Part III: "In terms of production scheduling, Lean and TOC have a lot in common . . . "

(excerpted from The Pipeline)

Which brings the discussion to something called the Theory of Constraints”, said the intrepid, results-based consultant, adding to a previous list.

LEAN HOMEBUILDING
THEORY OF CONSTRAINTS (TOC)

Despite their differences — which I don’t want to diminish — all improvement approaches and methodologies do overlap each other, from the standpoint of the elements they share, the elements they have in common”, she said.  “And — educated bunch that you have become — you say, well, duh, the physics that govern production are immutable, and the various improvement approaches and methods should have more in common than they have in conflict. 

Reducing an improvement approach or methodology to its salient features is an over-simplification.  Nevertheless, essence can be useful.  Every approach or methodology has its salient feature, which — conveniently enough — tends to identify it. 

So — we say that TQM is about quality;  we say that reengineering is about radical redesign;  we say that Six Sigma is focused on reducing variation;  we say that Lean is about reducing waste. 

The salient feature of the Theory of Constraints — what we call TOC — is identifying, exploiting, and elevating the system’s constraint to higher throughput.  We have already discussed constraints.  Recall the earlier discussion of chains;  the weakest link in the chain invariably limits the strength of a chain — limits its ability to accomplish its purpose;  that’s the constraint. 

No matter what else you improve about the chain — no matter which other link you strengthen — you will not improve the overall strength of the chain, unless you strengthen its weakest link.  It is the constraint that determines the throughput of the entire system. 

Think about the implication of that last statement”, said the intrepid, results-based consultant. 

What the Theory of Constraints gives you is focus.  Not a focus on something you don’t like and believe is inherently wrong — or inherently evil, as former GE Chairman and CEO Jack Welch would say about variation — and about the methods for how to reduce or eliminate it wherever it exists.  

No.  

TOC gives you a focus on what you have to improve in order to make more money.   

In terms of production scheduling, Lean and TOC actually have a lot in common, and they both have a lot to offer.  Most of their supposed conflicts are overstated, particularly within the narrow confines of our little world of homebuilding.  The areas of actual conflict between Lean and TOC are few.  In terms of scheduling, the biggest difference between TOC and Lean is that TOC purposely unbalances the capacity of the resources of its process, while Lean purposely levels the capacity of the resources of its process.  

Let me show you what I mean.”

CONTINUOUS FLOW AND BUILD-TO-ORDER PROCESSES V. SYNCHRONOUS FLOW

TOC builds production scheduling around the availability of the system’s most constrained resource, because it is this constraint that determines the throughput/output of the entire production system”, she explained.  “TOC is all about finite capacity, and synchronizing the entire production system around whatever makes the capacity finite, what it calls the constraint.  Lean likes continuous flow;  TOC likes what it calls synchronous flow.   

Lean acknowledges the presence of constraints (or bottlenecks), but doesn’t require its pacemaker to be the constrained resource — unless, it’s a build-to-order process.  When it comes to how they manage their build-to-order processes, the Theory of Constraints and Lean Production are in essential agreement.  

And — homebuilding production is what type of process?”

It’s a build-to-order process”, said the CEO.