We are not enemies, unless you want to be
I came across Friends or Foes- Lean versus Theory of Constraints - Business Review Canada by Marcus Schmieder via my weekly Google Alerts on the TOC topic. It seems that Business Review Canada has been encouraging its bloggers to write more about various continuous improvement methodologies, as I've seen several items recently. While I appreciate the description of Lean, the article turned into more of an advertising piece for the author's consultancy, which is clearly focused on Green manufacturing. As a result, the characterization of TOC is a bit off the mark:
Lean Manufacturing in its general principle is based upon reducing waste or processes which do not add value to the product. In case a process is a constraint, it will lead to more productivity. Lean Manufacturing if applied correctly to the enterprise will reduce lead times; reduce inventory and work in progress. In general, waste will be reduced and more time can be spend in value added activities.
Lean Manufacturing is a tool, which allows companies to be geared towards the future to be more efficient, have cross trained workers and standardized products.
TOC in contrast is not looking at waste in general but focuses on processes with constraints only to increase throughput in a facility. It may not involve the overall company and its employees but only looks at local errors in the system. Managers, supervisors and employees are trained to work on bottlenecks only. There is no or very little thought spend on waste or its effects to people, environment or the community. TOC is a tool to increase profits and throughput whatever it takes. [Italics mine to highlight incorrect statements]
While it is correct that TOC does not focus on waste or people or the environment, it certainly doesn't ignore these things. In TOC parlance, "throughput" is directly tied to sales, which gives the business profits. "Throughput" is not the same as simply making more stuff at a given facility, as this article seems to indicate.*
And why would a business want more throughput? For most businesses it is not JUST to make more money, they want to make a difference to their employees and their community. This cannot be done by simply making more money today; business owners want to ensure that the business is a viable concern, so they can continue supporting their employees and their community.
As with many other successful continuous improvement initiative, TOC should result in higher sales; better flow; reduced inventory; higher quality; better safety; and, yes, less waste. The belief in the TOC approach to continuous improvement is to find the area of the business that most limits growth in the business and find ways to correct that situation. In fact, there are three key measures that we use to help gauge the process of which improvements to do when: Throughput (Sales - TVC); Investment; and Operating Expense. Whatever change is recommended should be checked against these measures with a preference for changes that will have a REAL positive impact on Throughput first - but don't ignore the other pieces. After all Net Profit = Throughput - Operating Expense.
* In fact, a focus on producing more is where some continuous improvement efforts (including TOC) have run into problems. The manufacturing center may have been a constraint to sales, but they improved so much that they could produce more than the market could bear - and then cost accounting told the business that the facility was inefficient. This is the impact of local thinking vs. systems thinking.
[Photo: "Jay Fight" by Richard Lowkes]
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