In this down economy, companies are jumping onto the Lean Six Sigma bandwagon to improve their performance.
Since the introduction of the Toyota Production System (TPS) in the 1950â€™s, it has been the foundation of continuous process improvement throughout many areas of the manufacturing sector.
Toyota Production System is based on the Just in Time (JIT) concept:
TPS is based on the â€œJust in Time (JIT)â€ concept, which employs the principles of making sure that everything is available when it is needed, where it is needed. JIT shifted the focus for the manufacturing production scheduling department from being more efficient to becoming more effective at meeting customer demand. Efficiency in this instance is when a resource such as equipment, people, etc. is expected to work at the maximum capacity in order to reduce the production cost per unit.
Eliminating the eight wastes:
On the other hand, effectiveness, is achieving a consistent throughput rate aligned with customer orders, and identifying and eliminating the eight wastes at the same time An efficient process is one that is focused on increasing the output to reduce manufacturing costs in the belief that it will increase operating profit. The type of statement one would hear in a business using efficiency as its success metric would be â€œWhen the equipments not operating, weâ€™re not making any profitâ€. On the other hand, an effective process is one that is focused on the elimination of waste to create and maintain a continuous flow of activity to align production throughput rates with customer demand. This rate or temp aligned with customer demand is known as â€œTakt Timeâ€ and demonstrates if resources are generating waste and increasing costs because of overproduction, excessive inventory, waiting, defects, etc. An effective process is focused on a specific goal and that is to eliminate defects and rework, reduce costs, and increase the delivery velocity to assign more value to the consumer. Does anyone really care? Why is this important?
The Toyota Production System:
A customer who had a good experience and is satisfied will come back with their orders, repeatedly. The Toyota Production System was founded on a simple principle, there is a direct correlation between improving customer satisfaction and increasing profits. This is achieved by the continuous pursuit in discovering better methods to improve value for the customer. Customers who are dissatisfied will not return, in fact most will tell other associates never to use the services of a business that did not satisfy their needs. TPS has gone through numerous levels of development over several years. It has resulted in breakthrough in process improvement to create paradigm shifts in all industries around the world. In the 1970â€™s TPS become popular and has been deployed successfully to improve processes as part of an integrated management system (IMS) focused on the identification and elimination of waste. TPS principles have been integrating by many organizations and this has elevated them to world class status. They also outperform non-lean or traditional businesses on a consistent basis. What common factor allowed these companies to achieve these results?