This article: World Class Operations & Method Selection
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Lean, TOC, QRM, Six Sigma, TPM, RCM, WCM … Which method adds most value?
Selecting and/or combining improvement methods
By Dr Jaap van Ede, editor-in-chief business-improvement.eu.
The first version was published in the Dutch specialist journal PT Industrial Management. Since then, the article was regularly updated.
There are many different methods which address this problem: (links refer to chapters on this site):
Which kind of companies use which approach, which method should yóu choose, what are the bottlenecks, do you have to choose anyway, and why are there so many methods to choose from? This site-section, 'WorldClass', is about those subjects!
This website has a separate section for each different process improvement method, Lean, TOC, QRM, Six Sigma, TPM and combinations thereof. For each method, (dis)advantages are discussed, and a lot business cases are given. Particularly these case studies help you to learn from other companies. In addition, these demonstrate which tools yields good results in a specific situation.
It is far better to acquire knowledge first about all methods, regarding possibilities and limitations. One way to do that, is to study the information on this site. Besides that, it is perhaps a good idea to take a course about a method which seems attractive. If you do that, it is important that there is room to discuss your own business problems.
Another idea is to simply experiment with some improvement methods. The fact is that this is the way how methods like Lean manufacturing and the Theory of Constraints were invented. There is nothing wrong with trial-and-error on the shop floor. On the contrary,
When you have a rough idea in what direction you want to head, it could be time to search for a consultant which matches your business. In that stage it might be helpful that all articles on this website belong to a particular section, as shown in the upper right of each article (this page belongs e.g. to the section WorldClass). In the margin(s) you will see banners of consultants that advertise in the section the article belongs to.
Theoretically, process improvement methods can be applied without any help, since the principles often are rather straightforward. However, beware that implementing a lasting culture of continuous improvement is not easy, a lot of change management is needed. A good consultant knows not only which tools are best to apply in your specific situation, but also knows how to get commitment from everybody on your shop floor!
To hold onto one process improvement method under all circumstances, therefore resembles a physicist who forces himself to choose between Newton and Einstein. That is not a good idea, because these ideas complement each other.
This applies also to improvement methods, since these all help to achieve one common goal: to produce and deliver products as efficient as possible, under the boundary condition that these fit the expectations of the customers.
This leads to the next question: Why are there so many different tools, why isn’t there an all-embracing process management method?
Line of approach
The box below gives an overview.
Process improvement methods and their lines of approach
Logistic management perspective
1. Lean manufacturing (LM)
Lean aims to maximise the value which streams towards your customers. It considers only processes which add value to products or services as useful. Seven kinds of waste are reduced as much as possible: overproduction, inventory, manufacturing errors, manufacturing disruptions, waiting times, transport and movements, like searching for materials. One of the ways to achieve this, is to let materials flow through your company in as steady a stream as possible (flow manufacturing), with a minimum of intermediate stock, and at a rate dictated by customer demand (pull). A process flow diagram (value stream mapping) is used to identify which processes add value to the products or services provided by your company, and which don’t.
Origin: Japan (Toyota). Later also the US (Massachusetts Institute of Technology)
2. Theory of Contraints (TOC)
TOC concentrates on reducing the throughput time. By optimally exploiting bottlenecks or constraints, and to subordinate all other processes to these bottlenecks, the efficiency of the supply chain as a whole is improved.
Origin: Israel/US (consultant and management guru Dr Eli Goldratt)
3. Quick Response Manufacturing (QRM)
QRM focuses on gaining time during the process from buying raw materials until the delivery of the finished products. This will result in shorter lead and delivery times. To increase the throughput on the shop floor, work-in-progress should be reduced. This means smaller batch sizes, and therefore possible investments in extra people and/or machines. Those investments are however more then dan compensated for by savings in other departments, like warehouses. Origin: US (prof. Rajan Suri)
Quality management perspective
4. Six Sigma (6S)
Six Sigma reduces variation in production and business processes. The goal is to maximize the likelihood that your products or services will meet customer expectations. The term Six Sigma refers to an error probability of only 0.00034%.
Origin: US (Motorola, later also General Electrics)
Maintenance management perspective
5. Total Productive Maintenance (TPM)
TPM concentrates on productivity improvement, primarily by way of maximizing the availability of equipment. To do that, small multidisciplinary teams improve step-by-step the Overall Equipment Effectiveness (OEE) of ‘their’ machines or production lines. The OEE is defined as the multiplier from, among others, the machine availability, the relative machine performance and the fraction correctly manufactured products.
Origin: Japan (automotive supplier Nippondenso). Further developed by the Japan Institute for Plant Maintenance.
6. Reliability Centered Maintenance (RCM)
RCM concentrates on the prevention of those machine failures, which have the most harmful consequences. To do that, per failure event the consequential loss is determined, during a so-called Failure Mode and Effect Analysis or FMEA. These losses can be financial (the production process stops), but can also include harm to humans and/or to the environment.
Finally, for each machine part the best maintenance plan is determined, which is the plan which prevents the most harmful failure-related events.
Origin: US (Boeing)
However, the applicably of most methods (with as sole exception RCM) broadened later to all business processes, and even to supply chains.
This can be clarified, by giving a few examples.
As a consequence of this broadening process the overlap between the different methods became bigger and bigger. Today, all methods can therefore be used, at least theoretically, to improve any business process! Even the end result will be more or less the same, independent of which line of approach was originally taken. In general, you always end up with a reduction in inventory, and/or faster throughput times and/or products (or services) of better quality.
It is logical that people give preference to improvement methods which fit in with their own business discipline or nature. For example, persons with a mathematical attitude often will have affinity for Six Sigma, which relies heavily on statistical analyses. Popular among engineers is the TOC, since this theory was developed by a physicist.
As discussed earlier, the development of the improvement methods started from different lines of approach. So, these methods implicitely make a different assumption about what is the biggest problem in an organization. According to Lean this is to much waste, TOC says it’s a bottleneck in a supply chain or even a mental blockade, and Six Sigma states that varying product quality is the biggest issue. TPM sees the (un)availability of machines as most important, and RCM starts with the assumption that the biggest problem is the consequential loss of machine failures.
Same end result
Theoretically speaking, the answer is “no”, although a clumsy start is possible because another method would have delivered results much faster. A Black Belt in for example Six Sigma can however, in principle, say that “his method” is suited to improve all organizations and all business processes.
This can be explained by the fact that the primary goal of one improvement method is the secondary goal of the other, and vice versa. That is also the reason why the end result will be, in general, the same: a reduction in inventory, faster throughput times, and products of better quality.
Some examples illustrate that.. The primary goal of Six Sigma is quality improvement. However, that includes also on time delivery. To achieve that, the supply chain should be streamlined. This means that also TOC, Lean or QRM tools have to be used.
In debates about the usefulness of improvement methods which are further apart, interestingly there is a stronger tendency towards consensus. For example, some consultants combine Lean and Six Sigma into a new method, which they call Lean Six Sigma. In this approach, Lean is used to improve the flow and to remove unnecessary (production) steps, and Six Sigma is used to improve the quality of the remaining production steps.
Nevertheless it is possible to make a clumsy start. Because the methods have a different line of approach, that brings along a different assumption of what problem is the biggest problem. If this is wastage in a production or supply chain, then Lean, TOC or QRM will render results most quickly. However, if the biggest issue is variation in quality, then Six Sigma is probably more effective.
So it seems reasonable to select a method, on the basis of what should be improved first. If quality improvement is the primary goal, then Six Sigma should be chosen. If the throughput is to low, Lean, TOC, or QRM could be selected. Finally, if most of your problems seem to be related to the availability of the machinery, then TPM or RCM should be applied, at least in the beginning.
Differences in applicability
Logistic management perspective
The value adding organization
The unlimited organization
When capacity is limited most by logistic problems related to high mix/low volume production, customer-specific production, and/or a highly volatile demand, Quick Response Manufacturing (QRM) becomes an interesting option. To reduce the lead times the business-organization is reformed from functional to process-oriented. One way to do that is to form multidisciplinary work cells, which each perform a group of similar tasks. The workload and the exchange of materials between the work cells is controlled with for example the POLCA-system.
Examples: Interfocos (Holland), John Deere (VS), Harley-Davidson, JoyGlobal
Consultancy: List consultancy and support QRM
Quality management perspective
The perfect organization
Six Sigma is often applied when there are products which should meet high quality specifications, which should lie between certain boundaries. These type of products are commonly found in the (semi)processing industry, and in the high tech sector as well.
However, Six Sigma is also used when the quality of administrative processes is important, for example within banks, insurance companies and hospitals. Generally speaking, Six Sigma can be applied when certain characteristics can be made measurable, which are critical to quality (in the eyes of the customer)
Examples: SABIC Innovative Plastics, ABN AMRO (Holland), University Hospital Groningen (Holland), Shell, Philips
Consultancy: List consultancy and support Six Sigma
Maintenance management perspective
The smooth organization / factory
When possible machine failures bring along serious safety issues, or when such failures entail high costs, then Reliability Centered Maintenance (RCM) becomes useful (or even inevitable!). RCM is among others applied in the aviation and military industry, within nuclear power stations, by railway companies, and also in the (petro)chemical industry.
Examples: Stork, Nyrstar (Holland)
Using only one method has the advantage of a strong focus. That way, low hanging fruit can be harvested quickly. After that, other improvement methods can be added.
Lean Manufacturing for example is suitable for this “stepping stone” approach. First, Value Stream Mapping is applied, to indentify the biggest problems. Next, these problems are solved with a method which seems best at that moment. In this approach, TOC, QRM, Six Sigma, TPM and RCM are considered as a toolbox, which is subordinated to Lean.
Of course it is also possible to use another method as stepping stone. When for example TOC is chosen as leading method, this has the advantage of an immediate focus on the biggest constraint, which fits well with the development of a business-strategy.
When Six Sigma is chosen as stepping stone, that has the advantage that a lot of attention is given to the wishes of your customers, and it helpes you to built an organisation for improvement with Black and Green Belts as professionals.
The stepping stone approach is advisable, if your company has not much experience with business improvement methods.
This is different for multinationals, because these generally have many years of experience with step-by-step improvement. Notice however, that as a rule also these multinationals started by applying only one improvement method. For example, Unilever started with TPM, Philips with Six Sigma, and Scania with Lean. Later, these companies added the other improvement methods, under the umbrella of the originally chosen method (which remained leading). As a result, multinationals now generally apply a mixture of logistic, quality and productivity oriented improvement methods, e.g. Lean+Six Sigma+TPM. This combined approach is often called World Class Manufacturing of WCM, a term popular for already thirty years to describe several mixed continuous improvement approaches.
WCM as defined today improves business processes from all three perspectives: logistics, quality and productivity. Therefore it is tempting to start immediately with WCM. However, because of the risk of a lack of focus this is not advisable. There is however one exception, namely Lean Six Sigma. This is sometimes successfully used as starting method. It should be noticed however, that generally one of the approaches in Lean Six Sigma is leading, and commonly this is Six Sigma.
Therefore it is advisable not to become fixated on one of the improvement methods. As discussed already in the stepstone approach, it is often smart to use tools from other methods when appropriate. The manner how such a tool is used then often will not deserve the beauty prize, but why should you want that? It should however be noted that to use a certain improvement-tool it is important that you, and the consultant involved, know the background of the matching improvement method.
No standard approach
Logistic improvement methods stimulate flow
The logistic improvement methods, Lean manufacturing, The Theory of Constraints (TOC) and Quick Response Manufacturing (QRM) are based on the same ideas, which were first formulated and applied by Henry Ford:
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