Tag: lean manufacturing

Smooth the rough spots with TOC, then Lean – and fine-tune with Six Sigma
What Grade of Sandpaper Will You Use? Part Four

Here we are at the final installment of our four-part, Sandpaper blog series about when to use the tools of Lean Manufacturing, the Theory of Constraints (TOC) and Six Sigma to address constraints, drive flow and promote continuous improvement. With regard to sandpaper, I talked a lot about what level of grit you will need to smooth out your processes—and what could happen if you try to start with Six Sigma as a first step in creating continuous improvement momentum.

Refine with Six Sigma

Six Sigma is the fine grit sandpaper, best used on a relatively smooth board that you want to make like glass. After TOC has helped with global flow and directed you to the location of numerous 5s and Kaizen events, you are beyond the point of dealing with special-cause variation. You identified processes that are within statistical control, but now, you need to move the baseline for the process. To do this, you need the depth of understanding that Six Sigma lends.

I have seen countless presentations by companies that begin with Six Sigma. There seems to be this focus on how many hundreds or thousands of Six Sigma projects they performed as an indicator of the value of their continuous improvement dedication. For me, the number of projects you run in an organization that is not ready for the level of refinement that Six Sigma provides, only means doing more work, at more cost, to get fewer benefits.

There are some improvement metrics that in my opinion, are based on funny numbers. But if you start with TOC, you can really see what is changing. That’s because TOC only impacts financials if you move Throughput (T) up, Operating Expense (OE) down, or move Inventory (I) down. (It is important to note that OE includes both direct and indirect labor.) If you take 25 percent of the labor content out of a process but there is no actual reduction to the payroll expense, then you have not impacted the financials unless that 25 percent of freed-up time can be spent increasing throughput. Six Sigma is exceedingly effective, but it can be a costly, slow, and exhausting process if you are trying to apply its fine-grit approach on a very rough board.

The Right Tools at the Right Time

Let’s quickly go through the steps to using TOC and Lean Manufacturing—before you try to use Six Sigma to significantly move the needle.

1) Start with the coarse grit sandpaper – TOC – to point you toward critical constraints that when managed, will provide the greatest return.

As you maximize throughput through constraints and remove obstructions to flow, global throughput and flow goes up. This causes the next level of items impeding flow to come to light as you begin to see more global changes affected—and it creates momentum and visibility for “the next right thing” to do.

2) Use the medium grit tools of Kaizen events and Lean Manufacturing to refine further.

As you get rid of the more glaring impediments to flow, you begin to see where your Kaizen events should be staged. You have more data to make value stream mapping and other Lean tools smooth the process even further.

3) The fine grit of Six Sigma is a great way to finely-tune to your continuous improvement processes.

Six Sigma tools allow you to refine and adjust big picture items with laser-like focus. It allows you to understand common-cause and special-cause variation. So you can determine if you need to bring the process into control or overhaul the process to move to the next level of performance. These areas for improvement may have been hidden until you applied TOC and Lean tools that revealed the changes you need to make the most impact to both global improvement – and the bottom line.

If You Could See Me Now

When I was first working with Lean Manufacturing, TOC and Six Sigma, I made plenty of mistakes and I learned a lot about how to refine the continuous improvement journey. One of the last things I would like to say to help you— keep your eyes open.

A very wise man once said there is a vast difference between looking and really seeing something at depth. I found for myself that when I look at the surface of the issue, I don’t make as much progress as when I try to really see. If you keep these methodologies at hand and combine them with the ability to see (with context and clarity) what to do next to keep your continuous improvement ball rolling, you’re sure to experience great improvements for you, your processes and your people. Let me know what you are doing to keep the continuous improvement fire burning at your company.

-John Maher

This is part four of a four-part series. Here are the links to the earlier posts in this series:
- Part 1, What Sandpaper Will You Use?
- Part 2, Fast Results Using TOC for Demand-Driven Manufacturing
- Part 3, Using TOC, Lean and Six Sigma to Become More Demand-Driven
John’s passion for demand-driven manufacturing is equal to his interest in how this method improves the lives of employees within these environments. “I’m here to help, not to judge” comments John whose posts reflect why demand-driven matters and are based on his experience working in manufacturing environments and expertise in ERP, MRP, APS, supply chain, manufacturing planning and scheduling systems and constraints management.
August 4, 2015
Common Lean Manufacturing Software Project Constraints
Leveraging Project “Constraints” and Maximizing Results

As a project manager for demand-driven, lean manufacturing software, I have more than a nodding acquaintance with the theory of constraints (TOC). What I find quite remarkable is the ability to apply the theory of constraints to other mediums beyond the manufacturing of goods – even something like project work. When a client understands the theory’s principles, it can be powerful in driving a truly transformational project that outperforms their other software installations. It becomes a new way to frame how you and an organization collaborate to create something new – a better business with better and faster results.

If you want to learn more about how constraints management works in manufacturing, definitely check out my fellow blogger, Rick Denison. He’s the go-to guy for this practice on our site. What I’d like to talk about today is constraints management during projects—specifically—what are some of the more common project “constraints” and how do I deal with them?

Every project contains a standard set of parameters that become initially defined, but are continually balanced throughout the project lifecycle. These are competing project constraints, which include, but are not limited to:
- Scope
- Quality
- Schedule
- Budget
- Resources, and
- Risks[1]
These elements will pull against each other throughout the project, but it’s wise to identify them not as “bottlenecks” or issues, but as constraints that can be leveraged to drive outputs and faster progress. To give you some ideas about how to leverage these constraints, I will focus on three from the list: schedule, resources, and risks.

Schedule Time to Schedule

Sometimes people consider project planning a phase that can be glossed over so that the “real work” can begin sooner. Talking about the work does not accomplish the work, but it will make you consider ways to work smarter. Working smarter means different things to different teams, but can include creative scheduling solutions like:
- Several “sprint-like” mini projects instead of one big define-and-deploy project. This mini-project approach can mean functionality is delivered to business users faster and in more palatable scope amounts.
- Parallel paths of work to get more out of the project timeline.
- Understand the benefits of building in purposeful “buffer” time, which can at first seem like it’s unnecessary or that there’s no time allowable. I encourage teams to do this so that they protect the most constrained project resources and create a project system that is able to handle the inevitable, yet “standard” project disruptions, such as new business climate factors, changing team members, etc. Buffers are central within the TOC framework. Since the constraint resource becomes the pacemaker for the rate at which project deliverables are output, building in this time becomes critical to remaining on-time and not slipping in either schedule or scope.
It’s easy for a project team to complain about not having enough time in the schedule – even if they are just starting out. Instead, think about the full project timeline as a blank canvas and an opportunity to get creative on how to best leverage the time.

Your Most Valuable Resources are People

Your project team is about finding the perfect combination of two elements: quality and quantity. The “quality” of your team members cannot be overvalued. Capable team members that know their role, the business needs, and can deliver on the project objectives are the most valuable assets that any project could ask for.

But even top-performers only have so many hours in the day. Whether team members are allocated 25% or 100%, the important thing is to maximize the time, or capacity, that these resources have available. It’s not about labeling your most “valuable” resources, but inevitably, one team member will be a constraint. So, acknowledge the constraint and have everyone rally around the team member(s) to support their activities. In my experience, that means doing everything I can as a project manager to align tasks, schedules, and being extra-prepared for these specific (and valuable) resources.

The second leverage point to boost your project resources would be to add capacity by increasing the “quantity” of resources. When you have fully maximized the results from all of the current resources and are still not meeting the project scope, many teams consider relieving the constraint by increasing headcount. While this can be a helpful solution over time, be aware of the upfront time associated with bringing more people up to speed and that their output quality may not initially match others. Just like a manufacturing environment, additional resources (machines/assets) add to capacity, but require management and attention too.

Risky Business

Consider project risks to be like identifying project “flow disruptions” — ahead of time and concurrently adjusting course to mitigate those disruptions. Risks can range from small to significant, but discussing them openly and planning accordingly can sometimes be enough to avoid them all together. This means you increase the overall velocity of your project when you deal with less surprises downstream and you are able to deliver results to the business faster and with more clarity.

A team that does not spend time identifying risks throughout the project lifespan will likely regret it at some point. Discussing project risks can seem like more time taken away from “doing work” or a “gloomy” way to kick off a project, but it’s actually incredibly productive. The project paranoia that people raise can seem like an energy drain, but pay attention because often these concerns are based off of real experiences and legends of projects past from which the current team can learn.

The act of going through risk identification can surface two categories of topics. The first category is the potential risk scenarios for which a mitigation plan should be developed and executed. These would be the most common notion of project risks that people consider – the “what-ifs” and their consequences. The second category are issues that may seem like risks, but are really actual and necessary project tasks that were overlooked in the project plan. Be grateful that these were identified and plan them into your project activities like everything else, with a pat-on-the-back for your thoroughness in planning and the confidence in knowing you delivered a higher-quality output.

Next time, we’ll take a deeper dive into the project risks category and talk about ways to overcome them. Until then, feel free to send me your questions or experiences on anything implementation related.

[1] PMBOK Guide, 5^th edition

Sarah takes a customer-focused and results-driven approach to project management and demand-driven manufacturing systems implementation. With hundreds of projects under her belt, Sarah is fearless when it comes to challenging the status quo and delving into the details to ensure an optimal user experience. As such, her posts reflect tips and best practice advice for managing people and processes through projects – and getting the most out of your systems.
June 4, 2015
Using TOC, Lean and Six Sigma to Become More Demand-Driven
What Tools to Use to Get the Most of Your Demand-Driven Changes
Last time, we looked at specific companies that I have worked with and how they became more demand-driven using the Theory of Constraints (TOC) as a first step. As you saw from these real-life examples, TOC works well as a pointer to see where you need to change – and what should be the first items on the list.

I have watched TOC solutions work exceedingly well in manufacturing, scheduling, replenishment, and project management for continuous improvements that truly revolutionize environments. Just as coarse-grade sandpaper can quickly address a rough surface, TOC quickly identifies global changes that can smooth flow and impact the bottom line. However, to get to that next level of improvement, we need to start using our Lean Tools.

Kaizen

Continuous improvement of an entire value stream or an individual process to create more value with less waste.

There are two levels of kaizen (Rother and Shook 1999, p. 8):
1. System or flow kaizen focusing on the overall value stream. This is kaizen for management.
2. Process kaizen focusing on individual processes. This is kaizen for work teams and team leaders.
Value-stream mapping is an excellent tool for identifying an entire value stream and determining where flow and process kaizen are appropriate.

– Lean Institute

Tools such as kaizen (after you understand the global system) delivers profound improvements to your production process—and, ultimately, high-quality business results.

A way of thinking

The TOC thinking processes allow you to build current and future reality trees that give you an excellent understanding of the environment, its core conflicts, and the root causes that are holding the company back. Its buffer management methodology lets you identify disruptions to flow and pare out disruptions to find the points in the organization that, if resolved, would have the largest impact on increasing global flow. Now you have a “board” that is smooth enough to let you switch over to medium sandpaper and start employing the tools of Lean to resolve the disruptions that TOC has pointed out.

Just as I have never seen a more effective tool than TOC when you’re first starting a company on the continuous improvement path, I have yet to see a methodology as effective at rapidly improving processes (once the focal point is known) as the process of Kaizen. Use Kaizen—along with the tool set that comes with the Lean methodology –and watch your improvements exponentially increase.

Costly mistakes

In order to get the largest global benefits, you need the pointer – TOC. This is another place where sandpaper comes into play. If you take a really rough board and use medium sandpaper (Lean tools) on it, you can still get it as smooth as you would if you started with coarse paper (TOC) and then moved to medium paper. The difference will be in the time, effort, and expense that it takes to reach the same point when compared to using the coarse first and then the medium. I have seen companies use only Lean tools to achieve phenomenal success. However, the kaizens were directed only from intuition; I have found over and over again that real leaps in global performance were not made until an enormous number of kaizens had been completed. If your management has enough patience, tenacity, time, and cash to wait until tens or hundreds of kaizens are completed, you can be successful. If not, the Lean transformation is doomed to fail – not because it doesn’t work, but because we started with the wrong methodology and focus.

I want to be clear here: When I say global improvement, I am talking about improvements that show up on the bottom line.

Numbers Game?

There is often a problem with how improvement results are measured. Too often, they are measuring local optima, with cost accounting principles that ignore whether or not actual bottom line or global flow gains are made. For example, if you cut the setup time in half on a specific machine – from one hour down to 30 minutes, and then you setup the machine 1,000 times each year with an overhead burden of $500 an hour, you do not get to say that you achieved $250,000 in cost savings. The cost/ depreciation does not change for that machine and the cost of your overhead does not go down due to this improvement, either. There are only two possible ways that actual impact to the bottom line occurs:

1) If you are able to ship more product because of the change. (It must leave your shipping dock and the customer needs to be invoiced for it to count.) Extra throughput through the resource does not count if the other resources in the chain cannot get it through at the same rate.

2) If you can send the operator home early or give them days off – but this certainly doesn’t get you $250k.

You need the pointer to make sure that the changes you make have the largest impact on the bottom line and for me, TOC is the best methodology for determining this. TOC will show you the areas that, if improved, have direct impact on global throughput.

Yes, I recognize that Lean has value stream maps. However, those are snapshots of the system at one point in time, and they are product-specific flows. They do NOT look at the aggregate and interconnected environment that most manufacturers live with every day.

A Smoother Board

It has been my experience that Lean produces the most refined, disciplined, and productive manufacturing process. If I walk into two environments, one that only used TOC and one that used only Lean, and they both made it five years into the journey with management staying committed, I would fully expect the Lean company to have had the most success in transforming their operation. If we looked at the same two companies one year in, the reverse would be true.

This is not about which methodology is better. The fortunate thing for companies is that TOC and Lean are pieces to the same puzzle and if used together, the results are formidable.

Next time we’ll talk about an even more fine-tuned refinement tool- Six Sigma. Until then, please let me know how you have used the tools of TOC, Lean and Six Sigma to refine your continuous improvement projects.

-John Maher

This is part three of a four-part series. Here are the links to the earlier posts in this series:
- Part 1, What Sandpaper Will You Use?
- Part 2, Fast Results Using TOC for Demand-Driven Manufacturing
John’s passion for demand-driven manufacturing is equal to his interest in how this method improves the lives of employees within these environments. “I’m here to help, not to judge” comments John whose posts reflect why demand-driven matters and are based on his experience working in manufacturing environments and expertise in ERP, MRP, APS, supply chain, manufacturing planning and scheduling systems and constraints management.
May 19, 2015
Demand-Driven Matters

Welcome to the Demand-Driven Matters blog. During our conversation in this space, I hope to bring you additional insights on demand-driven manufacturing and/or help in your quest to become a demand-driven, factory of the future. I call this blog a conversation for a reason—your input will enrich what we are trying to do here, which is provide ideas about how you can become more demand-driven, each and every day.

When I first began instituting demand-driven practices in the late 90s, we were into creating pull, eliminating waste, and getting on a path of continuous improvement. Technology at the time was seen as an inhibitor rather than an enabler. Most people active in Constraints Management and Lean Manufacturing were abandoning their technology and going to purely manual solutions. I always believed that technology was important to get the most out of the system and to make it scalable, however, in the late 90s, the lack of technologies that enabled pull made manual the only logical choice.

One of the more fascinating developments in demand-driven enablement has been the shift of demand-driven manufacturing back to technology as an enabler rather than an inhibitor. There is recognition today that technology has to play a significant role in eliminating waste and synchronizing operations and extended supply chains. Along with this trend, the creation of open ERP systems that are easily integrated with service-oriented architecture allows companies to leverage the system they already have and benefit from today’s best-of-breed, demand-driven solutions through seamless, real-time integration. Finally, the web-based, SaaS revolution has made this process more cost effective, with expensive internal services now “downloaded” to the software provider, freeing up IT and manufacturing teams to focus on what matters. The digitization of demand-driven practices has, in effect, opened up companies’ ability to manage inventory and constraints more effectively; free up capacity; control operating expenses; drive flow; dampen variability; and create innovations to meet customer demand.

You will see me often weigh in on what’s valuable and not-so-valuable—and you can do the same by commenting or perhaps even writing a rebuttal, just to keep me on my toes! We’ll look at the classic hallmarks of a demand-driven culture and see what kinds of leadership, change management, and employee communications keep such systems alive. We’ll delve into the challenges and benefits of a demand-driven environment as well as what really happens on the shop floor – for example: what happens when you “choke the release” of inventory. I’ll also invite people from my team to weigh in about their areas of expertise—from implementation to integration to constraints management to new sales and marketing opportunities for a demand-driven business— and I hope you will tune in to hear their proven and exciting ideas.

Based on decades in this business, I have found that demand-driven manufacturers realize the most benefit when they keep their eyes on the prize: Each day, they stay focused on demand-driven behaviors and remain disciplined in their efforts. It can be a difficult road. But it is my hope that this conversation will validate why demand-driven matters and inspire you on your journey each day. Until next time, keep it Lean!

– John Maher

John’s passion for demand-driven manufacturing is equal to his interest in how this method improves the lives of employees within these environments. “I’m here to help, not to judge” comments John whose posts reflect why demand-driven matters and are based on his experience working in manufacturing environments and expertise in ERP, MRP, APS, supply chain, manufacturing planning and scheduling systems and constraints management.

November 4, 2014
Never Stop Learning
Necessary demand-driven components: How TOC delivers powerful results

I grew up in a home where my family held daily quizzes around the dinner table about what we learned during the day at work or school. These topics ranged from Astronomy to current events – yet what this experience instilled in me was not so much knowledge in specific disciplines, but the idea that I could learn something new each day. And even if I was not directly exposed to new knowledge, these moments showed me that the people I associated with during each day were a rich source of knowledge by sharing what they learned with me.

As I entered the workforce after college, I began another learning process. I found to my dismay that not all I learned in the university was directly applicable at the manufacturing companies where I worked. Each company seemed to have their own definitions for their processes and believed that their environments were completely unique. This attitude created production practices that seemed needlessly complex. I often thought, “There has to be a better way.”

It wasn’t until my first management job that I finally found some answers. I was introduced to The Goal, by Dr. Eliyahu M. Goldratt and Jeff Cox. This book was a watershed moment for me, in that it shed light on some of the assumptions I had seen at play within all of the organizations I had known.

Since that time, using principles of the Theory of Constraints (TOC) in The Goal, I have researched, taught, and applied many approaches to overcome the assumptions that prevent organizational growth, employee development and increased profitability. Drum-Buffer-Rope scheduling, Thinking Process Jonah Training, Six Sigma Black Belt Training, extensive research on the Toyota Production System, Lean principles, and study in Deming’s Theory of Profound Knowledge all contribute my repertoire of improvement methods.

During these blog discussions, I would like to share the insights that I have gathered across many manufacturing environments and over decades. I hope that similar to those dinner table discussions of my youth, you will bring your insights and share some of your knowledge here, as well.

My expertise focuses on the Theory of Constraints; Lean manufacturing; and creating a culture of continuous improvement within a demand-driven manufacturing framework. I will be talking about how these theories can be put into practice to drive your production success. We’ll learn about:
- The genesis of the Theory of Constraints and why it matters to your business
- Using constraints management to drive practical change for profitable results
- The kinds of constraints you will encounter and how to deal with them
- What measurements drive the behavior for improvement
- And more…
My goal is to bring the valuable science inherent in these systems to you in an accessible way. Yet I will also make sure to deliver practical advice and examples of how I have seen a TOC focus make a world of difference at companies large and small. Just as gravity is an immutable law of nature, to me, the TOC is an immutable law of manufacturing success. And just like any laws, the best ones sort out complexity. I finally got my answer to, “There has to be a better way.” I hope I can help answer the same thing for you.

– Rick Denison

Rick is the “Dr. Who” of manufacturing operations and logistics. And while Rick doesn’t travel through time, he is adept at leading change – and saving time – in a diverse range of manufacturing environments through Lean manufacturing, Six Sigma, and TOC techniques. Rick’s posts address how demand-driven matters and draws from his background in process improvement, change management, project management, information systems implementation, and profitability analysis.
November 4, 2014

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