book Part 11

In my last post, we discussed Steps 1b and 1c exploring different types of both waste and variation.  In this post we will focus in on Step 2a of the Ultimate Improvement Cycle. As a reminder, this material is taken from my newest book, The Focus and Leverage Improvement Book - Locating and Eliminating the Constraining Factor of Your Lean Six Sigma Initiative, published by Routledge/Productivity Press. To refresh your memory, here are the basic steps of the UIC:

Step 2a

When Goldratt introduced the world to his Theory of Constraints, he did so by laying out his 5 Focusing Steps. His second of five steps was to decide how to exploit the constraint. In other words, how to wring the maximum efficiency out of the constraint. Not just maximizing the efficiency, but because the constraint dictates the performance of the organization, or more specifically dictates the system throughput, how do we maximize our throughput? In Step 2a we will develop our plan on how to exploit the constraint.


My advice to you is very straightforward. If you want your plan to be executed, then keep it simple! Probably many of you have project management software, but I have seen many teams get bogged down in the details of the plan and end up with a failure to launch! Please don’t let that happen. Keep it simple, direct and easy to understand, and it will be executed.

Many times, we simply used a Word table or an Excel spreadsheet, because they’re easy to use and update. Keep the plan visible and at or near the constraint, since that’s where most of the action will be. OK, so what should be in the plan? In the figure below we see only a sample of part of a plan I helped to develop for a company, and as you can see, the Constraint Improvement Plan is simple, uncomplicated and straightforward, and follows the actions prescribed in the Ultimate Improvement Cycle. Also, notice that there aren’t details on how things like the DOE will be performed, or what will happen during the 5S initiative. This plan is simply intended to be a document that will be used to define the required activities, the expected outcomes and who is responsible for making things happen, and reviewing progress against each of the action items. Each one of the teams will develop their own detailed plan, so again, don’t make your Constraint Improvement Plan overly complicated, and be sure to use it for its intended purpose. We have seen so many examples where teams spent an inordinate amount of time on developing the plan at the expense of its execution. Review your plan on a regular basis, and make it visible for everyone to see.

Two final points regarding the improvement plan. The first point is that the order in which you plan and execute, is strictly a function of the current status of your operation. For example, if you have a major problem with equipment downtime, then activities aimed at reducing downtime should be included in the early stages of your plan. If you have problems related to defective product, then your early efforts should be focused there. The point is, there is no cookie-cutter approach or step-by-step recipe for the order in which activities are planned and executed. It is all dependent upon your own situation and status. In other words, your own current reality.

The second point to remember is that you must involve the right players as you develop the improvement plan. Believe it or not, the most important members of the team are the hourly operators that will be responsible for operating the new process and making product when the new process is ready. Operators are so often left out of planning activities, when in fact they are the people with the most information……the true process experts. My advice is very clear-cut.  If you want your plan to work, then you better actively involve the operators in its development.  And since your operators played a large part in the development of your improvement plan, they will own it and make it happen.  In a later blog post, I will discuss what we refer to as “active listening” in more depth.

In addition, the operators must be provided assurance that they are not planning themselves out of a job. The worst possible thing that can happen is that, as cycle times are reduced, or defects and downtime are eliminated, people get moved out of their jobs or worse yet, laid off. If this is your strategy, then I suggest that you stop right now, because it’s a strategy for disaster. If this were to happen even one time, you will lose your sense of team and the motivation to improve, so do not lay people off! We realize that business conditions can change, or the economy can take a downturn, and that there are times when you simply can’t avoid layoffs.  But if people sense that the reason their fellow workers are losing their jobs is because of improvements to the process, then improvements will stop immediately.

In my next post I will discuss the role of non-constraints in your improvement efforts as well as TOC's scheduling mechanism known as Drum Buffer Rope,
Bob Sproull

New Book Part 10

In my last post I discussed the importance of selecting the right performance metrics and laid out the benefits of using these metrics.  In today's post I will be discussing Steps 1b and 1c of the Ultimate Improvement Cycle. Just to refresh your memory, I will start with a graphic of the individual steps of the UIC:

Steps 1b and 1c

In Step 1b, we are attempting to Define, Measure and Analyze (D-M-A) non-value-added (NVA) waste in the constraint operation, while in Step 1b, we are completing the same D-M-A steps, focusing on sources of variation. It is important to remember that in these two steps, we are not taking action to reduce or eliminate waste and variation yet. What I am recommending at this point is to only recognize the existence of waste and variation. It is my belief that one of the primary reasons that many improvement initiatives fail is because of this compulsion to find and react immediately to sources of waste and variation, but I disagree with this approach. In my opinion, it is this compulsion to do everything “right now” that creates a disjointed improvement effort.

Waste and variation reduction efforts are not effective if they aren’t done with a systematic plan that ties both of these steps together. You want waste and variation to be attacked simultaneously to ensure that any changes made in the name of waste reduction aren’t negatively impacting variation, and vice versa. Remember that for now, because the constraint dictates throughput, and increasing throughput yields the highest potential for significant profitability improvement, you are focusing your waste and variation reduction efforts only on the constraint. The exceptions to this would be upstream process steps causing the constraint to be starved, or downstream process steps scrapping product or causing excessive rework. You cannot ignore these two exceptions. But primarily, you will be focusing your improvement efforts on the constraint.

The figure below is a tool that I have successfully used many times to search for waste in processes. You will notice that I have listed ten different sources of waste, and symptoms of their existence, instead of the traditional eight. I do this to be as specific as we can in our search. For example, we list overproduction and inventory separately, because the negative impact of overproduction exhibits completely different symptoms from waste of inventory and will require different actions to correct. It helps us focus better.

Waste Description	Symptoms to Look For
Waste of Transportation	1.      Too many forklifts 2.      Product has to be moved, stacked and moved again 3.      Process steps are far apart
Waste of Waiting	1.      Frequent/chronic equipment breakdowns 2.      Equipment changeovers taking hours rather than minutes 3.      Operators waiting for inspectors to inspect product
Waste of Organization and Space	1.      Operators looking for tools, materials, supplies, parts, etc. 2.      Large distances between process steps 3.      Not able to determine process status in 15 seconds 4.      Many different work methods for same process 5.      Poor lighting or dirty environment
Waste of Over-processing	1.      Rework levels are high 2.      Trying to produce perfect quality that isn’t required by customer 3.      No documented quality standards
Waste of Motion	1.      Process steps located as functional islands with no uniform flow 2.      Excessive turning, walking, bending, stooping, etc. within the process
Waste of inventory	1.      Product being made without orders 2.      Obsolete inventory 3.      Racks full of product.
Waste of Defective Product	1.      Problems never seem to get solved and just keep coming back 2.      Independent rework areas have become just another step in the process 3.      Excessive repairs
Waste of Overproduction	1.      Long production runs of the same part to avoid changeovers and set-up time 2.      Pockets of excess inventory around the plant 3.      Making excess or products earlier or in greater quantities than the customer wants or needs.
Waste of Underutilization	1.      No operator involvement on problem-solving teams 2.      No regular stand-up meetings with operators to get new ideas 3.      No suggestion system in place to collect improvement ideas 4.      Not recording delays and reasons for the delays
Waste of Storage and Handling	1.      Many storage racks full of product 2.      Damaged parts in inventory 3.      Storing product away from the point of use

We now want to turn our attention to variation. There are two types of variability, that you are interested in. No, we’re not talking about special cause and common cause. We’re talking about processing time variability (PTV) and process and product variability (PPV) which are very different from each other.

Sources of PTV are those things that prolong the time required for parts to progress through each of the individual process steps, while PPV are those variables that cause parts’ quality characteristics to vary. PPV has a profound impact on PTV, simply because PPV negatively interrupts the process flow. There are many examples of situations that disrupt processes and therefore create variation. Some of the more common examples include unreliable equipment (PTV and PPV), lack of standardized work procedures (PTV and PPV), defective product (PPV and PTV), late deliveries from external and internal suppliers (PTV) and many others.

Variability burdens a factory because it simply leads to congestion, excessive inventory, extended lead times, quality problems and a host of other operational problems. There are two prominent theories on variation and how to treat it. Walter Shewhart’s idea was to “minimize variation so that it will be so insignificant, that it does not in any way, affect the performance of your product.” Taguchi, on the other hand, tells us to “construct (design) the product in such a way, that it will be robust to any type of variation.”

They’re both right, of course. So, what are your options when dealing with the negative effects of variation? There are three ways to handle variation, namely, eliminate it, reduce it or adapt to it. Because it’s impossible to totally eliminate variability, you must reduce it as much as possible, and then adapt to the remaining variation. In a later post, I will discuss the subject of variation in depth and why it is so important to attack it with a vengeance.

In my next post I will continue our way around the Ultimate Improvement Cycle by looking at Step 2a. As a reminder, this material is taken from my newest book, The Focus and Leverage Improvement Book - Locating and Eliminating the Constraining Factor of Your Lean Six Sigma Initiative, published by Routledge/Productivity Press.

Bob Sproull

New Book Part 9

In my last post I began explaining the details of how the UIC works and finished by commenting on what performance should you be looking at and using.  In this post we will explore these metrics and lay the foundation for a continuance of the Ultimate Improvement Cycle.

Performance Metrics

Performance metrics are intended to serve three very important functions or roles as
follows:

1. First and foremost, performance metrics should stimulate the right behaviors.
2. Performance metrics should reinforce and support the overall goals and objectives of the company.
3. The measures should be able to asses, evaluate and provide feedback as to the status of people, departments, products and the total company.

The right behaviors of people and departments are critical to the achievement of the overall goal of the company, but often the metrics chosen encourage and stimulate the opposite behaviors. To be effective, performance metrics must demonstrate the following criteria:

• The metric must be objective, precisely defined and quantifiable.
• The metric must be well within the control of the people or departments being measured.
• The metric must be translatable to everyone within the organization. That is, each operator, supervisor, manager, engineer and operator must understand how his or her actions impact the metric
• The metric must exist as a hierarchy, so that every level of the organization knows precisely how their work is tied to the goals of the company. For example, if one of the high-level metrics is on-time delivery, then the lower level metric might be cycle time or schedule compliance at individual work stations. Or, if the higher-level metric is parts per million or PPM, then the lower level metric might be the defect rate at an individual work station.
• The metric should be challenging, yet attainable.
• The metric should lend itself to trend and statistical analysis and, as such, should not be “yes or no” in terms of compliance

In my next post we will continue on with our discussion of the individual steps of the Ultimate Improvement Cycle by discussing Steps 1b and 1c.

Bob Sproull

New Book Part 8

In my last post we completed our discussion on the Ultimate Improvement Cycle (UIC) by presenting the deliverables you should achieve as you complete your first rotation of this cycle.  In this post we will continue our discussion on the UIC and dig a bit deeper into what you can expect to happen as you complete the cycle.

The UIC accomplishes five primary objectives that serve as a springboard to maximize revenue and profits as follows:

• It guarantees that you are focusing on the correct area of the process or system, to maximize throughput and minimize operating expense and inventory.
• It provides a roadmap for improvement to ensure a systematic, structured and orderly approach to improvement, to maximize the utilization of your improvement resources.
• It integrates the best of Lean, Six Sigma and TOC strategies to maximize your organization’s full improvement potential.
• It ensures that the necessary up-front planning is completed in advance of changes to the process or organization, so as to avoid the “fire, ready, aim” mindset.
• It facilitates the synergy and involvement of the entire organization, needed to maximize your full return on investment. In short, you will see a “jump” in profitability!

Step 1a

I will now discuss, in more depth, each step required to achieve these five primary objectives. Step 1 can best be characterized in one word—Identify. As stated earlier, all of Step 1 is a series of activities aimed at identifying, rather than taking action on. What we are attempting to do in this first step is collect information that will become the basis for our well-conceived action plan for improvement. So, as you go through Step 1, we know there will be a near-irresistible urge to make changes, but don’t do it yet. The success of the UIC is dependent on the development of a coherent plan and avoiding the “fire, ready, aim” scenario that has become one of the primary causes of failure of many improvement initiatives. Resist this urge!

In Step 1, I have combined identification of the value stream, from the Lean cycle; identification of performance metrics, from Six Sigma; and identification of the current and next constraint from the Theory of Constraints. The flow and inventory analysis is completed by simply reviewing the completed current state VSM or Process Map for location, and volume of inventory within the system. The performance metrics analysis is done by meeting with all departments and leaders to determine what metrics are tracked at all levels of the organization. If your company is like many others, you will be surprised by the number of performance metrics tracked. We also recommend that you determine how the metrics are communicated throughout the organization.

Identifying the current and next constraint is the most important activity in Step 1, simply because the constraint will become the focal point for most of your improvement activities. One of the easiest ways to locate the constraint is by walking the process with your team, during the development of the current state VSM or a Process Map. As you walk this process, you will be identifying both the location and volume of raw material, WIP and finished goods inventory. Typically, the location that has the highest level of inventory will be the current constraint, and the step with the next highest level will be the next constraint, but not always. Look also for policies and procedures that have been implemented that might be policy constraints. An example might be using the performance metrics, manpower efficiency or equipment utilization in every process step. Take your time and do it right, because it will be worth it in the end. Remember, the operative word here is to simply identify, and not take action, just yet. So, how do you identify the right performance metrics? In my next post we will answer this question and continue on our cycle of improvement.

Bob Sproull

New Book Part 7

In my last post, I completed my discussion on some of the improvement tools, actions and focus I use when implementing the Ultimate Improvement Cycles.  In this post I will present the third of the three concentric circles of the Ultimate Improvement Cycle by presenting the necessary deliverables. This information is taken from my newest book,  The Focus and Leverage Improvement Book.

I have added a new element to my original UIC concentric circles, first introduced in my book, The Ultimate Improvement Cycle [1], with that being your expected TLS deliverables. The figure below is that third concentric circle.

In Step 1a, you should come away with a complete picture of the system you are attempting to

improve in terms of flow, plus the predicted people behaviors and the knowledge that efficiency should only be measured in the constraint.

In Step 1b, you should come away with the knowledge of location of and type of waste and inventory that exists in your current reality. In addition, you may also come away with a list of potential core system problems. Your take-away for Step 1c should be a working knowledge of both the location and type of variation, plus any recurring problems that currently exist within the system.

Your deliverable from Step 2a is a coherent action plan on how to improve your system’s capacity. The product of Steps 2b and 2c is a well-organized and well-controlled constraint, with minimal waste and only controlled, common cause variation present. 

In Step 3a, you should come away with a coherent and well-documented plan on how you intend to synchronize flow within your system. Your takeaway from implementing your synchronization plan that you developed in Step 3a should be a well-functioning process, exhibiting synchronized flow of products through your system. Your product from Step 3c is an optimized safety buffer, with minimal WIP (thanks to DBR and Buffer Management) throughout your system.

The deliverable from Step 4a is a well-thought-out and clear plan aimed at sustaining the gains you’ve made that will deliver and sustain an optimized process with excellent process capability and control. From Step 4b, you should have a complete understanding of your new capacities and financial gains from implementing Throughput Accounting. In Step 4c, your sustainment actions will be in place and functioning well, based on sound financial decisions. At this point, your actions should have resulted in a constraint that is no longer your constraint. So, based upon all of your actions and focus, your constraint should now be in a new location. This is the ultimate deliverable, and it’s time to return to Step 1a. But this time, your work should be much easier to perform.

In my next post, I will continue discussing this integrated methodology.

Bob Sproull

New Book Part 6

In my last post, I discussed some of the improvement tools, actions and focus I use when implementing the Ultimate Improvement Cycles.  In this post I will continue discussing some of the other tools I use.  Just to refresh your memory, the figure below is the 2^nd of 3 concentric circles used in the Ultimate Improvement Cycle.  This material is taken from my newest book, The Focus and Leverage Improvement Book.

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 I 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. The Conflict Diagram is one of TOC’s Thinking Process tools. I also recommend using an Intermediate Objectives Map (aka Goal Tree), to further identify key relationships.

In Step 3a, we are attempting to create a synchronized flow of product through our current constraint, which is why in Step 3b I recommend using Drum Buffer Rope in combination with Buffer Management to achieve this objective. In Step 3c, we will optimize our buffer size to limit our non-constraint production. In Step 4a, we need to develop our plan on how to elevate our constraint, if it’s necessary to do so. In addition, the plan needs to include our selected protective controls. In Steps 4b and 4c, we will execute our elevation plan. I recommend performing a capacity analysis and a cost benefit analysis. In our final step, Step 4c, we need to perform process audits and policy analysis and then implement control charts.

In my next post, I will continue discussing this integrated method by presenting the deliverables related to the Ultimate Improvement Cycle.

Bob Sproull