A Formula for Success - Lean & TOC

Many businesses prioritize improvement initiatives haphazardly, says guest contributor Satya S Chakravorty, professor at Kennesaw State University, and find that they are not achieving overall business objectives. In this article Chakravorty looks at how the Theory of Constraints (TOC) can be applied to get better results. Organizations launch improvement initiatives such as Lean events on the assumption that they will be making substantial progress towards realising overall business objectives. But after investing significant resources and time, some businesses find that they aren't seeing the results they want. Why? First, let's look at Lean. Lean initiatives involve performing value stream mapping of a process, identifying value added and non-value added activities, and then reducing non-value added activities using Lean tools. And while there are many Lean tools such as Kanban (a.k.a. one piece flow) or cellular manufacturing, Kaizen events are often used to reduce non-value added activities. Lean events typically run four (4) to six (6) weeks consisting of two (2) weeks of initial analysis, two (2) weeks of training and preparation, one (1) week of conducting the actual event, and one (1) week of stabilization. Events are prioritized with the objective of reducing non-value added activities as much as possible. Consider, for instance, a process consisting of three work centers: work center A, work center B, and work center C. After performing value stream mapping, the amount of non-value added activities (e.g. waste of movement) per work center was identified as the following: work center A has 30%, work center B has 20%, and work center C has 10%.

Figure 1 In order to demonstrate high Return on Investment (cost savings in waste reduction/cost of a Lean event), the first Lean event is scheduled at work center A (because that's where the most non-valued added work was identified), the second Lean event at work center B, and third Lean event at work center C. Sometimes, during an event, a high (e.g., 85%) arbitrary target of reduction of non-value added activities is pursued with a significant investment of resources. Businesses assume that this will help them make substantial progress towards overall goals. The event kicks off to great fanfare, maybe with the participation of the President or VP of Operations, department heads, all the process owners, and even the official photographer to record before and after event pictures, (and, of course to track visuals of phenomenal progress).