Lean Management: Why shall we optimize processes?

Use continuous process improvements to make your organization lean

Everybody use processes on a daily basis, most of us joust don’t focus on it. We have a process for getting ready in the morning, a process for going to bed at night, a process for driving to work, a process for driving home when we are done. I think you get the point: Our lives are full of processes. Businesses and organizations are no different. They are full of processes, some well defined and lean, others not.

The secret to success is to get lean

I believe that one of the biggest factors between businesses that are successful and those that aren’t is that the successful ones know and understand what their business processes are and focus on the improvements of those processes. The reason that the understanding of these business processes is so powerful is that the organization that understands how it gets things done can also focus on how to improve the efficiency surrounding that process, minimize costs, and increase profits. That is a powerful tool. It is easy to see how a firm grasp of your processes can help you to increase the efficiency of your business model, thereby making the actions required to execute the processes lean in nature.

Efficiency studies and what they mean today

Around the turn of the last century massive studies whose focus where the efficiency of workers and the processes in the plants they worked in began to help business owners understand that slight modifications of even the smallest step in a production process could net significant increases in productivity. The focus of lean process improvement is similar to these early studies in that it seeks to identify possible bottlenecks and constraints within established processes and minimize or eliminate them where possible. Consider the impact on a production line where a bucket of bolts is placed just out of arms reach where the mechanic may require a full second to reach the bucket, retrieve a bolt, and place it in the designated product. Now consider identifying that as a constraint on the production time of that particular product and as a result moving the bucket of bolts closer to the mechanic. This move cuts the time it takes him to get the bolt in half. For one bolt this may not seem significant, but over the course of 100,000 bolts the company saves nearly 14 hours. By making all processes lean, production time is greatly reduced, more products are made, and more profits are generated.

Six Sigma: An overwiew

The Value of Six Sigma

Six Sigma, and its counterpart Lean Six Sigma, have been buzz words for quite some time. Still, when most business people are asked they can’t quite pinpoint what it represents. First and foremost individuals that are seeking to implement the process must focus on learning what Six Sigma is. Contrary to what many folks have been led to believe, it is not a magic pill that will eliminate the problems your organization may have overnight. Six Sigma is as much of a culture as it is a system. The primary tenets of the program focus on impacting the culture of an organization and how they focus on problems, as opposed to using some system of mathematical equations to fix your process flows.

What Six Sigma Is
The Six Sigma process places a sharp focus on how things get done. Typically I recommend beginning the evaluation of a process by implementing either an Ishikawa Diagram or by performing a root cause analysis. These techniques are beneficial in that they allow me to look at the very basic processes that organizations have and then begin to evaluate the processes that evolve as an event unfolds. Regardless of what the event is, it must have a beginning, middle, and an end. By using the Fishbone Diagram I am able to evaluate the many pieces of the process I am examining and begin to focus on bottlenecks or constraints within the process that introduce inefficiencies into the workflow. By evaluating these processes early on, I can begin to identify steps in the workflow process that have a higher likelihood of introducing variability into the process. By isolating and then minimizing these instances of process variability I can then make recommendations regarding ways to increase the overall efficiency of the process and reduce variability.

What Six Sigma Is Not
Six Sigma is no silver bullet. Once all of the analysis has been performed, and the steps within the process that introduce heightened variability have been identified it is still the responsibility of management to put these findings to use. Without the commitment to implement the recommended methods to minimize variability, the evaluation of the entire process is merely a waste of time and resources.

Theory of Constraints - The Thinking Process (1)

The Theory of Constraints (TOC) was introduced to the world in 1985 in a book entitled "The Goal" by renown Dr. Eliyahu M. Goldratt. The TOC is a model of verifiable philosophy: by understanding how people think, leads us to understand the world around us, and because we understand it we can improve. The theory of constraints provides answers to three simple questions: What to change, to what to change to and how to cause the change.

1) First question of the thinking process
One of the most important questions of the Theory of Constraints is: "What to Change?" TOC is a method of practice for organizations to focus on ways of making the company run more efficiently thus increasing productivity and profits by figuring out where the constraints are in the system and finding ways to dissolve them..

What are constraints?
Constraints are anything that stops an organization from achieving the highest potential of its goals. Constraints may be inside of an company (internal) or outside of it (external). Internal constraints can come from the equipment being limited to not producing enough saleable goods and services. The written or unwritten policies of the organization can also prevent all the systems within from producing enough product. One of the biggest constraints that Dr. Goldratt talks about is people's resistance to change when the solution is not a win-win situation. Solutions around this constraint must create a situation in the organization that everyone can win with and increase job security, otherwise people will resist and fight the change. Other types of internal constraints are the policies of the company and the equipment, both of which can limit a system from producing more goods or services. We talk about an external constraint when the organization is producing more goods or services than the market can handle. To handle constraints, TOC provides the "5 focusing steps" which I will talk about in one of the next posts.

Suggestion: Watch the original video lectures of Dr. Goldratt.

Continue reading with the second part of this article.