When looking at ways to improve businesses, managers have resorted to many methodologies over the years. People around long enough remember Total Quality, Just In Time, Manufacturing Resource Planning and their modern counterparts: Six Sigma, Lean and Enterprise Resource Planning. While we have heard of the companies that have benefited greatly from these efforts, it’s more common to hear about firms implementing them with disappointing results. Why would these powerful techniques work for some but not others?
In addition, people debate whether Theory of Constraints (TOC) or Lean is the way to improve their business. The answer you get depends on whom you ask. Lean practitioners will tell you that Lean is the best system and will give a great list of successful implementations. TOC professionals will tell you that much of the effort expended on Lean is wasted because it never impacts the bottom line.
Velocity is a book by TOC professionals Dee Jacob and Suzan Bergland, along with the original co-author of The Goal, Jeff Cox. Velocity tackles the question of TOC versus Lean combined with Six Sigma in the form of a business novel. It describes Hi-T Composites Company, already using TOC being bought out by Winner Inc., a company using Lean/Six Sigma.
The authors describe how the Winner Lean/Six Sigma team began to implement their programs in Hi-T. They saw the extra capacity around the constraint and the extra workers in the constraint area as waste and began reducing this waste. When results were disappointing, the implementers said that results would come when the implementation was complete. After a year of floundering, the President of Hi-T found herself in jeopardy of losing her job. When she was given three months to turn the company around, she assembled a team that used current reality trees and the five focusing steps to reestablish protecting the constraints. Once they did this, they saw the benefits of the Lean/Six Sigma efforts — the non-constraints now had more surge capacity and they were able to solve a chronic product quality problem that led to increased sales. The title of the book, Velocity, is what the new system was called. In physics, velocity is defined as speed with direction. The Lean/Six Sigma was the speed component while TOC determined the direction.
Below is a table describing some of the key differences between the two methodologies.
|Goal||Achieve customer satisfaction||Make money, now and in the future|
|Focus||Find and eliminate waste and improve quality||Identify, protect, elevate the constraint|
|Motto||Lots of small improvements will add up||The way to rapid improvement is to improve your constraints|
So what is my answer to the question Lean or TOC? Why not both? TOC on its own is great at setting priorities for the firm but can fall down in the implementation stage. Lean/Six Sigma are great tools, but lack the focus to find the best projects. If you use TOC to determine the constraints and use Lean/Six Sigma to improve them, you can get the best of both worlds.