http://pinnacle-strategies.com1

TLS – Integrating Tools for Big Results

Mark Woeppel, Pinnacle Strategies http://pinnacle-strategies.com

“Brilliant process management is our strategy. We get brilliant results from average people

managing brilliant processes. We observe that our competitors often get average (or worse) results from brilliant people

managing broken processes.”

http://pinnacle-strategies.com 4

http://pinnacle-strategies.com 5

• Theory of Constraints

T• Lean

L

• Six Sigma

S

http://pinnacle-strategies.com 6

An Integrated Approach

• Continuous Improvement• Makes CI a profit center

A System

• Governance• Strategic deployment• Aligns local efforts with

overall strategy

What is TLS?

http://pinnacle-strategies.com

TLS supports different situations with specific tools for that situation.

- 7 -

http://pinnacle-strategies.com 8

Theory of Constraints

It’s about focus and synchronization

20 25 10 12 16Levera

ge Point

http://pinnacle-strategies.com 9

Lean Principles

SPECIFY VALUE

IDENTIFY VALUE

STREAM

FlowCUSTOMER PULL LEAN

Pursue Perfection

http://pinnacle-strategies.com 10

Six Sigma PrinciplesBefore you improve a process, stabilize

Use empirical data

Y=f(x)

Effective Project Management

Customers feel the variance, not the mean

Every project must be financially driven

http://pinnacle-strategies.com 11

TLS

Six SigmaReduce

Variation

LeanReduce Waste

ToCSystemic Alignment

http://pinnacle-strategies.com 12

TLS •Create Structure for CI Governance & Align Goals

ToC •Identify the Constraint & Stabilize the Global Process

Lean •Drive Out Wastes at the Constraint (Exploit)

6 Sigma •Drive Out Process Variation at and Around the Constraint

ToC •Subordinate, Elevate the Constraint•Identify the new constraint

http://pinnacle-strategies.com 13

Sanmina-SCI DOE Results

Lean Six Sigma TLS0

0.5

1

1.5

2

2.5

3

3.5

4

TLS returned 3.9 times more than Lean or Six

Sigma

http://pinnacle-strategies.com 14

Contribution to Results

89%

7%

4%

% of Savings Contribution

TLS

Six Sigma

Lean

89% of benefits came from 6 of the 21 plants

using TLS

http://pinnacle-strategies.com 15

The Improvement Challenge

“All IMPROVEMENTS results from a CHANGE to the

process….

But not all CHANGES result in an improvement….

http://pinnacle-strategies.com 16

The Traditional Approach to Improvement

“A cent plus a cent plus a… will accumulate to a fortune…”

Realist

Global Improvement = ∑ Local Improvement

http://pinnacle-strategies.com 17

The Systems Approach to Improvement

“If I find the leverage point I can move the earth...”

Archimedes

Global Improvement ∑ Local Improvement

20 25 10 12 16Leverage Point

http://pinnacle-strategies.com 18

CI Methods In Use

Lean TQM Six Sigma

TPS TOC Agile Other None0%

10%

20%

30%

40%

50%

60%

70%70%

34%29%

17%14%

6%

15%12%

http://pinnacle-strategies.com 19

Progress Toward World Class?

None Some Significant Full0

10

20

30

40

50

60

70

12.8

61.1

24.2

1.9

20

The goal is to create improvement

Create systematic

improvement s

A

CI Projects focus on biggest time

sinks

D

CI Teams get results

BThe Troops

21

Improve the things that are important to the business.

Create systematic

improvement s

A

CI Teams are focused on

business needsC

CI Projects do not focus on biggest

time sinksD’

The Leadership

22

We have a problem!

Create systematic

improvement s

A

CI Teams are focused on

business needsC

CI Projects focus on biggest time

sinks

D

CI Teams get results

B

CI Projects do not focus on biggest

time sinksD’

The Troops

The Leadership

http://pinnacle-strategies.com 23

The Existing Solution & Its Effects

People are cynical about

CI

Management is frustrated

Management does not

support CI efforts

Overall company

performance does not improve

Difficult implementatio

ns

Many projects do not

achieve resultsCI Projects

focus on biggest time

sinks

D

CI Projects do not focus on biggest time

sinksD’

Focus on the large time sinks

unless there is a major problem

Resistance to change

The problems still exist

http://pinnacle-strategies.com 24

What’s wrong with the conventional approach to CI?

Time spent at every resource is a major waste

Create systematic

improvement s

A

CI Teams are focused on

business needsC

CI Projects focus on biggest time

sinks

D

CI Teams get results

B

CI Projects do not focus on biggest

time sinksD’

http://pinnacle-strategies.com 25

Only the projects focused on the leverage point have any return.

20 25 10 12 16Leverage Point

http://pinnacle-strategies.com 26

The Biggest Obstacle to CI Program Success?

Reason Cited0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%Middle Management Resistance

Lack of Know How

Employee Resistance

Supervisor Resistance

Lack of Criteria

Backsliding

Unknown

Flavor of the Month

Financial Value Not Recognized

http://pinnacle-strategies.com 27

Malcolm Baldrige Research ResultsIs there a causal link between the Baldrige Criteria and actual performance of firms?

Leadership is the most important driver of system performance

Information and Analysis is the second most important

Process Management is twice as important when predicting customer satisfaction as when predicting financial results

http://pinnacle-strategies.com 28

The Reasons for Unsatisfactory Results?

Projects not geared towards the bottom line (phantom cost savings)

Lack of focus

Emphasis on tools, not results

Lack of leadership of CI ProcessNo structure to reinforce improvements or manage improvement process

Accountability for sustained improvements is not clear

No alignment with global goals or strategy

Teams are “self-directed”, not led

TLS Process Addresses the Core Problems

http://pinnacle-strategies.com

Tools – Create Alignment

- 29 -

Commissioning / Governance

Visual Display

Measurements Analysis

Constraint Analysis

G e t i t D o n e

G e t Re s u l t s

B r e a k B a r r i e r s

CHAMPIONS

LEADERS

PRACTITIONERS

APPLICATORS

EXPERTS FINANCE

Tools – Stabilize The Delivery Process

- 31 -

D1 D2 D3 D4 D50

100

200

300

400

500

Buffer Management

Level Loading / BalancingSDBR – Pull System

Drive Waste Out of the Process

http://pinnacle-strategies.com - 32 -

Process Mapping

Desired

Result

Cause and Effect Analysis

Texas Style QFD

Process

Output Process Input (OPI)

Who are the customers?

What do they want/need?

How are the needs met?

Purchasers of ice cream

Taste Ingredients

Quantity for price

Provide consistent weight

Packaging appeal

Shape, size, art work, color, verbiage

Texture / visual Air, fat content, Consistency

Order

Step 1

Step 2

Step 3 Cash

http://pinnacle-strategies.com

Drive Variation Out of the Process

- 33 -

Desired Result

Process Variables either as Noise or Constant

Visual Work Instructions

Run / SPC charts

?Variable Characterization

http://pinnacle-strategies.com 34

The Path Forward

Create Alignment

Sponsorship of Senior Manager

CI Team leader chosen (Process

Manager)

Tools training – simple applications

Metrics alignment / Strategic linkage

Project list created

Apply Tools to the Process

Stabilize Order Fulfillment

Visual Measurements

Process Mapping

1st project completed

successfully

Stabilize

Celebrate

Next level of training

http://pinnacle-strategies.com 35

The Path Forward

1st project completed

successfully

Next level of training

Go back the beginning

http://pinnacle-strategies.com 36

TLS – A Synergistic Solution

The Causes

Focusing on the wrong things

No system to produce improvements

No linkage to global strategies

Un-Synchronized improvement teams

No change in culture

The SolutionsFocus on the constraint

Continuous Improvement system with clear accountability

Projects deployed to constraint processes

Each CI initiative tied to process manager

Approach CI as a culture shift TLS

ToCSystemic Alignment

LeanReduce Waste

Six SigmaReduce

Variation

http://pinnacle-strategies.com 37

TLS Benefits

Fast, significant improvements as measured by the global metrics of Net Profit and ROI

Overall company performance improves

People are have tools to improve their sphere of process influence

A culture of continuous improvement exists

Significant progress towards world class with

ZERO capital investment

“Brilliant process management is our strategy. We get brilliant results from average people managing

brilliant processes. We observe that our competitors often get average (or worse) results from brilliant people

managing broken processes.”

http://pinnacle-strategies.com 40

More information about TLS

http://pinnacle-srategies.com/BusinessExcellence.htm