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  Manufacturing Focus: Our Weekly Feature Article on Topics Related to Manufacturing Management  
 
 
  -February 10, 2009 -  

Supply Chain News: The Supply Chain and Manufacturing Improvement Tool Kits



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From Lean to Theory of Constraints, Here is a Quick Overview

 
 


SCDigest Editorial Staff

SCDigest Says:

While originally focused on manufacturing processes, Lean thinking has been expanded to encompass the broader supply chain and other SCM functions, such as logistics, and even general office/business processes.


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The following article didn’t quite fit into our recent Supply Chain Digest Letter on Lean Manufacturing.  You can find an electronic copy of that Letter plus a wealth of other Lean information at our Lean Microsite: Lean Manufacturing Resources.

Lean is one of several improvement methodologies for manufacturing and supply chain. To add some clarity to what can be a confusing amalgam of terms, we have summarized some of the key approaches below.

Lean: Pioneered by engineers at Toyota (originally called the Toyota Production System, or TPS), Lean is the term subsequently coined by authors James Womack, Daniel Roos, and Daniel Jones in their seminal book “The Machine that Changed the World,” published in 1990, that described the Toyota approach.

In essence, Lean is about removing waste from processes, focusing on total system flow, and driving continuous improvement.

In a later book, Womack and Jones said Lean distilled five key Lean principles:

  • Specify the value desired by the customer
  • Identify the value stream for each product providing that value, and challenge all of the wasted steps (generally nine out of ten) currently necessary to provide it
  • Make the product flow continuously through the remaining, value-added steps
  • Introduce pull between all steps where continuous flow is possible
  • Manage toward perfection so that the number of steps and the amount of time and information needed to serve the customer continually falls

While originally focused on manufacturing processes, Lean thinking has been expanded to encompass the broader supply chain and other SCM functions, such as logistics, and even general office/business processes.

Lean has a defined and broad array of tools, such as Value Stream Mapping and Kaizen, which are used to analyze and improve processes.

(Manufacturing Article - Continued Below)

 
     
 
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Even within Lean, there are two main branches or philosophies:

TPS: The founding concept, which in addition to the principles mentioned above relies strongly on the concept of Just-in-Time (JIT) inventories, which are achieved by achieving a pull-based system, continuous flow, and predictable cycle times. However, some believe that traditional TPS does not do a good job of handling scenarios with high product mix, shared production assets across products, and volatile demand.

DFT: Partly in response to the limitations of TPS in some scenarios, in the 1980s consultant John Constanza developed a set of tools known as Demand Flow Technology (DFT). DFT is primarily a set of mathematical tools to coordinate work flow into a synchronized stream, achieving balance and greater flexibility that TPS thinking may sometimes provide.

Six Sigma: Springing from the ideas of quality guru Edwards Demings, Six Sigma is a quality improvement methodology that, in general, seeks to reduce process and results variation. The term comes from statistical measures of this deviance, which at a Six Sigma level means there would be only 3.4 defects in a process/product per million “opportunities.”

In the US, Six Sigma was championed in manufacturing by such companies as Honeywell/Allied Signal and GE, to their great benefit. The most popular approach is known as the DMAIC methodology, consisting of five steps: Define, Measure, Analyze, Improve and Control.

As with Lean, the technique has branched out beyond manufacturing to other supply chain and general business processes.

Theory of Constraints: Developed by the legendary Dr. Eli Goldratt, Theory of Constraints (TOC) is an approach that focuses on finding the single constraint that is limiting the performance of a given system. As that constraint is fixed/relaxed, or the system is optimized around this constraint, another constraint will emerge, and that constraint is then tackled, as are subsequent ones, each time improving overall system performance.

While there are also many tools in the TOC playbook, a key one is the concept of “Drum-Buffer-Rope”: the drum – the constraint or weakest link; the buffer - the material release duration; and the rope – the release timing.  The aim of the solution is to protect the weakest link in the system and, therefore, the system as a whole against process dependency and variation and, thus, maximize the system’s overall effectiveness.

Hybrid Approaches

Of course, many companies and consultants have opted to combine these methodologies in one form or another.

The most popular is Lean Six Sigma. In general, using this approach a company seeks to improve results by using Lean to streamline processes and eliminate waste, then improve the consistency and reliability of those processes using Six Sigma.

There are several principles that drive the strategy of bringing Lean and Six Sigma together:

  • Lean cannot bring a process under statistical control
  • Six Sigma alone cannot dramatically improve process speed or reduce invested capital
  • Both enable the reduction of the cost of complexity, but in complementary ways

Some are combining all three of the improvement processes together, adding in Theory of Constraints as a front-end before both Lean and Six Sigma. This three-way combination is sometimes referred to as TLS (TOC, Lean, Six Sigma).

“TLS is by far the best approach – and in that order,” says Judy Yetter of Shippensburg University in Pennsylvania and an expert in this area. “TOC must be the foundation from which you make decisions about where to apply Lean and Six Sigma.”

What would you add to our supply chain improvement taxonomy? What tools do you favor where, and why? Let us know your thoughts at the Feedback button below.

 
     
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Feedback
2009-02-16

February 16, 2009

How refreshing. Do you know how many people are not aware that Six Sigma is a hybrid of Theory of Constraints (TOC) and Total Quality Management (TQM)?

What is even more amazing is how difficult it is to explain that those two methodologies lead directly to Supply Chain Solutions. What we fail to see is that everything is related, that suppliers in the supply chain become members of different collaboration groups, meaning they have one to many relationships or belong to multiple systems.

Also that quality for entire systems as well as how efficient each supplier is has a direct impact on the manufacturing facility that releases the product to the end user, thus making collaboration necessary for global competition.

I loved the article and will forward to as many people as possible.

Tony E. Madison



2009-02-10

February 10, 2009

Thanks for the balanced article. Yours is one of the first to get the Theory of Constraints aspect of it correctly.

Another ToC application is the distribution solution, which is kind of a hybrid -- it takes the global system and makes your entire chain a pull system.

Mark Woeppel
President/CEO
Pinnacle Strategies





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