Lean, Six Sigma, or Theory of Constraints?

In the world of “Continuous Improvement” there are numerous competing methodologies. In any given business environment, it wouldn’t be uncommon to hear “We use the Toyota Production System” or “We follow the DMAIC process”. Each of these approaches have their army of management consultants, who often add their own unique nuances to the approach and are always happy to tell you why theirs’s is best. For the sake of keeping this post readable we are going to limit the scope of conversation to what I call “The big three” or Lean, Six Sigma and Theory of Constraints. To all the master black belt practitioners out there, the intent here is to provide the 30,000ft view not an exhaustive textbook. So, please forgive any oversimplification.

The Objective

Six Sigma

Each of these three methodologies seeks to drive out inefficiency, but they all look for it in different ways. The methodology names themselves serve to illustrate this point. For example, Six Sigma derives its name from the normal distribution or “bell curve”. A sigma is indicative of one standard deviation and, three standard deviations in either direction contain 99.7% of all the data points. The Six Sigma philosophy seeks to push beyond a mere 99.7% rate of acceptable outputs and reach six sigmas in either direction or a minuscule 3.4 defects per million opportunities. Practitioners implement this by systematically finding and eliminating causes of variation within a process.

The Motorola Company developed the theory in the late 1980’s and General Electric helped bring about it’s popularity. By reducing the variability in any part of a process, you can reduce the amount of defective product, improve customer satisfaction, and increase the accuracy of your forecast for future performance.

Lean

I find it easiest to think about the Lean methodology the same way you might envision an Olympic marathon runner. These runners are Lean, with hardly an ounce of body mass that isn’t directly employed in the purpose of propelling them forward over a long and arduous 26.2 miles. It’s is not just the absence of fat that defines a marathoner’s physique. World class sprinters, swimmer, pole vaulters all tend to have low body fat as well. The difference is, marathoner tend to lack an excessive amount of muscle mass. This translates to less weight over longer distances. The Lean methodology advocates finding and removing wasted resources of any kind. This means eliminating all activities that don’t directly impact value creation. Like the marathoners, that means not only eliminating “fat” wastes like high scrap rate and delays, but also “muscle” wastes like unusable excess capacity and over processing.

Lean is really an evolution of the “Toyota Production System” first popularized in the early 1990s. Lean was originally developed for traditional manufacturing environments. However, in recent years, software development, call centers and a variety of other applications have adopted versions of the system.

Theory of Constraints (ToC)

The last and probably least well known of the topics we are going to discuss is Theory of Constraints (ToC). ToC’s core philosophy is that every process has bottleneck operations also known as“constraints” limiting production speed. If you are driving a Ferrari behind a school bus, you will never go any faster than the school bus. That said, if you absolutely must drive behind the school bus, best to make sure there are not any potholes or other obstructions in its path. The novel/management primer “The Goal” popularized ToC in the 1980’s . The book follows the trials and tribulations of a plant manager as he struggles to turn his facility from his company’s perennial under-performer into its top producer.

Compare and Contrast

There are a lot of complementary components to all three of these methodologies. In fact, Lean and Six Sigma are often cross promoted as part of the same big “Lean-Six-Sigma“ solution. Likewise, Six Sigma’s emphasis on eliminating process variation can greatly aid ToC practitioners in finding and isolating bottlenecks. After all, it is hard to know what your slowest operation is if it keeps changing.

Conversely, there are also scenarios where the methodologies directly conflict with one another. A classic example would be the use of work in progress inventory or WIP.  WIP inventory is considered a form of waste that ties up resources under Lean methodology. Theory of Constraints maintains that you should hold a “buffer” of WIP inventory to feed any bottleneck operations. This way you can “isolate” these bottlenecks from any upstream variability and prevent them from ever sitting idle. Similarly, Lean and Six Sigma can come into conflict if your Six Sigma’s drive toward ever increasing quality results in Lean waste in the form of “over process”. In any of these scenarios the key is to think objectively about the organization’s larger goals. Make sure that the methodology is functioning as a toolbox in service of those goals not an end unto itself.

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