Theory of Constraints Handbook - James Cox Iii [307]
As an example, Sanmina SCI, a large semiconductor manufacturer in the United States reported (Pirasteh, 2007) that it did a study on 21 of its factories over a 2.5-year period to measure the results achieved using only Lean (4 plants), only Six Sigma (11 plants), and TLS (Theory of Constraints as the focusing tool for Lean and Six Sigma) (6 plants). The results were staggering. Although each plant contributed toward the total savings, the six TLS implementations contributed 89 percent of the total savings. This meant that the results of a Lean or Six Sigma implementation could be improved by a factor of 15 if focused in the right area (on the system constraint or non-constraints that limit better exploitation or elevation of the system constraint).
Other examples of the leverage that can be achieved by implementing TOC after Lean and Six Sigma include the following:
Delta Airlines (Mays and Adams, 2007) reported that despite implementations of Six Sigma (1999) and Lean (2000), they filed for Chapter 11 bankruptcy. In 2006, they started with their TOC implementation within their Maintenance and Repair Organization and within less than 12 months increased Throughput by 25 percent, reduced turn-around-times (TAT) by between 10 and 40 percent and increased revenues by 20 percent, without an increase in OE, making a significant contribution to the successful turnaround of Delta.
Warner Robins Air Logistics Center reported that after a successful Lean implementation they reduced their TAT on the maintenance of the C5-Galaxy from 390 days to around 240 days between 2000 and 2005. After implementing TOC, they managed to reduce it to 170 days within less than 6 months (another 30 percent reduction).
Seagate Technologies (Zephro, 2004) had completed over 4700 Six Sigma projects, reported $1.2 billion in savings, and trained over 8000 employees as Green, Brown, and Black Belts by 2004. However, a review of their Six Sigma projects and feedback from stakeholders made them realize that the DMAIC11 analyze stage lacked a strong effect-cause-effect tool, the DMAIC improve stage didn’t have an effective tool for solution development, the DMAIC improve stage didn’t have a method to resolve conflicts, generally projects took too long to complete (average 6 + months), and Belts did not have a way to prioritize and mine projects. To solve these problems, Seagate introduced the TOC TP to supplement the DMAIC tools. The results have been impressive: Project approvals increased since they are more focused and they have more clearly stated problems and solution paths that include how all stakeholders will benefit. They also reported less resistance to buy-in for proposed solutions and faster and more successful project completion (project completion rate increased by 80 percent, number of projects completed increased by 70 percent). Graduating Transactional Belts voted Current Reality Tree (CRT), Future Reality Tree (FRT), and Evaporating Cloud (EC) the most useful Six Sigma tools in every wave since introduction.
Not only TPS/Lean and TQM/Six Sigma are benefitting from the focusing mechanism of TOC. Researchers, using other improvement methods such as Business Process Reengineering (Al-Mashari et al., 2001), Agile Management for Software Development (Anderson, 2003), Activity-Based Costing (Vergauwen and Kerckhoffs, 2009), ERP Software Implementations (Barnard, 2001; 2009), and Balanced Scorecard (Breyfogle, 2008), are starting to present case studies on how the use of TOC as the “systems or holistic approach” enables achievement of faster and more significant improvements and reduces or prevents the past high-failure rates of powerful methods wasted on local optima. These results show to what extent TOC as a focusing mechanism can unlock inherent potential.
Using TOC’s S&T as a CI and Auditing Tool
Introduction to TOC’s S&T TP
The introduction by Dr. Eli Goldratt and coworkers (2002) of a “new” TOC-based TP called a Strategy and Tactic (S&T) tree is being viewed by more and more executives and managers who have been