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TOC-Lean-Six Sigma (TLS) synergy
TLS synergy - Solution for Profits

A large, traditionally managed, profitable organization seeks and gets to be listed on the stock exchange after more than 25 years of operations. True – the organization is now able to access funds and investments from shareholders. Also true – the organization’s strategies and profitability maneuvers are scrutinized and even criticized.

The auditors move in and discover anomalies in the business performance. The message goes out that millions of dollars of inventory are unaccounted for. The organization’s structures, roles and functions are seen as the likely ‘root causes’. Out goes the paternalistic Chief Operating Officer, who has been with the organization since it started. In comes a ‘boy wonder’ who realizes that the only way to impress the shareholders and secure the position is to undo what has existed. He does this with a ‘gun in the hand’. He gets some response in the administrative functions, but dares not upset the operational managers who evidently still bring in the revenue and profits.

It is a classic situation. The common response is a fast, seemingly effective solution. The shareholders win if such solutions were indeed ‘worth their money’ (‘boy wonder’ and the cosmetic alterations). The truth of the matter is that the organization’s profitability and performance capability are in jeopardy. 

Elements of the TOC + LM + SS

Theory of Constraints (TOC), Lean Management (LM) and Six Sigma (SS) offer a versatile and formidable basis for launching improvements that can significantly impact business performance and excellence. Continuous improvement efforts depend on critical diagnosis and analysis that are comprehensive and thorough. Such is the product of the synergy that is inherent in TOC + LM + SS.

Factor One: Theory of Constraints (TOC)

According to TOC, every organization has - at any given point in time - one key constraint which limits the system's performance relative to its goal. These constraints can be broadly classified as either an internal constraint or a market constraint. In order to manage the performance of the system, the constraint must be identified and managed correctly.
It is based on the fact that, the weakest link in any complex system is most often only one aspect of that system that is limiting its ability to achieve more of its goal. For that system to attain any significant improvement that constraint must be identified and the whole system must be managed with it in mind.

Factor Two: Lean Management (LM)

The elimination of constraints releases the bottlenecks and alleviates the basis for hastening the throughput of the business performance. LM realizes that the approaches adopted to achieve continuous improvement in TOC are capable of meeting Lean Management principles such flexibility, ‘pull production’, continuous flow and time to market.
Lean Management principles are significantly facilitated through various methodologies in TOC such as Drum-Buffer-Rope. Lean’s focus on waste elimination is systematically addressed through TOC’s Thinking Process (TP) – for example, applying the Current Reality Tree to the concern for equipment reliability.

Factor Three: Six Sigma (SS)

The project by project approach remains the basis for diagnosis, analysis and implementation of solutions. Methodologies are only as good as what is factually shown to impact solutions. Data and evidence provides the empirical basis for persuading others and overcoming resistance to change.
The statistical rigor of Six Sigma ensures that where solutions are implemented, capabilities are sustained and controlled. The statistical basis for testing hypothesis and testing possible resolutions for validated ‘root causes’ are the result of rigorous efforts to funnel the analysis through cause and effect. Such efforts are squarely aligned to TOC’s tools found under ‘trees’ and ‘clouds’.

The Synergy is possible

Lean Management heightens the operational basis and rationale for aligning an organization’s resources and people toward providing value to the customer. Through the application of TOC, Lean’s focus on increasing value for the customer and reducing cost for the organization are significantly strengthened and robust. Six Sigma statistical rigors ensure that the solutions that produce the results are repeatable, reproducible, valid and reliable. The synergy in TOC + LM + SS (TLS) is the corporate leader’s staple for moving projects in the most efficient and effective way toward achieving the expected results.

A study released in the May, 2006 APICS magazine demonstrates that TOC is twenty times as effective as Six Sigma, and nearly ten times more effective than lean at causing cost savings. I find this remarkable result especially interesting because cost savings are a side benefit of TOC...TOC focuses on increasing Throughput.This is the only scientific double-blind study of its kind performed "in the wild", i.e. in actual business plants. The authors summarize the results of over 100 improvement projects, where:

  • 11 plants applied Six Sigma
  • 4 plants applied Lean
  • 6 plants applied TOC, Lean and Six Sigma
The results are unequivocal:A little further analysis shows:If we assume linearity (i.e. that the treatments are additive), we can estimate TOC alone. The 11 six sigma plants saved 0.63% per plant, and the 4 Lean plants saved 1.5% per plant. So, we subtract 6x(.63+1.5) = 13% for the 6 plants that did the combined, the estimated TOC alone savings is 76%, or ~13 % per plant. So, TOC is twenty times more effective than six sigma, and around nine times more effective than lean.

If you want to know more about our TOC service offer, please contact us at +852 2312 6038 or complete the following enquiry form at Our TOC Un-refusable Offer - Solution for Profits

如果您想更進一步了解我們之TOC德奧思服務, 歡迎與我聯絡+852 2312 6038 或填上以下網上回覆表格

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Published on: 2008-10-25 (15342 reads)

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