LEAN, Theory of Constraints and Six Sigma Notes

Process Optimization

Process optimization involves systematically increasing the effectiveness and/or efficiency of a process. The concepts discussed include Lean, Theory of Constraints, and Six Sigma.

LEAN

Lean is a business culture focused on adding value from the customer's perspective by eliminating non-value-added activities (waste) and creating continuous flow, it is about continuous improvement and respecting people. Lean is a paradigm. It is not mean.

5 Key Principles of Lean

  1. Value: Identify customer requirements (defining value).
  2. Value Stream: Map all steps/activities in the process and eliminate waste.
  3. Flow: Rearrange the steps/activities to ensure a smooth process flow.
  4. Pull: Supply only upon demand.
  5. Perfection: Continuous improvement.

Reducing Waste

Taiichi Ohno, the father of Lean manufacturing said:

"All we are doing is looking at the timeline from the moment the customer gives us an order to the point when we collect the cash. And we are reducing the timeline by reducing the non-value-added wastes."

8 Types of Waste (Muda)

  • TRANSPORT: Unnecessarily moving things, equipment, parts, tools, and materials from one location to another.
  • INVENTORY: Making more than customer demand, building up unnecessary stocks. Over production.
  • MOTION: Unnecessary movement; people walking to get things which should be located closer to the point-of-use.
  • WAITING: Delays between operations because parts are missing. Stopped work: waiting for parts, machines, or people.
  • OVER PRODUCTION: Making too much or too many. Completing a task before it is needed. Making products that the customer hasn't ordered.
  • OVER PROCESSING: Duplicate or redundant operations, performing wasteful steps that are not required. Often because "we always do it this way."
  • DEFECTS: Failing to produce a quality part the first time, generating rework or scrap. Not delivering the product or service "right the first time."
  • SKILLS: Failing to use skills and capabilities of the workforce. Not listening to people, using their knowledge, or learning from past mistakes/issues.

History of Lean

  • The Arsenal of Venice (1450s): Construction of a complete galley in continuous flow, going from start to finish in less than an hour.
  • Henry Ford: Focused on eliminating waste and helping employees work more efficiently. He emphasized having people and his company work smarter through standardization, waste reduction, and creating flow.
  • Toyota Production System: After World War II, Taichii Ohno and Shigeo Shingo at Toyota Motor Company incorporated Ford production and other techniques into what became the Toyota Production System (TPS) or Just in Time (JIT). This system shifted the focus from individual machines to the flow of the product through the total process. They also recognized shortcomings in Ford's system, especially regarding employees.

Lean Assignment Example

Mick is cooking spaghetti Bolognese for his girlfriend but starts late because he struggles to find the spaghetti pot. He prepares a large amount, perhaps more than needed, and forgets about the spaghetti, and boils it too long. To determine the waste in this cooking process is the assignment.

Six Sigma

Six Sigma focuses on improving products and processes by reducing variation/variability.

  • Introduced by engineer Bill Smith while working at Motorola in 1986.
  • Acceptable amount of variability when a six sigma performance level is the objective is very minimal.

Variability

  • Demonstrates how Six Sigma aims to reduce variability in processes.
  • Example comparing temperature samples, highlighting differences in standard deviation.

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  • Variability: Flaw of Averages

Standard Deviation

  • It is a measure of the amount of variation or dispersion of a set of values.
  • Averages can be misleading when there is high variability.
  • The example used shows temperature sample 1 with a Standard Deviation of 11 while temperature sample 2 has a Standard Deviation of 99.

Natural vs. Artificial Variability

  • Natural variability: Inherent to the system or process (e.g., increased demand for emergency care during glazed frost on the roads).
  • Artificial variability: Created by the way the system is set-up and managed (e.g., less elective hospital admissions during the weekend).
  • Artificial variability undermines the effectiveness and efficiency of a system or process and should therefore be eliminated.

Six Sigma Assignment Example

In the Netherlands, a visit to a General Practitioner (GP) is the first step to receive medical treatment. A typical GP appointment is scheduled for ten minutes. A study shows consultations take 10 minutes on average, however many patients complain about waiting time. Create a histogram of the “consultation durations” to observe for both natural and artificial variability in the data set.

Theory of Constraints (TOC)

  • A system/process is only as strong as its weakest link.
  • Developed by Eli Goldratt (1947-2011).

The 5 Steps of Theory of Constraints

"An hour lost on the bottleneck is an hour lost on the entire system; An hour gained on a non-bottleneck is a mirage"