Theory of Constraints Handbook - James Cox Iii [292]
Direction of Solution to Breaking the Continuous Improvement Conflicts
To ensure that we don’t make the common mistakes of omission and commission (within CI) and mistakes of early detection and correction (within auditing), we need a focusing mechanism that helps us identify what should be done (to achieve more goal units) and what should not be done (since it would waste resources or even decay performance).
TOC provides a simple and effective solution to this problem—no wonder that more and more organizations have been looking to TOC to provide them with the focusing mechanism needed to focus all improvements on what is good for the company as a whole (Breyfogle, 2008).
TOC’s Five Focusing Steps
Goldratt (1990a, Chapter 1) defined a simple Five Focusing Steps (5FS) process for achieving continuous and step-change improvement that, if followed, would also likely prevent the errors of omission and commission as well as errors of detection and correction. The process is based on the simple premise that an organization can be viewed as a chain and, therefore, any organization’s performance is limited by its “weakest link” or system constraint. To improve the organization’s performance, management should therefore focus their limited time and resources on finding ways to “strengthen the weakest link.” TOC’s 5FS process enables an organization to continuously exploit and elevate its inherent potential that can be “unlocked” or “created” through focusing scarce resources on identifying, exploiting, and elevating the performance of its current system constraint. TOC’s 5FS are as follows:
Step 1: Identify the system constraint (the weakest link).
Step 2: Decide how to exploit (not waste the potential of) the system constraint.
Step 3: Subordinate everything else to the above decision.
Step 4: Elevate the constraint.
Step 5: If, in the previous steps, a constraint has been broken, go back to Step 1. WARNING: Do not allow inertia to cause a system constraint.
Frequently, the most difficult step is Step 3—subordinate everything else (all processes, policies, and measurements) to the decision on how to better exploit the system constraint—because it can result in local versus global optima or short-term versus long-term conflicts.
For example, if the constraint is in factory capacity, it might make sense for the factory to produce in larger batches to reduce setup and waste. However, if the constraint moves to the market and the company is starting to lose sales due to the fact that their lead times are too long or their unwillingness to accept smaller orders (both consequences of a policy to manufacture in only large batches), then the factory will face a new conflict. Should they now change the old rules (or not) to subordinate to the requirements of the new system constraint—the market—by producing smaller batches. Unless this conflict is broken, the company will not be able to exploit fully the market potential.
A similar conflict can arise when the company enters Step 4—elevate the system constraint. The company might have a policy in place not to hire any additional people or not to approve any capital expenditures, which, unless this conflict is broken, will block the company from elevating its system constraint and therefore constraining its improvement potential. Figure 15-7 shows a graphical representation of the 5FS and the related exploitation and elevation conflicts organizations might face when realizing they would have to challenge and possibly change some of the rules to better exploit or elevate the real system constraint.
FIGURE 15-7 Graphical representation of the TOC 5FS (Barnard, 2003).
But you may ask, what about the “non-constraints?” Should they not be improved?
The system constraint is the only part of the system for which “more is better” is valid. All other parts (non-constraints) have to maintain their performance at a level of “good enough.” If their performance is below this level (too little), it will compromise the performance of