Theory of constraints, six sigma and lean: are they playing in the same league?
How to choose the methodology of improvement that will bring your company to the next level.
Every company has somehow the objective of improving their operations. When this project is clearly expressed, they often rely on consultants or, for larger companies, on dedicated internal departments. Three methodologies are taking a large portion of this market: Six sigma, lean manufacturing and Theory of Constraints (TOC). Each methodology has its aficionados, and you will often find people telling you that one is better than the other. This apparent competition polarized more and more this market.
Is this polarization based on some reality? Is there one methodology better than the others?
Consultants opinions are often biased. Consultants are most of the time advising to use the methodology they are trained with, they advise based on what methodology is best for them, and rarely based on what methodology is best for you.
Even if I am a consultant now, I was for many years a manager in an international industrial group in the domain of railway equipment manufacturing. In this position, I implemented improvement projects based on six sigma, lean manufacturing and theory of constraints. This article is about my experience using the methodologies. It reflects this experience and therefore, my opinion.
I often hear from other consultants: “My methodology is better than yours.” Such polarization is not justified and each methodology has its use and place in the landscape of process improvement. They are not opposed. They can and should be used together. Unfortunately, they are too rarely used in a coordinated way. They are not exclusive one of the others, but, they are often seen as such because very few people have the training to use the three of them and see the synergies.
It is important to understand their strength and weakness to determine which one to use when and for what.
A short introduction to the methodologies.
I will not make an exhaustive description of what the theory of constraints, Lean or six sigma is. It exists several good articles on internet for that. But you need to understand that mastering any of these requires work, dedication and time.
Six sigma, lean and the theory of constraints are three methodologies that make similar claims of bringing improvements to operations. But they are significantly different in their approaches and in how they pretend to reach their results.
- Six sigma is focused on ensuring the consistency of the processes over time by eliminating variations.
- Lean suppress waste from the process, and streamline it to be the more efficient possible. In lean vocabulary, efficient most often describes what is capable of producing desired results without wasting materials, time, or energy.
- The theory of constraints optimizes the system as a whole to generate more profit by managing the constraint, i.e., the parameter that limits the output of the whole system.
This being said, let’s begin with a short description of each methodology.
Six sigma
Six Sigma is aimed at controlling and suppressing variations of the processes to obtain consistency of the output over time. It uses extensive data to support its analysis and focus this analysis on the place where the symptoms of the problem are seen. When finished with one problem, six sigma goes to the next one as an approach to continuous improvement.
Six sigma requires an extensive amount of data to be applied. The collection of data is often the first task of the team looking to improve a process. Six sigma is perfectly adapted for the improvement of industrial repetitive, semi-automated or automated processes.
Lean Manufacturing
Lean manufacturing (or lean) is aimed at suppressing waste from a process to increase the speed of the flow of work. Waste shall be understood as any use of time, material, or energy without contributing to the production of a product. This improvement is often performed in a series of incremental steps, therefore the idea of continuous improvement is already embedded inside the methodology itself. It uses an evaluation of the value creation by each activity to determine if something is a waste. Lean aims at creating balanced process lines where all resources have the same capacity to avoid the “waste” of extra and unused capacity.
Theory of Constraints
The theory of constraints is a systemic approach assuming that every system throughput is limited by a “main” constraint and that managing in an optimum way that constraint is the only way to improve the throughput of the system. It is not based on large data collection nor value analysis. It is based on a simple five-step approach in an iterative method: determining the limiting factor, exploit that limiting factor, subordinate all to the previous decision, elevate the limiting factor, restart from step one.
The theory of constraints is not limiting its action to physical resources, but this process can also improve the situation when the limiting factor is a procedure or a policy.
Same destination, but different journeys
In fine, the three methodologies have the same goal: improving the operations. They will eventually reach the same result, but the journey will be radically different.
Six sigma will try to suppress variations in successive steps until the variation of the process becomes negligible. Suppressing the first detected variations using six sigma is relatively easy and cheap, but soon, after a few iterations, the suppression of further variations becomes more and more expensive and requires more and more efforts and resources. At that stage, one may wonder whether the further improvement worth the efforts, as the improvement will be small and the efforts huge. It is at that stage that, most of the time, any further progress reaches a halt.
Furthermore, even the first improvement prepared with six sigma methodology requires trained operators and a large collection of data. This collection of data is critical for the quality of the six sigma analysis and is often where companies first fail.
Lean may seem more approachable as it doesn’t need the same preliminary step of data collection. But lean needs that the process is described in details to identify each step and the corresponding value creation. The first difficulty resides in describing the process as it is, and not as we would like it to be. As for six sigma, the first improvement is effortless and cheap, but the cost and effort of further improvement may become quickly prohibitive and hinder any further progress.
The theory of constraints has a different approach, and is relying more on untapped knowledge of the workers and common sense. The chain analogy is often used to demonstrate how TOC works. This is the first differentiator between TOC on one side and lean and six sigma on the other side.
The chain analogy: The strength of the chain is determined by the weakest link. Only if you improve the strength of that weakest link, you make the chain stronger. Any effort put to strengthen another link doesn’t improve the strength of the whole chain and is a waste of resource
Neither lean nor six sigma has a mechanism to be sure that they are improving the weakest link. Therefore, the improvement may not result in direct and immediate increase in the profits. This makes even more difficult for those methodologies to demonstrate any return on investment. To go around such problem, many consultants speak about “productivity improvement.” They arrange a definition that suits their need to justify the action undertaken even if it has no real impact on the bottom line of the company. Actually, this “productivity improvement” is paying back your efforts with Monopoly money.
Furthermore, Lean tends to build balanced production lines because it considers extra capacities as waste. Suppressing the extra capacity brings all resources at the same capacity as the constraints. You inherit of a chain of interdependent resources of equal capacity. This is a sub optimum and dangerous situation. Such a balanced process line doesn’t allow to maximize the output. As demonstrated by the dice game, the production of a chain of events of equal capacity is not optimized and is difficult to manage because of “wandering constraints” — The constraints move heretically from one resource to the other, bringing chaos to the process.
In most case, suppressing extra capacity of non-constraint resources will not show any improvement on the bottom line, but, to the contrary, because of the statistical variation inherent to interdependent activities, a fast degradation of the profits can occur. In this particular case, the remedy is worse than the illness.
TOC has a completely different approach. It doesn’t need a huge data collection or a deep value analysis. It needs a logical analysis of available data. Most of the time you will discover that people who work within the process already know what the constraint is. Most of the time the symptoms will be obvious, but if they are not, a few data will be probably enough to uncover the constraint.
How do you identify the constraint? By experience, begin by starving the process, stop introducing work. Soon, you will see parts of the process starving and one that still has work piling in front of it. This is your constraint.
Once the constraint is identified, then you have to choose how to exploit it. This means making certain that you make the most of what you have and that you don’t waste any minute of the constraint time (either by badly managing it, by starving it, or by having it work on parts that will need rework later on).
Don’t forget to subordinate everything to your decision of how to exploit the constraint. This can be as simple as don’t let work entering the process more than what the constraint is processing. The constraint becomes the drum that imposes the rate of production.
How will you know that you have discovered the actual constraint and that you have made what needs to be made?
It is simple, look at your profit. If it doesn’t increase, you are not improving the actual constraint. There is only one solution, restart from the beginning and find the constraint!
An important difference: how the improvement is designed.
Six sigma requires the involvement of highly trained personnel. Someone external to the process comes and collect data. It can be perceived as an intrusion by the staff working within the process. The solution will be then delivered top-down and resistance may develop before the solution is adopted. The complexity of the methodology may even foster this rejection.
Lean also involves external specialists to perform the value analysis, will deliver the solution in a top-down approach and may face the same resistance as the solution of six sigma.
TOC has a fundamentally different approach. It involves the operators in the problem identification and in the design of the solution from the beginning. TOC practitioners have the necessary tools (the seven layers of resistance) to obtain the buy-in of the staff working within the process and avoid resistance during implementation. This allows a better reliability of the solution once applied, a faster implementation and immediate feed back.
In this consideration, TOC is close to agile in its way of using fast feedback to verify the efficiency of its solution quickly. Agile TOC is cycling fast through the five focusing steps of continuous improvement. The focusing steps are allowing TOC practitioners to show the most complex situation as a simpler one where only a few parameters drive the performance of the whole system. This often allows to make the buy-in from the team much easier.
When the limiting factor is not a resource
Another important difference between the methodologies is the case when the limiting factor is not a resource. In any organization many activities are driven by policies whose purpose has been lost in time. The policy has been set up when it was necessary for managing a limitation. And then along the time, the limitation has changed, but the policy remained. We all have an example of such policy in mind. It can be a policy of bonuses that does not align with the market, or a policy of hiring that create a lack of resources in a critical process.
Six sigma or lean are disarmed in front of such a situation.
This is where resides the strength of TOC. The logical thinking process — The logical cause-effect trees used by TOC to identify the root cause and the solutions — allows identifying non-capacity constraints like procedures or policies that are no more adapted to the situation and cause disruptions. The same tools also allow to develop the solutions. This gives much more flexibility to TOC compared with the two other methodologies.
Real life results
Based on experience in applying the three methodologies, what are the expectations in terms of results?
The approach of TOC guarantees a higher return on investment as it doesn’t require huge efforts to obtain significant improvement. TOC will only invest significantly on the constraint, not on non-constraints, therefore focusing the effort to what shall produce immediate significative results.
Lean and six sigma have no mechanism to ensure that they are working to improve the constraint. There is a good chance that the efforts are improving non-constrained resources. In this case, the profits will, at best, see little improvement, but most probably none. This makes difficult to justify further projects of improvement, and most of the time put a hold on the improvement efforts, waiting for the next round, a few years later.
They can go hand-in-hand
Nevertheless, TOC, Lean and six sigma can be combined. This is known as TLSS.
During the determination of how to exploit the constraint, the tools of six sigma to suppress variations or of lean to suppress waste use of the constraint’s capacity are a good support. They are again very useful when elevating the constraint. But none of six sigma or lean have an approach of subordination of the system to the exploitation of the constraint. TOC is supplying the framework, lean and six sigma supply tools.
Conclusion
When improving the operation of a company, it is important to focus the efforts on what brings the most profits to the whole organization in the shortest time possible. Increase in productivity located in a department or that doesn’t reflect in the bottom line are useless and counterproductive. From experience with the theory of constraints, lean and six sigma, the theory of constraints is the methodology that brings consistently fast, global and positive results.
According to what I saw on the field, TOC brings the framework in which the efficiency of lean and six sigma is multiplied.
In the present days, no company can afford to wait long for the results of improvement efforts. They need immediate and significative positive impact. Companies don’t have anymore the patience for marginal or incremental improvements. Furthermore, the improvement shall be obtained with the minimum effort. In my opinion, only TOC matches such criteria consistently.
To use a sandpaper analogy, if you take a really rough board and use medium sandpaper (lean tools) or a thin sandpaper (six sigma tools) on it, you can still get it as smooth as you would if you started with coarse paper (TOC) and then eventually moved to medium paper and then thin paper.
Choosing between TOC, lean or six sigma, depends on your sense of urgency and your taste for complexity. The difference is in the time, effort, and expense that it takes with lean or six sigma to reach the same point when compared to using the coarse sand paper first and then the medium and fine.
To summarize, TOC allows prioritizing the issues and indicate in which order they should be tackled. TOC tells you when using the tools of Lean and six sigma is beneficial, it is simultaneously a compass and a coarse sandpaper.
Didier Varlot
Senior consultant in Business Continuity and Theory of Constraints, Owner and CEO of SNTC.
Didier is a project manager with 35 years experience in project recovery and 25 years of application of the Theory of Constraints. He uses a mix of Theory of Constraints, Agile and Open organization (the TAO Way) to improve operation. His references go from railway industry to healthcare services, from chemical industries to green energy supply.
He is the author and moderator of the Thinking Logical: Synchronous Momentum and has his own publication on medium.
You can follow him also on Twitter, or LinkedIn
Contact Didier via LinkedIn, via email or via phone +40 744 501 044 (FaceTime and WhatsApp).
