What is the “right” tool for improving business performance?

By | April 10, 2012

When to use which one, and the need for flexibility!

Every day we hear about tools and programs for improving operating performance. There are many of them, with more versions coming out all the time. They include TOC, Lean, Six Sigma, ISO, CMM and BPI/BPM. Some, such as Six Sigma and ISO, have rigorous training and certification programs which are major projects to undertake in themselves. What is a company to do to understand which to choose, and possibly even when?

The answer to this question requires an organization to clearly define goals, timing, and the rationale for beginning at all. Is there a specific issue, or is there a client/industry mandate, or is the business looking to establish a base for optimizing performance overall? A comprehensive overview is impossible in a short piece such as this, so I anticipate this distillation may provoke some lively feedback and discussion.

TOC – Theory of Constraints

  • Focus: identify constraints or limitations for a task or process
  • Action: eliminate the constraint
  • Results: maximize the throughput
  • Limitation: usually targeted to a single task/function

“Build it and they will come.”

LEAN

  • Focus: eliminate waste, operate just in time
  • Action: make to order, optimize single piece flow
  • Results: rework eliminated , reduced inventory, reduced floor space, reduced cycle time
  • Limitation: difficult in a project oriented business more effective with ongoing production

“Don’t build it until it is needed.”

SIX SIGMA

  • Focus: variation in a process, tracking error/incident statistics and cause
  • Action: DMAIC – Define, Measure, Analyze, Improve, Control
  • Results: find and eliminate sources of variation, can help with complex problems due to structure
  • Limitations: rigorous, statistical intensive approach, can lead to analysis paralysis; cost for six sigma training and certification can be high.

“Build it exactly to customer specification.”

ISO

  • Focus: documenting the process
  • Action: document the existing process in detail in a structured way, and audit compliance to the documented process
  • Results: consistent and repeatable process drives highly repeatable outcomes, improved supplier quality
  • Limitations: focus is on documentary evidence, so a poor process can be documented and followed and certification still achieved. Corrective action focuses on the documentation. ISO is a costly system if certification is pursued.

“Document what you do and do what you document.”

BPI/BPM

  • Focus: define, analyze, and improve cross-functional business process
  • Action: map the existing process, define tasks and inputs and outputs for each, identify and remove gaps and overlaps, manage with metrics and link actions to results
  • Results: refined and reengineered process with reduced cycle time and cost, and increased first pass yield.
  • Limitations: requires top down support to be truly effective, scope of process needs to be clearly defined, must apply the appropriate problem solving tools and project management skills

“Manage as an enterprise around meeting overall corporate goals; use the right tools as applicable.”

Companies need to have a clear understanding of their goals and needs, and a measure of their tolerance for change. The urgency for improvement is another critical factor. Finally, consider what skills you need to add, and/or assistance you may require to most efficiently and effectively address your needs and the tool you choose. This can reduce the time to achieve results and improve the probability of success.

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