the need to integrate toc, lean, six sigma and management...
TRANSCRIPT
The Need to Integrate TOC, Lean, Six Sigma and Management by Processes
Eduardo C. MouraSeptember 2010
A Webinar by:
Eduardo C. Moura: Founder and President ofQualiplus Consulting (www.qualiplus.com.br).Graduated as Electronics Engineer in 1978, USP(Sao Paulo University-Brazil). Since 1984 hasbeen an active instructor, consultant and authoron quality and business excellence.From 1986 till 2003 accumulated the ASQ certifications for CQE,CRE, CQA and CQM. Quality Specialist by the UNICAMP(University of Campinas, Brazil) in 1992. Certified Taguchi Expert by the ASI (American Supplier Institute), 1999. Author of severaltechnical 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. Certified Thinking Process Practitioner by the TOCICO (The Theory of Constraints International Certification 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.
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The goal...
✤ To clarify about the need and benefits of integrating:✤ TOC (The Theory of Constraints)✤ Lean Production/ Lean Office✤ 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...
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✤ That is a methodology developed by Eduardo Moura as of 1994, based on the concept of “Cross-Functional 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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Ishikawa
Harrington
Mizuno
E. Moura
I didn’t dare to place my
photo among such
celebrities...
Origin of BMTP
Some more details about BMTP✤ BMTP implementation
steps:✤ 1) Identify and
structure the needsfrom every businessstakeholder.✤ Customers✤ Employees✤ Owners/investors✤ Suppliers✤ Community✤ Government
7Customer satisfaction parameters (partial)
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✤ 2) Identify all business processes by grouping together related, cyclical business activities.
Desenvolvimento e avaliação de fornecedores
Reunir fornecedores para avaliação de desempenho
Analisar desvios nas entregas de insumos (quantidade + prazo)
Negociar requisitos da Reckitt com fornecedores
Desenvolver fornecedores com qualidade assegurada
Controlar as entregas por fornecedor
Avaliar performance dos fornecedores
Aprovar fornecedores de serviços de beneficiamento
Comparar diferentes fontes de suprimento
“intercompany”
Desclassificar fornecedores sem qualidade
Preparar documentação técnica p/ produção em
terceiros
Monitorar desempenho dos CDA’s
Visitar fornecedores de insumos produtivos
Buscar especificações técnicas de materiais
Auditar processos de fornecedores
Distribuição
Armazenamento
Armazenar produtos acabados no C.D.’s
Endereçar os produtos p/ armazenagem
Analisar custos de armazenagem
Desenvolver formas alternativas de
armazenagem de insumos/produtos
Eliminar estoques obsoletos
Expedição
Separar produtos p/ expedição
Despachar produtos acabados para clientes
Identificar problemas nas entregas de produtos
Acompanhar as entregas dos produtos
Carregar veículos para embarque
Enviar produtos para os CDA’s
Cyclical business activities Processes
Macroprocesses
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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.
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✤ 4) Create the business macroflow (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 macroflow
Business Macroflow
Macroprocess flow and interfaces
Process flow and interfaces
Let’s recognize...
✤ No individual improvement methodology has the definite 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 organizationalprosperity by focusing on thebusiness system’s constraint”.
✤ Do organizations need that?✤ No other approach does that with such a “laser-
precision” focus and effectiveness.✤ That’s 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 flow.”
✤ Do organizationsneed that?
✤ Lean contributes withpowerful concepts andproven tools for visualcontrol, quick feedbackand constantimprovement of thevalue-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 organizationsneed 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
✤ Goal: “to increase all stakeholders satisfaction by focusing on the integrated standardization of the business processes flow”.
✤ BMTP identifies a major policy constraint: the “Management by Departments” paradigm✤ that sub-optimizes the entire
business system...
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MANAGEMENT BY DEPARTMENTS PARADIGM
AMBIGUOUS INTERFACES BETWEEN AREAS (UNCLEAR,
MISMATCHED AUTHORITIES AND RESPONSIBILITIES)
DEFICIENT COMMUNICATION/ INFORMATION FLOW
LOTS OF REWORK AND FIREFIGHTING
INCREASED COSTPOOR QUALITY
SLOW RESPONSES
UNSATISFIED CUSTOMERSLOW COMPETITIVITY
✤ 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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✤ The high levels of rework and firefighting (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 conflict.✤ different groups of people will be effecitively focused on both
sides of the conflict...
Current gaps in each methodology(my point of view; no offense intended...)
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GAP
TOCTends 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 company’s value streams.Does not consider market constraints.
Six Sigma
Tends to be too “statistics-oriented”.Typically, focuses mostly cost reduction.
BMTPAlthough it builds an integrated process structure, it does not provide the “filling” for each specific process, in terms of applicable improvement tools.
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 360º Excellence model (E360), integrating TOC, Lean, Six Sigma and BMTP.
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TOC
LEAN
TOCTOC
SS
BMTP
TP: prioritize projects
CCPM: better project mang’t
CCPM: better project mang’t
TA: better eval. financial impact
CCPM: prioritize projects
CRT: problem analysisCloud: innovative solutions
TA: better financ. indic./decisions
CCPM: better project mang’t
TOC Sol. incorp. into processes
Main syenergistic interactions
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LEAN
TOC
TOCTOC
SS
BMTP
Lean tools: more visual control
Wider people involvement
Lean tools: more stable processes
Waste elim.: better Q, faster L/T
Visual process standardization
Kaizen team maintain standard.
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SS
TOC
TOCTOC
LEAN
BMTP
Balances customer focus x T
Stat. tools: better data analysis
Less variab.: more stable flow
GBs/BBs: high impact proj.
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BMTP
TOC
TOCTOC
LEAN
SS
Integr. chain: better exploit/subord.
Overall integrated chain: flow
Kaizen efforts are incorp. to proc.
Leadership is standardized
Systematic projects id./drive
Breaks silo mentality
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But watch out!
✤ All such integration of methods and tools is just know-how...✤ And know-how is not sufficient 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...
✤ Two other elements are necessary:✤ know-what: what key business aspects should we drive know-
how to, in order to improve overall performance?✤ know-why: why improve? (core values)
Know-How
Know-What
Know-Why
The 360º Excellence Model
“Successful know-how application requires precise know-what identification and know-why realization.”
Opportunities Definition
A simplified implementation roadmap
Define Organizational Ideology
Identify High-impact themes VOC Study
Improvement ProjectsBMP Lean Six
SigmaTOC Other
Results Analysis
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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 Briefing”, Qualiplus Consulting.✤ [7] E. C. Moura (2006): “Integrated Business Process Standardization -
Training Manual”, Qualiplus Consulting.