My take on Debottlenecking:
Lean and Six Sigma are two of the most effective business improvement techniques available today. However, many companies still struggle to harness one or both disciplines to achieve the desired results. One solution is to combine lean/Six Sigma with a third business improvement approach — Debottlenecking. By bringing Debottlenecking into the equation, companies can identify where to focus the lean and Six Sigma efforts for maximum success.
Companies that have embraced lean and Six Sigma have had some impressive initial results. However, these popular business‐improvement disciplines have not always worked for everyone—even when they have been combined. A number of companies have either not achieved the touted benefits or, after initial success, have seen their improvement efforts grind to a halt.
A few leading companies have also used another business improvement approach, namely Debottlenecking (theory of constraints – an concept pioneered by Eliyahu M. Goldratt), to focus their Lean and Six Sigma efforts and amplify their results. Debottlenecking looks at the business as chains of dependent events and focuses improvement efforts on the weak links in the chains. On the face of it, the inclusion of
yet another sophisticated business process might seem to lead to excessive complexity. But in practice, this new layered approach actually can simplify management’s job by providing a focusing mechanism for improvement initiatives.
The benefits of the application of Debottlenecking techniques can help to jump‐start stalled lean and Six Sigma implementations. To aid understanding, I refer to the example of an automotive parts plant (real but unnamed). This company had a relatively straightforward production process in which steel rolls were received, cut and shaped, plated, assembled, painted, and then shipped to the customer. Market demand on the parts plant calls for 30 parts an hour. Before the new blended process disciplines were applied, the stamping area had a throughput of 35 parts per hour. The planting and painting operations handled ten and 40 parts an hour, respectively, with final assembly running at 20 parts hourly. Unfortunately, the plant frequently suffered from missed due dates, poor quality, shortages of the right parts (with plenty of the wrong parts), and low morale. Piles of work‐in‐process (WIP) were seen everywhere in the plant. And, expediting was the norm.
Setup reduction techniques have been applied at the press operations to cut set‐up times. These techniques can also dramatically increase effective capacity as well as the ability to reduce batch sizes. Six Sigma problem‐solving techniques have helped to increase the quality at the plating operation (previously experiencing a lot of rework) so that its effective yield is slightly more than market demand of 30 parts hourly. Lean concepts have been implemented at all operations to help reduce waste, and preventive maintenance is now being done to avoid machine and tool breakdowns, which has resulted in a significant boost in final‐assembly throughput. Finally, a pull scheduling system has been implemented that pulls product through the system at the rate of market demand. Dramatic improvements have been made. The process is now predictable and under control. Inventory, particularly WIP inventory, has been slashed by more than 70 percent. Cycle time has been halved, and customer service levels are now up 95 percent.
Companies that have effectively implemented lean and Six Sigma have driven much of the waste and variation out of their processes. The easy gains have been achieved. So how do their managers decide which lean/Six Sigma improvement initiatives to launch next?
First, they have to keep in mind the ultimate goal of any improvement initiative: to increase shareholder value by improving net profit and ROI. Debottlenecking provides a framework for measuring the impact of a local initiative on those bottom‐line measures. For example, when throughput is increased—without adversely affecting the Debottlenecking definitions of inventory or operating expense—then net profits and ROI are simultaneously increased.
When deciding whether to undertake a local lean/Six Sigma improvement, managers should take into account its impact on all three measures—throughput (making money through sales), inventory (all assets), and operating expense.
The Debottlenecking position is that the emphasis should first be on increasing throughput, then on reducing inventory, and finally on reducing operating expense. By applying a Debottlenecking framework to lean/Six Sigma efforts, companies can more easily avoid the problems incurred by placing too much priority on reducing operating expense.
Consider the many examples of businesses that have focused excessively on eliminating waste with the objective of cutting costs, while not applying at least as much effort to selling more. Excess capacity usually in the form of people is viewed as waste. This viewpoint can lead to several long‐lasting problems. First, cutting capacity to match existing demand leaves little room for increases in demand. Once capacity has been reduced, it’s not easy to increase it again. It takes time and money to find and hire skilled workers. A second problem is the effect of such moves on morale—and on future improvement efforts. Just how are workers expected to cooperate with any future lean/Six Sigma efforts if they know they are improving themselves out of a job? By that point, any hope of continuous improvement initiatives has been dashed.
To determine where the focus should be for improvement initiatives, it’s important to remember that a system of dependent events is governed by a very small number of constraints. The 80/20 rule states that 20 percent of the initiatives will yield 80 percent of the results. Once you realise that constraints govern the system’s performance, it becomes clear that only a few things can be done that will have a significant impact. In fact, the 80/20 rule becomes the 99/1 rule.
A process is needed to manage the system to confirm that the constraint is the centre of attention. The following are the five focusing steps of Debottlenecking:
1. Identify the system constraint. What and where is the limiting factor? A review of the company’s symptoms can quickly lead to a diagnosis of the constraint. For example, in a plant that can’t make enough products to meet demand, the constraint can be a capacity‐constrained machine or work centre.
2. Decide how to exploit the constraint. Once the location of the constraint has been identified, managers should try to maximise its performance. For example, if a machine is capacity‐constrained, all sources of wasted and idle time should be eliminated.
3. Subordinate everything else to the constraint. It’s vital to determine that the non-constrained resources are working solely to support the constraint. For example, with a capacity‐constrained machine, all other resources would produce at the same rate as this machine and run no faster.
4. Elevate the constraint. Managers have to take whatever action is necessary to eliminate the constraint. Additional capital investment is considered at this point. Breaking a capacity constraint could take the form of additional equipment or people.
5. Return to step one, but beware of inertia. At some point, the constraint is broken and moves somewhere else. It’s essential to recognize the location of the new constraint and to redirect efforts rather than continuing to focus on the old broken constraint. For example, production capacity might be raised to the point that the market is now the constraint, and efforts should then be focused on improving sales and marketing.
Following these five steps helps facilitate the development of a process of continuous improvement. This has to happen because the company always has a new constraint. So lean/Six Sigma improvement initiatives should be evaluated and prioritised—and periodically re‐evaluated and reprioritised—in the context of their impact on the company’s successive constraints. For example, if a company is capacity‐constrained, lean tools should be used to eliminate waste and improve the flow using demand‐pull scheduling. On the other hand, if the constraint is external—if the company has more capacity than demand—then Six Sigma projects should be aimed at areas that will make the system’s offerings more attractive to potential customers. Key areas in this regard include customer response time and the reliability of delivery promises
My take on Debottlenecking: