Continuous improvement with Lean + Six Sigma + TOC

Among the main concerns companies have, we can mention saving money, producing more income, achieving greater productivity and profitability in their teams as well as improving customer satisfaction and including new technologies to facilitate processes and make their business more competitive. These needs or expectations will turn into strategic goals at some point. 

For continuous improvement, most companies are implementing different tools that allow them to manage their business processes efficiently, effectively and safely. 

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Through the use of BPM tools (Business Process Management), companies can organize and design their cross-wise processes so that they can manage the key indicators that are related to the goals they want to achieve; they can also carry out the necessary optimization to reach these strategic goals. 

If you want to introduce a meaningful change in the improvement of your processes and resources as well as achieving true business agility, you should apply continuous improvement methodologies since they allow the optimization of operative processes so that you can achieve greater effectivity, efficiency and performance in the execution of processes to get the expected results. 

<<< ISO 9001 Standards: their importance in continuous improvement >>>

Within process management, we can emphasize three continuous improvement methodologies: Lean, SixSigma y TOC, which are complementary to each other; they allow you to focus on the different parts you can improve in a process and increase customer satisfaction by offering the required quality of products and services at the right time. 

1. Lean

James Womack proposed this name for the management philosophy used by Toyota in the 50s. It's a continuous improvement methodology that puts forward an alternative to improve efficiency (the ability to achieve a particular effect by doing the right thing from the start) in production processes or in the provision of services.

<<< What is it and why do you need to apply the Lean Management methodology? >>>

To that end, within the productive process, its goal is based on eliminating everything that doesn't add value, allowing you to work more efficiently using fewer resources. This way, results can be achieved immediately in terms of the productivity, competitiveness and profitability of the business. 

An important piece of information to understand Lean methodology to work on the improvement of your processes is “Takt Time” calculation (the average time between the beginning of the production of a unit and the beginning of the production of the following one): the ratio at which we need to produce to meet our customers' demands so that, later, you can balance resources at the same ratio.

If operation capacities are greater than the amount needed to meet customers' demands, they will be considered as waste that will not add value, so that Lean will focus on eliminating this waste and balancing capacity and demand. 

2. Six Sigma

It was developed in 1985 by Bill Smith who was working at Motorola at that time. It is a continuous improvement methodology that develops a model to improve the quality of a product or service, managing to save money, increase customer satisfaction, get the 99,9999% of efficiency (the ability to achieve the desired or expected effect) and eliminate waste and variability. 

<<< Process improvement: Six Sigma >>>

To achieve this, it aims at reducing (almost completely) the flaws (anything that doesn't meet the demands of the customer) and variations of processes, costs, cycle time and at increasing productivity and customer satisfaction through reducing variations in products and processes to provide organizations with a competitive sustainable advantage on time. 

Six Sigma methodology supports continuous improvement in two important indicators: the speed at which a process is carried out (cycle time) and the number of errors that get to the customer (internal/external).  

3. TOC (Theory of Constraints) 

It was created in 1970 by the physicist Eliyahu M. Goldratt in his business novel "The Goal". It's a continuous improvement methodology that offers another alternative to improve the capacity of production. It aims at interfering in the constraints or bottlenecks (that set the pace of processes) that restrict the capacity of productive processes. 

This theory states that companies' goals should be generating income through three process indicators: companies have to maximize their sales (throughput: the process output minus its input) assuring their presence in the market; they also have to reduce inventories (the cost of stored materials) and minimize operational expenses (those associated to transforming inventories into throughput- generated value), which include direct and indirect costs as well as the company's assets. 

In conclusion, the three process management tools Lean, Six Sigma and TOC complement one another to provide different levels in the continuous improvement of processes; in the case of Lean methodology, it improves the efficiency of processes by eliminating the parts that don't add value; Six Sigma, improves the quality of products and services; and, TOC, productivity. Three alternatives for optimizing the results of your company so that it is positioned alongside the best ones.