By Issa Bass
 

Over the last two decades, a lot of managerial methodologies aimed at improving production processes have been introduced to businesses throughout the world. Some have resisted skepticism and have prevailed, and are still being used while others, such as the Total Quality Management (TQM) or Company Wide Quality Control (CWQC) have been deemed to be nothing but fads and have disappeared almost immediately after they appeared.

In fact all the process improvement strategies (Six Sigma, TQM, CWQC, Lean, TOC…) have the same underlying philosophy; they are all geared towards customer satisfaction and insist on the necessity for all sections of a company to cooperate in order to improve all aspects of its operations. They all insist on producing high quality products at the lowest possible cost through a reduction of waste and continuous improvement.

Some companies have deployed TQM and failed either because the deployment was badly conducted or because of poor training of their employees or that the areas they insisted on improving were areas that did not require improvement because their improvement would not have a positive impact on the overall performance of the business as an entity, therefore costing money and not generating any significant ROI.  

In most cases, TQM did not fail because it was in itself a bad methodology or that its application was conducive to poor performance and failure. Indeed, most of the tools that were used by TQM have been refined and are still being used in Six Sigma.

Most of the failures stem from the fact that top managements did not understand how to apply the methodology, and as a result of that, TQM tools were usually partially applied when they were supposed to be instilled as a whole throughout the companies that were using them. Where TQM was supposed to be a new culture that protrudes every aspect of the companies, a few of its tools were used after a lot of money was invested for its deployment and the training of employees.

Six Sigma and Lean have withstood skepticism largely because of the success some major corporations have seen as a direct result of their application. A careful observation of those corporations would reveal that Six Sigma and Lean are not partially used and in most cases, they have become a culture, a way of managing for those companies instead of auxiliary instruments temporarily used to solve a circumstantial problem.    

In fact the name of the methodology that a company uses to improve its processes should not be the most germane aspect of its management strategy. Currently, the most widespread methodologies used in management are Six Sigma, Lean also known as The Toyota Production System (TPS) and to a lesser extent the Theory Of Constraints (TOC) and TRIZ (which may not be a traditional methodology but which is a formidable tool for problem solving).

Most companies use one or two of them, but since they do not necessarily conflict, it is not impossible to use all of them for continuous process improvement in a given company.

Taken in isolation, each one of these methodologies can yield good results but when they are combined the probability for success should be even greater. But to better put this point of view into perspective, it is necessary to analyze each one of them, see what tools they use and how they use them and under what circumstances before we can determine how they can possibly be combined.

The Theory Of Constraints And Bottleneck Identification

The Theory Of Constraints was first introduced in 1985 (just a few years before Six Sigma) by Eliyahu Goldratt in his famous book the Goal and later developed in his subsequent books such as “The Critical Chain”, “It’s Not Luck”, “the Haystack Syndrome” and “The Theory Of Constraints”.

 It is founded on the notion that in any business structure, at any given time, one factor tends to impede the company’s ability to reach its full potential. All business operations are structured like a chain of events, like linked processes with each process being a dependent link and at any given time, one link on the chain tends to restrain the whole chain and prevent it from reaching its Goal. Since the objective of a company is not to maximize the efficiency of the different parts that compose it, but to maximize the overall efficiency of the business as an entity, it becomes necessary to identify the constraint and proceed with the needed improvements.

One of the first lessons that Goldratt gives in The Goals is an obvious one, even thought some businesses fail to understand it: Companies do not exist for the sake of being productive or for the sake of producing high quality goods and services or making their customers happy. The reason why companies are set up, their raison d’etre, their Goal is to make profit, to make money. Productivity, high quality products and services and customer satisfaction are nothing but very necessary ways and means that companies have to use to reach their Goal. So the cost of being productive, the cost of quality and customer satisfaction must be contingent upon the Goal. 

In his quest to show the ways and means to reach the Goal, Goldratt borrows some commonly used business terms but he gives them a different meaning. Three of the most important of which are the Throughput, Inventory and Operational Expenses which he defines as follow.

• Throughput: Money generated by a company through sales
   
• Inventory: Money invested on purchasing things intended for sales
   
• Operational Expenses: Money spent to turn Inventory into Throughput.

Some of the derivatives of these metrics are the Throughput Per Unit and the Throughput Per Unit of the Constraining factor.

• Throughput Per Unit = Throughput /( units of Product)
   
• Throughput Per Unit of the Constraining Factor = (Throughput Per Unit) / (units of the constraining factor required to produce each unit of product).
   

To maximizing total Throughput, The Company must concentrate on improving the sales of the products that provide the highest throughput per unit of the constraining factor. This is because the bottleneck determines the throughput.

The objective of a company must be to maximize the Throughput by minimizing the Inventory and the Operational Expenses. To reach that objective, it must continuously strive to identify the Constraints, the Bottlenecks and proceed with the necessary changes. The bottleneck is defined as a resource whose capacity is equal to or is less than the demand placed on it. The slowest performing area in a process determines the level of output generated by that process.

To make the necessary changes, the company needs first, to answer the following three questions:

• What to change?
   
• What to change to?
   
• How to make the change happen?

The changes that need to be made must address the area of the business that constitutes the bottleneck; Overlooking the interactions between the different departments in a company and only improving on areas that are perceived to constitute constraints might only address the symptoms and in some cases aggravate the problems.

To make the necessary changes, Goldratt suggests the 5 following steps:

1. Identify the constraint
    
2. Exploit the constraint
    
3. Subordinate all other operations to the necessity to exploit the constraint
    
4. Elevate the constraint if after exploiting it and subordinating all other operations to it, more capacity is needed to meet market demand.
    
5. Restart the process without letting inertia become the system’s constraint. The process needs to be restarted again and again until the current constraint is no longer the constraint.

The way we can tell that the current constraint is no longer the constraint is that when further changes are made on the current constraint, they do not positively impact the bottom line of the company as a whole. Therefore another process, another department, another link must have become the weakest link, the new constraint, and it needs improvement.

Lean And The Steady Material Flow

Lean Manufacturing or TPS (Toyota Production System) is a management methodology originated from Japan and more often associated with Toyota Motor Company, It was introduce to the American public by James Womack and Daniel T. Jones in the 90’s.
It is about doing things right the first time and every time on a steady pace. It is also about reducing cycle time and inventory by eliminating waste. 
The underlying foundation of Lean manufacturing is the organizational strategy that constantly seeks a continuous improvement through the identification of the non-value added activities (Muda) and their elimination along with the reduction of the time it takes to perform the value added tasks.
The elimination of waste starts with the specification of the products value and then the identification of the value stream for each product. The value stream traces the production flow from when the customers place their orders to when they receive the  finished goods. In other words, the identification of all the processes of transformation through which the products have to pass until they reach the customers.
As in the case of the Theory Of Constraints, the purpose of implementing Lean is to increase Operating Profit, increase Cash Flow and Return On Investments.  To do so, Lean emphases the need to reduce waste, reduce inventory, reduce Cycle Time and set-up time. 
Let’s note that the definition of Inventory in the case of Lean is slightly different from TOC, it is the stock of goods that are ready to be transformed and the stock of finished products ready to be shipped to the customers.

 The identification and elimination of waste is done through the following steps:

1. Specify the exact value of each specific product.
The value of the products is determined by the customers through their desire to buy or not buy them and through the price they are willing to pay for them.

2. Identify the value stream for each product.
Each product is manufactured in a unique way. The value stream traces all the steps required to transform the raw materials into the products demanded by the customers.  Each step must add value to the product, in other words, the product must be worth more when it leaves a step in the process than when it got there. The analysis of the value stream is done for the sake of identifying waste and non value added steps and reducing the time necessary for the value added steps. Some non value added steps are necessary and inherent to the processes but some are unnecessary and cause clutter and can be sources of bottlenecks.

3. Make the value flow without interruptions.
To eliminate waste and clutter, the producer should put in place a production process that yields a steady and constant flow of products. So after the value of the products is determined, the value stream mapped, the clutters removed, the producer should strive to make the production flow relentless on a steady pace. Applying the One Piece Flow principle is one way of doing it and it will eventually lead to the Just-In-Time method: getting the right part, in the right quantity at the right time at every step of the process. A one- piece-flow process is only possible if all the steps take the same amount of time to process the materials before they send them to the next step.

4. Let the customer pull value from the producer.
When the materials flow on a steady and constant pace and the Just-in-Time principles are applied and are working, it becomes easier to predict and plan the work load executions and the deliveries since the time required for the completion of each task is known in advance. Inventory, cycle time, WIP (Work In Process) and complex scheduling are reduced, making it possible to let the customer pull the orders instead of building an excessive outbound stock of products waiting for a potential customer. An excessive stock of product in itself constitutes waste because one cannot know with certitude, how long it will stay unsold, and more money will be spent on its maintenance under the form of labor, warranty and the cost of the space it occupies. Letting the customer pull the products means only producing the products that are ordered by the customers. Let them determine what to produce, when and in what quantity.

5. Pursue perfection.
Opportunities for improvements will always be there, since continuous improvement does not end. Once the process flow has started, the company should keep seeking to uncover best practices. There are always possibilities to improve on existing processes by continuously setting higher targets. This in itself will prevent from falling back to old ways. Process improvements are made through kaizen events with the involvement of all concerned employees.

Six Sigma And Variability Elimination

Six Sigma is a data driven business strategy that seeks to streamline production processes to constantly generate quasi perfect products and services in order to achieve Breakthrough ROI. One of the pillars of Six Sigma is the pursuit of the elimination of production process variation. For a production process to generate perfect products, the process itself has to be perfect, therefore, in the design phase of the production process, the process engineers need to precisely and accurately determine all the Critical-To-Quality Characteristics of the products or services they are about to produce in order to minimize the possibility for variations to occur. Variation is said to have occurred every time a product does not exactly match its predetermined CTQ characteristics; therefore the corrective actions require the identification of the sources of variation and their elimination.
The strategy used by Six Sigma to improve production processes is called DMAIC (Define, Measure, Analyze, Improve and Control) and very specific tools are used at every step of the DMAIC Roadmap.

Define
Since it would be hard to fix what is not known, the first step in a Six Sigma project will consist in defining the goals of the project, identifying the Ys (the problem being addressed) 
Define the purpose and the scope of the project.
Determine the resources needed
Determine who are the customers of the project
Map the SIPOC (Suppliers- inputs-Process-Customer –Output-Customer)
Develop the project planning

Measure
Identify the Xs ( the factors that are thought to cause the problem being addressed) and collect data
Identify the business processes that generate the Xs and the Y
Perform a regression analysis to measure the correlation between the Y and the Xs
Identify the Critical-To-Quality requirements (CTQ)
Define the metrics used to measure the CTQs
Measure the current process capabilities

Analyze
Identify what inputs affect the output and to what extent they do so
Identify the root causes of the problem
Using Pareto Analysis, determine the vital few factors that contribute to the problem
Determine the new metrics needed to monitor performance

Improve
Based on the results obtained from the Analyze phase; develop and implement plans for process changes that lead to an improvement of the vital factors that impact the issue at hand.

Control
Determine the standard process to be followed, monitor the process, communicate and train the employees.

Triz And “Out Of The Box” Thinking

Triz (Theory of Inventive Problem Solving) is a powerful methodology which is founded on an algorithmic approach to solving complex technical problems. More than a methodology, it is a science for stimulating innovative and creative ideas and problem solving techniques. TRIZ has been around for more than forty years but it was mostly used in the former USSR where it originated from and the Eastern Europeans countries.

The methodology was invented by a young Russian Navy adviser named G. S. Altshuller in 1946. Altshuller sought to answer to the following question: Is there in essence an underlying trait, trend or pattern common to all innovative ideas?
He analyzed a great number of patents and realized that there appeared to be a “Principle of Inventions”, similarities in the basic ideas and comparable solutions in different problems. He concluded that there are some natural patterns in creative innovations of different applications. Identifying those patterns can help facilitate and speed up new creative innovations.

Most inventions have been the result of incidental happenstances or trial-and-error. Trial-and-error is a method that consists in attempting different theories or combination of factors until errors are eliminated. It is a common practice in the pharmaceutical industry. The ultimate goal is achieved after a lot of resources are spent.

Discovering the natural patterns underlying innovative inventions could help alleviate the dependence on Trial-and-errors and incidental discoveries and lead to the development of a creative methodology of problem solving, an inventive system that goes beyond the common savoir faire.  

Problems are nothing but unresolved contradictions and they come under two forms: they either have known solutions or they don’t. The ones with known solutions are solved based on how similar problems were solved.  

The problems with unknown solutions are more complex and require an “out of the box thinking” approach, the breaking out of Psychological Inertia (trying to find solutions only from personal experience); they call for inventive solutions since one cannot rely on personal experience to solve them.

Yet, solving them is not impossible since according to Altshuller more than 90% of the problems we face have already been solved before. The exact same problem one faces may not have been solved but the process used to solve other problems (that may not be identical) can be used since the quintessential patterns for innovative problem solving are similar. The steps to follow when solving problems with unknown solutions depend on the problem itself but the following fundamental steps are common to all:

• Identifying the Problem
   
• Transform the problem into a model
   
• Analyze the model
   
• Explore for Previously Well-Solved Problems
   
• Analyze how the physical contradictions of those problems were solved
   
• Use the process to solve My problem
   
• Put together ideal solution

Where Do They Meet?

After clearly examining these strategies, it would be fair to conclude that if there is any contradiction between them, it would be infinitesimal. Their goal is the same: increasing the Return On Investment. The factors that can lead to that goal are the same; they are called customer satisfaction, inventory reduction, waste elimination, higher productivity and efficiency of the production resources, excellent level of the quality of products and services. 
The validity of all these strategies has been strongly substantiated by the successes that major corporations have seen as a direct result of their application. GM, Sierra Management Technologies and Thomson-Shore are among the many companies that have used TOC with great success, Lean and Six Sigma are constantly gaining credence among manager and even though TRIZ is still a shadowy methodology, its success in engineering is slowly but very surely bringing it to the mainstream.

Even though its effectiveness is contingent upon the extent to which it permeates all aspects of a company’s operations, Six Sigma remains a project based strategy. The Six Sigma project selection is very crucial for a company because selecting a wrong project can only have negative effects. The starting point of a project selection might be a thorough analysis of the value chain of a company and its overall operations. How they are related, how they impact on one another. System diagrams and regression analysis can help determine the affect that changes in one department can have on the rest of the operations.

Both TOC and Lean rely on minimizing inventory (even if the definitions they give to the notion are slightly different) and minimizing the operational expenses to increase ROI. The Theory Of Constraints insists on Balancing the flow of products throughout the plant with the demand from the market and Lean insists on a steady flow of materials throughout all the production processes, but it is obvious that since all of a company’s resources capabilities are seldom even it is impossible to use all the resources to their full potential at the same time; therefore some resources will always be underused. To maximize the ROI, the objective should be to maximize the efficiency and effectiveness of all the resources at the same time. That’s where TOC can be helpful since it is about identifying bottlenecks and improving them for a continuous improvement. The identification of the bottlenecks requires value chain and process mapping. Once the bottlenecks are identified, a Six Sigma project would be an effective tool to improve on them and TRIZ techniques can efficiently speed up contradiction resolutions and help save resources.

Six Sigma has attracted some adepts who fanatically believe that it can be a panacea to all management problems, but taken in isolation, it is obvious that it will fail to be fully satisfactory, that’s why most of the companies that espouse it are combining it with Lean for better results. The objective should not be the summation of the different strategies but their amalgamation, their synergic integration for the creation of a sturdy body of knowledge.
 

Tell us what you think about this article. Send a note to the Editor.