Other Methodologies That Complement Lean Tutorial

Lean Management Other Methodologies That Complement Lean

Welcome to the eighth chapter of the Lean Management tutorial (part of the Lean Management Certification Training.)

Here, we will talk in detail about “Other Methodologies That Complement Lean.” 

In the next section, we will start with the objectives of the methodologies we are going to cover in this lesson.

Objectives

In this lesson, we will discuss:

  • The Theory of Constraints

  • Quick Response Manufacturing

  • Factory Physics

  • Six Sigma

In the next section, we will start with the theory of constraints (also known as TOC).

Theory of Constraints

In this section, we will cover the theory of constraints. The theory of constraints was developed and popularized by manufacturing guru Dr. Eliyahu M. Goldratt in 1984.

The theory of constraints has evolved over the past 20 years from a production scheduling technique to a systems methodology which is primarily concerned with managing change. It encompasses a wide range of concepts, principles, solutions, tools, and approaches. 

The theory of constraints states that every system must have at least one constraint limiting its output. 

What does Constraint Mean in Lean Management?

A constraint is a factor that limits the system from getting more of whatever it strives. The theory of constraints provides a reliable process that insists on follow through and focuses improvement efforts where they will have the greatest immediate impact on the bottom line of the company. 

In other words, “it is a thinking process that enables people to invent simple solutions to seemingly complex problems.”

Theory of constraints adopts the common idiom "a chain is no stronger than its weakest link."

This means that processes, organizations, etc., are vulnerable because the weakest person or part can always damage or break them or at least adversely affect the outcome. Just as the strength of a chain is dictated by its weakest link, the performance of any value-chain is dictated by its constraint.

The definition of constraints is “anything that limits or prevents a system from achieving higher performance versus its goal.” There are many ways that constraints can show up, but a core principle of the theory of constraints is that there are not hundreds of constraints.

There is at least one but at most only a few in any given system. Constraints can be internal or external to the system.

Internal Constraints 

An internal constraint is in evidence when the market demands more from the system than it can deliver.

If this is the case, then the focus of the organization should be on discovering that constraint and following the five focusing steps (this will be covered in the next section) to open it up (and potentially remove it).

External Constraints 

An external constraint exists when the system can produce more than the market will bear. If this is the case, then the organization should focus on mechanisms to create more demand for its products or services. 

There are three major types of constraints; they are equipment, people, and policy. 

Equipment: The way equipment is currently used limits the ability of the system to produce more salable goods/services.

People: Lack of skilled people limits the system. Mental model, prejudice, or opinions held by people can cause behavior that becomes a constraint.

Policy: A written or unwritten policy can prevent or limit the system from making more. Organizations have many problems with equipment, people, or policies.

A machine breakdown is not a constraint in the true sense. But, if the same machine breaks down every day, it can be considered as a constraint as it is the thing that is preventing the organization from getting more throughputs. 

In the next section, we will continue the topic on the theory of constraints and cover the five focusing steps and thinking process for continuous improvement in an organization.

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Theory of Constraints(Cont.)

In 1990, Goldratt introduced a method called the five focusing steps for addressing system problems on a continuous improvement basis.

The steps are as follows.

Step 1

The first step is to identify the constraint. Identify the operation or activity that is limiting or prohibiting the productivity of the system. This may be a physical, person, or policy constraint. In order to manage a constraint, one must first identify it and then move forward.

Step 2

The second step is to decide on how to exploit the constraint. Once the constraint is identified, the next step is to focus on how to get more production within the existing capacity limitations. That is, to achieve the best possible output from the constraint. Remove limitations that constrain the flow, and reduce non-productive time, so that the constraint is used in the most effective way possible.

Step 3

The third step is to synchronize everything else to the above decision. Exploiting the constraint does not ensure that the materials needed next by the constraint will always show up on time. This is often because these materials are waiting in order at a non-constraint resource that is running a job that the constraint does not need yet.

Synchronization is necessary to avoid making the constraint wait for work. Action to be taken is to link the output of other operations to suit the constraint. Also, ensure smooth workflow by avoiding buildup of work-in-process inventory.

Step 4

The fourth step is to evaluate and elevate the performance of the constraint. After the constraint is identified, the available capacity is exploited, and the non-constraint resources have been synchronized, the next step is to determine if the output of the constraint is enough to supply market demand. 

If so, there is no need to elevate because this process is no longer the constraint of the system. In situations where the system constraint still does not have sufficient output elevate the constraint by investing in new resources, equipment or increase number of staff to increase the output.

Step 5

The fifth and final step is to check if any change is observed if so go back to step 1 and repeating the steps. Assess to see if some other operation or policy has become the system constraint. This step is consistent with a process of ongoing continuous improvement.

The thinking processes are a set of tools and processes that allow an individual or group to solve a problem and/or develop an integrated strategy using the rigor and logic of cause-and-effect, beginning with the symptoms and ending with a detailed action plan that coordinates the activities of all those involved in implementing the solution.

Simply stated, the thinking process involves the rigorous application of effect-cause-effect logic to answer the following three questions:

  • “What to Change?”

  • “What to Change to?”

  • “How to Cause the Change?”

Rather than reacting to external change, or being subjected to random internal change, many organizations have concluded that a process of ongoing improvement is an absolute necessity.

The image below illustrates the theory of constraints 

theory of constraints

For an organization to have a process of ongoing improvement, certain basic questions need to be answered faster and more effectively.

Those three fundamental questions are:

  • “What to Change?”

  • “What to Change to?”

  • “How to Cause the Change?”

What to change? 

The first question, “what to change?” is equivalent to asking, “where is the constraint?”. Since this process is generally used when the constraint is not a physical resource, there is usually no physical evidence (such as work in process inventory) to point to the constraint.

Instead of using physical evidence, one has to map what is currently going on in the system and start with the evidence that is available.

These typically are the negative events that are apparent in the system. From a list of observable symptoms, cause and effect are used to identify the underlying common cause, the core problem, for all of the symptoms.

In organizations, however, the core problem is inevitably an unresolved conflict that keeps the organization trapped and/or distracted in a constant tug-of-war like short-term versus long-term, centralize versus decentralize, process versus results, etc.

For example, frequently shipping orders late or excessive amounts of inventory, etc. The challenge is to map out the interrelated web of cause-and-effect that links the undesirable effects together.

Once completed, one is generally able to identify a “core problem” at the bottom of the map.

What to change to?

The second question “what to change to?” the first step in determining the answer to this question is to understand why the core problem exists. It is a general misconception that, if it is an easy solution to a core problem, it would have been solved a long time ago. There must be some conflict that underlies the core problem.

By challenging the logical assumptions behind the core conflict, a solution to the core conflict is identified. Once this is identified, the thinking process is used to develop a breakthrough idea that will resolve a conflict. These are often the changes to the policies, measurements, and behaviors, as well as the organization’s strategic objectives.

Lastly, the strategy is not complete until all potential negative side effects of the strategy have been identified, and the means of preventing or mitigating them become key elements of the strategy. Trimming these negatives side effects allows an organization to intentionally and systematically create strategies that are a win for all those affected.

How to cause the change? 

The third question “how to cause the change?” In order to cause the change, one must take into consideration existing culture of the organization and plan the transition for change and have appropriate people at the right place to drive such change.

A plan for successfully implementing the strategy is created, including what actions must be taken, by whom and when. Because resistance to change can block even the most perfectly laid strategies and plans, building active consensus and collaboration, or buy-in is crucial.

If these questions aren’t answered frankly and effectively by both the people who must implement the change and those who will be affected by it, the proposed change will not have the buy-in and support to succeed. Like most changes, no matter how great the idea or tremendous the value, the strategy and tactics are doomed from the outset.

The next section we will cover quick response manufacturing.

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Quick Response Manufacturing

Quick response manufacturing (QRM) is the latest development in Lean manufacturing where companies have progressed from the just-in-time methodologies.

It is a manufacturing strategy for implementing speed throughout the manufacturing process including often neglected areas such as quote processing, engineering, product development, and order processing.

The process looks at how lead times across the company can be reduced to increase productivity. Customer satisfaction is an important driver for businesses and the ability to respond quickly to customer’s requirements is a leading factor behind this.

Customers expect their vendors to respond to their requirements, so by adopting these processes, companies may have an advantage in winning business.

The concept of quick response manufacturing was first developed in the late 1980s by Rajan Suri, at the time professor of Industrial and Systems Engineering at the University of Wisconsin-Madison.

Combining growing academic research in time-based competition with his own observations from various lead time reduction projects, Suri conceived QRM as a concept espousing a relentless emphasis on lead time reduction that has a long-term impact on every aspect of the company.

Quick response manufacturing is an expansion of time-based competition, aimed at a single target with the goal of reducing lead times. The key difference between QRM and other time-based programs is that QRM covers an entire organization, from the shop floor to the office, to sales and beyond.

It emphasizes the beneficial effect of reducing internal and external lead times. Shorter lead times improve quality, reduce cost, and eliminate non-value-added waste within the organization while simultaneously increasing the organization’s competitiveness and market share by serving customers better and faster.

When a company implements QRM, the process of reducing lead times should be adopted throughout the organization. The company should also include analysis techniques and tools, and a step-by-step methodology to achieve the required reduction in lead times.

The time-based framework of quick response manufacturing accommodates strategic variability such as offering custom-engineered products while eliminating dysfunctional variability such as rework and changing due dates.

For this reason, companies making products in low or varying volumes have used this as an alternative or to complement other strategies such as Lean manufacturing or Six Sigma. (We are going to cover Six Sigma in detail in later sections).

QRM is often implemented by two types of businesses.

  • The first type is a company that produces highly engineered material in small batches.

  • The other type of company to implement QRM is one that does not need to engineer each item but has a very large number of different items with highly variable demand for each.

Implementing QRM requires that the whole organization understands it as a part of the process. In addition both management and employees should understand the manufacturing systems that are in place at the company, especially those that affect lead times.

However, lead times are not always determined by manufacturing processes. The purchase of raw materials, a back office function, will trigger a lead time, so a part of the QRM policy will include reducing lead times of non-manufacturing processes.

The QRM will, therefore, cover all areas such as purchasing, shipping, finance, and human resources.

In the next section, we will cover the next methodology called factory physics.

Factory Physics

Factory physics is a systematic description of the underlying behavior of manufacturing systems. The book named “Factory Physics” is written by Wallace Hopp and Mark Spearman, which introduces a framework for manufacturing management.

Understanding factory physics enables managers and engineers to work with the natural tendencies of manufacturing systems to:

First, identify opportunities for improving existing systems,

Second, design effective new systems,

Third, make the tradeoffs needed to coordinate policies from disparate areas.

The fundamental factory physics framework states that all value streams or production processes or service processes are composed of demand and transformation (or supply).

Transformation is made up of primitive elements of flows and stocks. There are very specific practical, mathematical relationships that enable one to describe and control the performance of flows and stocks.

In the presence of variability, there are only three levers capacity, inventory, and response time available to synchronize demand and transformation with the lowest cost and highest service level.

Factory physics enables practical and predictive understanding of flows and stocks and how to best use the three levers to optimally synchronize demand and transformation. The concepts provide a very powerful and practical approach to design successful operations strategies.

The executives connect these operations strategies directly to day-to-day operations for achieving marketing and financial goals of an organization.

In the next section, we will cover another methodology called Six Sigma.

Six Sigma

Six Sigma is a quality and process improvement methodology originally developed by Motorola in 1986. It is a set of tools and strategies which became famous after Jack Welch made it a central focus of his business strategy at General Electric in 1995.

Six Sigma originated as a set of practices designed to improve manufacturing processes and eliminate defects, but its application was subsequently extended to other types of business processes as well.

In six sigma, a defect is defined as any process output that does not meet customer specifications, or that could lead to creating an output that does not meet customer specifications.

Six Sigma seeks to improve the process and quality of the outputs by identifying and removing or minimizing the causes of variability and defects in manufacturing and business processes. It uses a set of quality improvement methods and statistical methods and provides a framework for breakthrough improvements.

Each six sigma project carried out within an organization follows a defined sequence of steps and has quantified financial targets, like cost reduction and/or profit increase. The term "Six Sigma" comes from a field of statistics known as process capability studies.

Originally, it referred to the ability of manufacturing processes to produce a very high proportion of output within specification.

Processes that operate with "six sigma quality" over the short term are assumed to produce long-term defect levels below 3.4 defects per million opportunities (DPMO). Six Sigma's implicit goal is to improve all processes to that level of quality or better.

Six Sigma has two major methods DMAIC and DMADV (or DFSS) The first methodology, DMAIC project methodology has five phases. It is the guideline commonly used in addressing and improving a business process.

It has the following set of phases:

Define the problem

First, define the problem, the voice of the customer, and the project goals, specifically.

Measure key aspects

Second, measure key aspects of the current process and collect relevant data.

Analyze the data

Third, analyze the data to investigate and verify cause-and-effect relationships. Determine what the relationships are, and attempt to ensure that all factors have been considered. Seek out the root cause of the defect under investigation.

Optimize the process

Fourth, improve or optimize the current process based upon data analysis using techniques such as the design of experiments, Poka-yoke or mistake proofing, and standard work to create a new, future state process. Set up pilot runs to establish process capability.

Sustain the failure state 

And finally, fifth, control or sustain the future state process to ensure that any deviations from target are corrected before they result in defects.

Implement control systems such as statistical process control, production boards, and visual workplaces and continuously monitor the process.

The second methodology is called DMADV project methodology. This is mostly applicable to the improvement and creation of new products or designs. DMADV is also known as the DFSS or the Design for Six Sigma.

The image below describes the design involved in six sigma.

design for six sigma: dmadv roadmap

It has the following set of phases:

Define design goals

First, define design goals that are consistent with customer demands and the enterprise strategy.

Measure and identify CTQs

Second, measure and identify CTQs (characteristics that are Critical to Quality), product capabilities, production process capability, and risks.

Analyze to develop and design alternatives

Third, analyze to develop and design alternatives, create a high-level design, and evaluate design capability to select the best design.

Design details

Fourth, design details, optimize the design and plan for design verification. This phase may require simulations.

Verify the design

And finally, the fifth phase, verify the design, set up pilot runs, implement the production process and hand it over to the process owner(s).

In the next section, we will cover various implementation roles in six sigma.

Six Sigma Implementation Roles

Six Sigma identifies several key roles for its successful implementation. Executive leadership includes the CEO and other members of top management. 

They are responsible for setting up a vision for six sigma implementation. They also empower the other role holders with the freedom and resources to explore new ideas for breakthrough improvements.

Champions take responsibility for six sigma implementation across the organization in an integrated manner. The executive leadership draws them from upper management.

Champions also act as mentors to “Black Belts.”

Master black belts

Master black belts, identified by champions, act as in-house coaches on six sigma.

They devote 100% of their time to Six Sigma. They assist champions and guide Black Belts and Green Belts. Apart from statistical tasks, they spend their time on ensuring consistent application of six sigma across various functions and departments.

Black belts

Black belts operate under Master Black Belts to apply Six Sigma methodology to specific projects. They devote 100% of their time to Six Sigma. They primarily focus on Six Sigma project execution, whereas Champions and Master Black Belts focus on identifying projects/functions for Six Sigma.

Green belts

Green belts are the employees who take up six sigma implementation along with their other job responsibilities, operating under the guidance of Black Belts.

Yellow belts

Yellow belts are for employees that have basic training in six sigma tools and generally participate in projects. White belts are for those locally trained in the concepts but do not participate in the project team.

With this, we have completed this lesson on other methodologies that complement Lean.

In the next section, we will summarize what we covered in this lesson.

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Summary

The topics covered in this lesson are as follows.

  • Remove constraints

  • Reduce lead time

  • Trade-offs for manufacturing management

  • Reduce variability and defects

Conclusion

Next, in the ninth chapter, we will learn about Lean Maturity Matrix.

  • Disclaimer
  • PMP, PMI, PMBOK, CAPM, PgMP, PfMP, ACP, PBA, RMP, SP, and OPM3 are registered marks of the Project Management Institute, Inc.

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