Four Ways to Combine Six Sigma with Theory of Constraints (TOC)

Many process improvement practitioners overlook the value of combining Six Sigma with Theory of Constraints, says contributor Abishek Soni. Here are four ways to harness the synergy between Six Sigma and TOC. Many companies adopt an either/or approach to process improvement and fail to appreciate the benefits - and reap the rewards - of combining different process improvement toolsets and approaches. I believe that Six Sigma and Theory of Constraints, for instance, are important complementary approaches and not used often enough together. Why Six Sigma? Why TOC? Six Sigma is a data driven improvement methodology which seeks to improve quality of process outputs by removing causes of defects and reducing variation. It consists of powerful statistical tools to measure, analyze and verify the performance of process. Six Sigma projects follow DMAIC methodology to improve existing business processes. DMAIC is composed of the following five phases: DEFINE: This phase defines the problem statement and scope of the project. MEASURE: During this phase key characteristics of process are collected. ANALYZE: During this phase the root cause of the problem is investigated. IMPROVE: During this phase improvement solutions are developed. CONTROL: During this phase performance of the new process is monitored and evaluated. Theory of Constraints (TOC) is an ongoing improvement philosophy originally developed by Eliyahu M. Goldratt that focuses on constraint management. A chain is no stronger than its weakest link is the fundamental tenet of theory of constraint. TOC believes that the entire system is a collection of interrelated/interdependent processes and each system has one or more constraint. A constraint is defined as any process that limits the ability of entire system to achieve its intended goal. TOC seeks to achieve POOGI (Process of ongoing improvement), by following Five Focusing Steps mentioned below: 1. Identify the system constraint: Determine the weakest link or process of the system which is limiting the ability of system to achieve its goal. 2. Decide how to exploit the constraint: Find ways to utilize the existing capacity of constrained process to its fullest. 3. Subordinate all other processes to above decision: Align all the other process to enable constraint to operate at maximum effectiveness. 4. Elevate the constraint: Make changes to break the constraint. 5. Go to step 1: If the constraint is broken go back to step 1 to identify new constraint and repeat the subsequent processes.

Limitations of TOC and Six Sigma:

Six Sigma attempts to reduce variation in all the processes in order to achieve overall improvement in system. System interdependencies are not taken into account and processes are improved independently. As a result, there is plethora of potential projects (improvement opportunities) in any system improvement initiative and it can be difficult to identify which ones to tackle first. Additionally, the propensity to reduce variation in all the processes sometimes make it difficult to identify single or few processes of significant impact; ultimately escalating the budget and time for the overall improvement program. TOC provides good guideline to identify the constraint or bottleneck but its lack of statistical tools to quantitatively measure and analyze the performance of the process makes this methodology somewhat less effective.

Harness the Synergy Between Six Sigma and TOC:

After studying the above limitations it seems both the improvement methodologies are complementary to each other. And if used in conjunction significant amount of synergy can be derived from them. TOC can be used to identify the constraint (process of significant impact) while statistical tools of Six Sigma can be used to quantitatively measure and analysis process performance. In other words TOC will enable an organization to identify where to judiciously launch a Six Sigma based improvement project. Here are four areas where TOC and Six Sigma could be used in conjunction: Opportunity #1:Identify the significant opportunity Start with first step of TOC. Identify the constraint to discover the bottleneck process in the overall system. Once the process of significant impact is identified introduce Six Sigma. DEFINE phase of Six Sigma methodology will concentrate only on the identified constraint or bottleneck process (restricting the overall improvement scope, budget and time) and correspondingly determine the most significant CTQ. Use MEASURE phase tools to determine performance standard, collect process data and conduct measurement system analysis. The most significant improvement opportunity with well-defined scope and performance standard is the final deliverable of this phase.

Opportunity #2: Analyze the Problem Use ANALYZE phase tools to establish capability of bottleneck process. Leverage tools such as ANOVA, Regression analysis, Pareto, Ishikawa diagram to identify the sources of variations and root cause of the problem. Complement analysis with TOC step, identifying ways to exploit the constraint or bottleneck process to its full capacity. This will ensure that existing capacity is utilized without any additional investment. Opportunity #3: Develop the Solution Generate possible solutions for the problem using various techniques of IMPROVE phase such as DOE, Poka Yoke, Pugh Matrix, FMEA etc Bolster the solution with TOC step; subordinate all the other processes to exploited constraint. This will ensure that all other processes of the system are aligned with solution identified. If sufficient investment is available proceed with TOC step to elevate the constraint i.e. remove the constraint of the system by increasing its capacity. Opportunity #4: Verify & Continuously Improve Gather feedback on the performance of the new process using CONTROL phase tool control charts. Continue the pursuit of excellence and begin with first step of TOC to discover new constraint.

References:
The Goal by Eliyahu M. Goldratt The Six Sigma Way by Peter S. Pande, Robert P. Neuman, Roland R. Cavanagh

About Abhishek Soni

Abhishek Soni is a certified six sigma black belt and an MBA graduate from XLRI, Jamshedpur, India. He has around six years of experience in process improvement function in financial services domain in IT industry. He is currently working as a process improvement consultant in a reputed Indian IT firm. He can be reached at mail2_abhishek@sify.com. I invite you to join as a member of the PEX Network Group http://tinyurl.com/3hwakem, you will have access to Key Leaders Globally, Events, Webinars, Presentations, Articles, Case Studies, Blog Discussions, White Papers, and Tools and Templates. To access this free content please take 2 minutes for a 1 time FREE registration at http://tiny.cc/tpkd0 PEX Network, a division of IQPC, facilitates access to a wealth of relevant content for Process Excellence, Lean, and Six Sigma practitioners. Further enhanced with an online community of your peers, we will provide you with the tools and resources to help you perform more effective and efficiently, while enhancing the quality operations within your organization. As our industry becomes more and more dependent on the Web for information, PEXNetwork.com has been developed to provide Six Sigma professionals with instant access to information. Leveraging our strength and foundation in education, IQPC and the Process Excellence Network are uniquely positioned to provide a comprehensive library of webcasts gathered from our events, as well as exclusive content from leaders in the industry.