Comparing Improvement Methods

In my last two blogs, I have provided an overview of the Lean improvement methodology.  This blog will wrap up the discussion by looking at some other methods of improving operations and comparing them to each other.

Total Quality Management

In the 1970’s and 1980’s, organizations were using Total Quality Management or TQM to make improvements to their operations.  The goal of this methodology was to build an organizational culture of producing high-quality goods and services. The idea was that if everyone in an organization was made aware of the importance of process improvement, and the culture focused on producing high-quality services and products, operations would automatically become more efficient, quality would increase, customers would be happier, and the organization would be more profitable.  A critical drawback was that there were no clear standards for what TQM was. It was just a wide assortment of inconsistent management practices that varied between organizations and practitioners.  There were no standards as to what comprised TQM, how it should be implemented, or what approach and tools should be used.
To make improvement happen, employees were encouraged to examine the processes for which they were responsible and look for ways to reduce errors and improve the quality of their work. Practitioners often followed W. Edward Deming’s Plan-Do-Check-Act (PDCA) cycle. Employees would figure out a way to make improvements to their processes, execute the changes, check to ensure they got the results they needed and make adjustments when necessary. The cycle would then repeat all over again.
Although there was no standard Total Quality Management toolset, practitioners frequently used seven fundamental tools to make improvements.  These were:

  1. Cause and effect diagram
  2. Check sheet
  3. Control chart
  4. Flowchart
  5. Histogram
  6. Pareto chart
  7. Scatter chart

These seven basic quality tools are very useful and effective, and have been incorporated into the toolsets of more modern improvement methods like Lean and Six Sigma.

The Theory of Constraints

The Theory of Constraints (ToC) was first described by Eliyahu Goldratt in his book The Goal. The theory says that a system (or process) is only as good as the activities that limit it.  The fewer the limits, the better it performs.  Because of this, an organization must take steps to identify those factors that restrict a process’ ability to perform efficiently and which negatively affect quality, then take steps to eliminate them.  The objective is to improve the weakest area(s) of a process and increase the throughput of good quality services and products. Once constraints are addressed, the organization then starts the cycle over again. They examine the process to identify any new points that have now become constraints and take steps to remove them.

The Theory of Constraints approaches operational improvement using the following approach:

  • Identify the constraint in the process. Constraints are generally found at points in the process where work slows down or reaches a bottleneck and has to wait for a long time to be completed. 
  • Exploit the constraint. Once a constraint has been identified, the process is adjusted so that it is always kept busy with work. These steps are already a point where the process slows down, so if they run out of work the process will slow down even more while the step sits idle.
  • Subordinate the process to the constraint.  It is not a good idea for work to pile up and just sit.  It is a wasteful practice. Once a constraint has been identified and exploited, the pace for the rest of the process must be adjusted to match that of the constraining step. This way, work does not pile up, and the constraining step receives a steady flow of work.
  • Elevate the performance of the constraint step.  At some point, the organization may decide that the constraint has to be removed. This can be done by adding additional staff or equipment to increase the capacity at the point of the constraint. Another approach is to change the constraining step in a way that makes it more productive and increases capacity, or by potentially removing the constraining step altogether.
  • Identify new constraints and start the cycle over again.  When one constraint is removed, another point in the process becomes the weak link. The final step in the Theory of Constraints cycle is to review the process, find any new constraints and take steps to address them.

Lean

The Lean methodology has its roots in the Toyota Production System. The focus of Lean is on maximizing value for both the customers and the organization.  This is done by eliminating wasteful practices and streamlining the process.  Lean practitioners spend time optimizing the flow of work in a way that continually adds value to the service or products and pulls work through the process.  They also seek perfection in the processes that create the services or products they provide.

Lean approaches operational improvement by implementing the following principles:

  • Value: Practitioners start by identifying the core value created by a process (as viewed from the customers’ perspective). The goal is to maximize the value produced by the process.

  • Value Stream: Practitioners identify and map the stream of activities that produce the value in a process. Value streams stretch beyond the process itself, and can include a variety of factors like service design, inputs provided by vendors, marketing, production, service delivery, logistics, and technology systems.

  • Flow: Practitioners ensure that work flows quickly and smoothly through a process.  Improvement teams will work to reduce or eliminate batch processing, delays, and any other interruptions to the flow of work.  They will also locate related tasks close to each other and eliminate non-value added activities.

  • Pull: Practitioners will set up processes to only produce what is needed when it is needed. Traditional business processes tend to push work from upstream steps to those downstream.  If the downstream step is busy and not ready to receive more work, then the output sits idle, (a wasteful practice). Lean processes are set up so that the downstream steps set the pace in the process, and work is done only when a downstream step indicates it is ready to receive it.

  • Seek Perfection: Once processes have been streamlined, the improvement teams will use a variety of tools and approaches to further develop the process and seek perfection in all of its activities.

The use of Lean leads organizations to identify the root causes of problems within their processes and find solutions to them.  The methodology also emphasizes ongoing measurement and careful assessment of how their processes function, and the need for continual improvement.  The measurement and assessment are done using a standard set of tools or methods that are applied in the various stages of the improvement process. Like Total Quality Management, Lean practitioners often follow the PDCA cycle. The process is assessed for opportunities, changes are made, and the results are examined to see if they are effective.  If necessary, adjustments are made to optimize the changes to the process, and steps are taken to solidify the improvements.

Six Sigma

While Lean concentrates on value and streamlining processes, Six Sigma focuses on eliminating defects.  This is done by reducing variation in the process and centering process performance on a specific target.  Like Lean, Six Sigma started in a manufacturing environment. It was developed by Motorola in the 1980’s as a way to profoundly improve business operations and help the company compete with overseas competitors.  It should be noted that while both Lean and Six Sigma have their roots in manufacturing, they both work very well for improving service operations.

Similar to the other methodologies that have been described, Six Sigma approaches operational improvement by following an improvement cycle.  In the case of Six Sigma, practitioners follow the DMAIC cycle, which does the following:

  • Define.  n the Define phase, practitioners spend time clearly defining the problem that they must solve, and developing a clear understanding of the process as it is functioning in its current (pre-improvement) state.  During this phase the project is chartered, the problem is defined and documented, the process is mapped, customers are identified, and voice of customer feedback is collected.

  • Measure. In the Measure phase, the metrics used to measure the process are evaluated to ensure that they are the best for adequately assessing process performance.  The systems that are used to measure the process are scrutinized to determine if they are capable of effectively and accurately measuring process performance.  If everything is OK, the current state of the process is measured.  This provides the improvement team with a clear understanding of how the process is performing, and sets a baseline to which the results of any improvements are compared.

  • Analyze. In the Analyze phase, the data from the Measure phase is carefully examined and used to develop a pre-improvement picture of process performance. The data that is collected is also used in performing root cause analysis to identify those factors that have the greatest effect on process performance, and which need to be controlled.

  • Improve. In the Improve phase, the project team uses what they have learned in the previous three phases to determine how the process should be improved.  They then work to develop solutions that will achieve those goals.  During this phase, promising solutions are modeled and tested to see which provide the best results.  The best solution is then implemented.

  • Control. In the Control phase, the improvement team takes steps to secure the improvements they have made and prevent the organization from sliding back to the old way of doing things.  The new process is documented, employees are trained to use the new process, and steps are taken to monitor the process and ensure that is performing the way it should.

Summary Comparison

The table below is taken from a slide created by Al Filardo for the Continuous Improvement and Six Sigma training program.  It provides a brief summary and comparison of each improvement methodology.

Continuous Improvement and Six Sigma

All of the approaches that have been described have pros and cons.  One cannot say that any particular method is better than the other, but they do have their applications in the process improvement world.  Each method can be used in a way that takes advantage of its strengths, and they can be combined when needed.  Lean and Six Sigma are often used in conjunction with each other to streamline and remove waste from a process, and then move the process toward perfection by reducing variation and centering performance on a specific target.  The bottom line is that they can all provide a benefit to an organization. The result is better and more efficient operations, lower costs, enhanced services and happier customers.  As always, I welcome your questions or comments.  You can email me at clayton.taylor@asu.edu.

References:
Filardo, A. (2008, July). Continuous Improvement and Six Sigma. Concept Introduction. Employee Development Program Slides, Arizona State University, Tempe, AZ.

Nave, D. (2002, March).  How To Compare Six Sigma, Lean and the Theory of Constraints, A framework for choosing what’s best for your organization. Retrieved from http://www.lean.org/Search/Documents/242.pdf.

About the Author:
Clayton Taylor, MBA, is a Management Research Analyst, Pr. and Certified Six Sigma Master Black Belt working in the Office of the Executive Vice President, Treasurer and Chief Financial Officer at Arizona State University. He currently consults with nine diverse Business and Finance operational areas to lower costs, improve operational efficiency and provide the highest quality customer experience to internal and external customers. Mr. Taylor can be reached at clayton.taylor@asu.edu.