The Need to Integrate TOC, Lean, Six Sigma and Management by Processes

Eduardo C. Moura September 2010

A Webinar by:

Eduardo C. Moura: Founder and President of Qualiplus Consulting (www.qualiplus.com.br). Graduated as Electronics Engineer in 1978, USP (Sao Paulo University-Brazil). Since 1984 has been an active instructor, consultant and author on quality and business excellence. From 1986 till 2003 accumulated the ASQ certications for CQE, CRE, CQA and CQM. Quality Specialist by the UNICAMP (University of Campinas, Brazil) in 1992. Certied Taguchi Expert by the ASI (American Supplier Institute), 1999. Author of several technical papers and books published in Brazil and in the USA, including Volume 15 of the ASQ How-To Series, How to Determine Sample Size and Estimate Failure Rate in Life Testing, Quality Press, 1993. Certied Thinking Process Practitioner by the TOCICO (The Theory of Constraints International Certication Organization), 2010.
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30 years TQM/Six Sigma; 16 yr BMTP; 10 yr TOC; 9 yr Lean (studying, teaching and implementing) Preaching integration of those 4 methodologies since 2003, 7 yrs ago. Article submitted to a US Quality magazine 4 yrs ago; rejected: Nobody ever wrote about that...

Article written in 2004, revised by Dr. Alan Barnard (Goldratt Research) late 2009. Available from Qualiplus or TOCICO.

The goal...

To clarify about the need and benets of integrating:

TOC (The Theory of Constraints) Lean Production/ Lean Ofce Six Sigma Business Management through Processes (BMTP)

Prereqs...

You have some previous knowledge about TOC, Lean and Six Sigma.

BMTP will be explained in a little more detail...

Origin of BMTP

Ishikawa

That is a methodology developed by Eduardo Moura as of 1994, based on the concept of CrossFunctional Management by Kaoru Ishikawa, plus the contributions of H. James Harrington and the use of the 7 New QC Tools [Mizuno, Ref. 3].
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Harrington

Mizuno

E. Moura

I didnt dare to place my photo among such celebrities...

Some more details about BMTP

BMTP implementation steps: 1) Identify and structure the needs from every business stakeholder.

Customers Employees Owners/investors Suppliers Community Government

Customer satisfaction parameters (partial)
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2) Identify all business processes by grouping together related, cyclical business activities.

Macroprocesses
Desenvolvimento e avaliao de fornecedores

Distribuio

Reunir fornecedores para avaliao de desempenho

Controlar as entregas por fornecedor

Desclassificar fornecedores sem qualidade

Expedio

Armazenamento

Analisar desvios nas entregas de insumos (quantidade + prazo)

Avaliar performance dos fornecedores

Preparar documentao tcnica p/ produo em terceiros

Separar produtos p/ expedio

Acompanhar as entregas dos produtos

Armazenar produtos acabados no C.D.s

Desenvolver formas alternativas de armazenagem de insumos/ produtos

Negociar requisitos da Reckitt com fornecedores

Comparar diferentes fontes de suprimento intercompany

Buscar especificaes tcnicas de materiais

Despachar produtos acabados para clientes

Carregar veculos para embarque

Enderear os produtos p/ armazenagem

Eliminar estoques obsoletos

Aprovar fornecedores de servios de beneficiamento

Monitorar desempenho dos CDAs

Auditar processos de fornecedores

Identificar problemas nas entregas de produtos

Enviar produtos para os CDAs

Analisar custos de armazenagem

Desenvolver fornecedores com qualidade assegurada

Visitar fornecedores de insumos produtivos

Processes Cyclical business activities

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3) Identify improvements and innovations needed to realign business processes (value-creation, support and management) to the satisfaction of stakeholders needs.

4) Create the business macroow (a systemic model of the business system viewed as a process chain)

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5) Design and implement the integrated standardization of the business macroow

Business Macroow

Macroprocess ow and interfaces

Process ow and interfaces

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Lets recognize...

No individual improvement methodology has the denite cure for all organizational diseases. A solution is needed that combines the best contributions from each of them.

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Why those 4 methodologies?

Real improvement cannot be achieved without starting from a systemic point of view. Most organizational improvements require a precisely orchestrated intervention in the chain of work processes. Nowadays TOC, Lean, Six Sigma and BMTP all consider:

a business-wide perspective, and orient improvement actions to business processes.

And each of those methodologies have unique contributions that no other have:
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Unique contribution of TOC

Goal: to increase organizational prosperity by focusing on the business systems constraint. Do organizations need that? No other approach does that with such a laserprecision focus and effectiveness. Thats why TOC should serve as the guiding methodology for Lean, Six Sigma and BMTP implementations.
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Unique contribution of Lean

Goal: To reduce time-to-cash by focusing on waste elimination in the process ow. Do organizations need that? Lean contributes with powerful concepts and proven tools for visual control, quick feedback and constant improvement of the value-creation chain.
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A Value Stream Map

Unique contribution of Six Sigma

Goal: to increase customer satisfaction by focusing on the variability reduction of key product/process parameters. Do organizations need that? No other methodology inherits so much of the core values, concepts and tools developed along 80 years of the worldwide Total Quality movement.

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Unique contribution of BMTP

UNSATISFIED CUSTOMERS LOW COMPETITIVITY

Goal: to increase all stakeholders satisfaction by focusing on the integrated standardization of the business processes ow. BMTP identies a major policy constraint: the Management by Departments paradigm

INCREASED COST POOR QUALITY SLOW RESPONSES

LOTS OF REWORK AND FIREFIGHTING

DEFICIENT COMMUNICATION/ INFORMATION FLOW

that sub-optimizes the entire business system...

That root cause has shown up in more than 50 CRTs the author has built in several different companies along the past 10 years!
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AMBIGUOUS INTERFACES BETWEEN AREAS (UNCLEAR, MISMATCHED AUTHORITIES AND RESPONSIBILITIES)

MANAGEMENT BY DEPARTMENTS PARADIGM

The high levels of rework and reghting (typically 70%!) immediately drive managers into the focusing dilemma:

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So far, the Management by Departments paradigm (a root cause of the focusing dilemma) has been taken for granted by TOC, Lean and Six Sigma!

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By establishing a new business structure and management model, BMTP is a win-win solution to the managerial focusing conict.

different groups of people will be effecitively focused on both sides of the conict...

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Current gaps in each methodology (my point of view; no offense intended...)

GAP TOC
Tends to be top management only. Takes process variation as a given. Tends to be (too) money-focused; lacks attention to values and mission.

Lean

Tends to be internally focused on companys value streams. Does not consider market constraints.

Six Tends to be too statistics-oriented. Sigma Typically, focuses mostly cost reduction.
Although it builds an integrated process structure, it does not provide BMTP the lling for each specic process, in terms of applicable improvement tools.
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Integration trends

Lean Six Sigma (Rubrich 2001; George 2002) is a standard approach nowadays. Quite recently, the integration of TOC+Lean+Six Sigma is gaining voice: The Ultimate Improvement Cycle (Sproull 2009); Velocity (AGI 2010). E. Moura (2002, 2006) introduced (humbly...) the 360 Excellence model (E360), integrating TOC, Lean, Six Sigma and BMTP.

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TOC

Main syenergistic interactions

TP: prioritize projects CCPM: better project mangt

LEAN

CCPM: prioritize projects CCPM: better project mangt

TOC

TA: better eval. nancial impact CRT: problem analysis Cloud: innovative solutions TA: better nanc. indic./decisions CCPM: better project mangt TOC Sol. incorp. into processes
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SS

BMTP

TOC

Lean tools: more visual control Wider people involvement

TOC

Waste elim.: better Q, faster L/T Lean tools: more stable processes

LEAN

SS

Visual process standardization Kaizen team maintain standard.

BMTP

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TOC

Balances customer focus x T Stat. tools: better data analysis

TOC

SS

Less variab.: more stable ow

LEAN

GBs/BBs: high impact proj.

BMTP

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TOC

Integr. chain: better exploit/subord. Breaks silo mentality

TOC

Overall integrated chain: ow

BMTP

Kaizen efforts are incorp. to proc. LEAN

Leadership is standardized Systematic projects id./drive

SS

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But watch out!

All such integration of methods and tools is just know-how... And know-how is not sufcient for sustainable, long-term organizational improvement

As a matter some 70% of the organizational improvement initiatives fail because of the narrow-minded, tool-oriented approach... know-what: what key business aspects should we drive knowhow to, in order to improve overall performance? know-why: why improve? (core values)
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Two other elements are necessary:

The 360 Excellence Model

Know-How Know-What Know-Why

Successful know-how application requires precise know-what identication and know-why realization.

A simplified implementation roadmap

Results Analysis Improvement Projects
BMP Lean Six Sigma TOC Other

Opportunities Denition
Identify High-impact themes VOC Study

Dene Organizational Ideology

References

[1] E. C. Moura, A. Barnard (2006, 2010): The Need to Integrate TOC, Lean, Six Sigma and Process Management, Qualiplus Consulting. [2] Strategos website: http://www.strategosinc.com/just_in_time.htm [3] Shigueru Mizuno, editor (1988): Management for Quality Improvement - The Seven New QC Tools, Productivity Press. [4] L. Rubrich, M. Watson, A. Larson (2001): Blending Lean and Six Sigma Workbooks, WCM Associates. [5] M. L. George (2002): Lean Six Sigma - Combining Six Sigma Quality with Lean Speed. [6] E. C. Moura (2002): Business Management by Processes - An Executive Brieng, Qualiplus Consulting. [7] E. C. Moura (2006): Integrated Business Process Standardization Training Manual, Qualiplus Consulting.
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