Tuesday, February 12, 2013

Six Sigma vs. Lean vs. TOC – What, When and Where?

Operational efficiency can be a defining competitive advantage for the leading organizations in an industry. This has been demonstrated by companies which have dominated their space for long durations of time such as Dell, Apple, Walmart, Amazon, Toyota, Ikea and many more. Perhaps, Scott Adams has a point when he says that mixing methodologies can create unnecessary confusion. Afterall, Six Sigma, Lean and TOC are find their origins in different schools of thought.

In addition to the primary and the secondary goals which are covered in detail in the article by Dave Nave, the question I wonder if certain organizations and industries lend themselves to be one of the process improvement methodologies?

High Technology Manufacturing companies like semiconductor fabrication (Intel, AMD), Aerospace and Aviation (Boeing, Rolls Royce, Airbus, Lockheed Martin) have inherent focus on quality. Hence the focus should be reduction of variation and quality more than anything else. Organizationally, these could be more engineering driven and hence, suited for analytical studies and improvement by Six Sigma. Volume industries on the other hand, where competition drives lower margins such as automobiles and other manufacturing plants where visual change is key and inclusive change of philosophy can be cultivated accompanied the continuous improvement from the workforce is essential might look at Lean as the viable method. Industries such as Petroleum, Mining and Retail where well defined organizational hierarchy and division of work between the executive and the workforce exist might render itself to achieve operational efficiency by implementing Theory of Constraints.

The assumption here is that though the three methods help organizations improve operational efficiency and effectiveness (in different proportions and metrics) , organizational challenges to change are important to be addressed. The point is that Supply Chains form only a part of the overall organization. Though the primary goals of improvement might be important, does the philosophical alignment of these methodologies with the organizational values and structure often take precedence?


How to Compare Six Sigma, Lean, and the Theory of Constraints (Nave, Quality Progress (www.asq.org), March 2002)

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