Business Process Reengineering Using
Theory of Constraints (TOC)
Mike Miller
Tax Chief, Unemployment Insurance
(801) 526-9410 [email protected]
Business Process Reengineering Using
Theory of Constraints (TOC)
Business process reengineering (BPR)
The analysis and redesign of workflows within and
between enterprises in order to optimize end-to-end
processes and automate non-value-added tasks.
Business Process Reengineering Using
Theory of Constraints (TOC)
The goal of Utah state government is to continually improve
services at the same or lower costs
Business Process Reengineering Using
Theory of Constraints (TOC)
The challenge of state government…
Business Process Reengineering Using
Theory of Constraints (TOC)
Lean methodologies focus on eliminating non-value added
work or waste from work processes.
Business Process Reengineering Using
Theory of Constraints (TOC)
Six Sigma is a data-driven approach to improvement that
focuses on reducing variation and improving quality.
Business Process Reengineering Using
Theory of Constraints (TOC)
The Theory of Constraints (TOC) focuses management time
and attention on the goal of the organization and the most
significant constraints that limit system performance.
Business Process Reengineering Using
Theory of Constraints (TOC)
• We responded by integrating Theory of Constraints,
Lean, and Six Sigma.
Theory of Constraints
Lean
Six Sigma
Purpose
Identifies and manages constraint (control
point)
Identifies and
removes waste
Identifies and
reduces variation
Focus
System Constraint (increasing system output
through the constraint)
Flow (creating smooth
process flow)
Problem (decreasing rework and reducing
variation)
Application Guidelines
Five Focusing Steps
1. Identify constraint
2. Exploit/Optimize constraint
3. Subordinate processes
to the constraint
4. Elevate constraint
5. Repeat
Value Steps
1. Specify value
2. Identify value stream
3. Improve Flow
4. Increase Pull
5. Achieve Perfection
6. Replicate
DMAIC
1. Define
2. Measure
3. Analyze
4. Improve
5. Control
Business Process Reengineering Using
Theory of Constraints (TOC)
TOC Basics: find the system constraint
Business Process Reengineering Using
Theory of Constraints (TOC)
Business Process Reengineering Using
Theory of Constraints (TOC)
The Blue Light Analogy
Kevin Fox, Viable Vision
One of my very first consulting jobs illustrates how important it is to see things differently and that there is
always much more resource capacity than you believe.
The plant made bumpers for semi-trucks. Senior management showed me their research, which they
believed proved the plant was working at 95% capacity. However, there was a backlog of bumpers at the
welding department. The backlog of bumpers represented angry customers who wanted their product.
Management was planning on expanding the plant to create more space so they could hire more welders
which would in turn reduce the stockpile of bumpers.
I knew the constraint was the welding department because of the backlog of bumpers stacked up in front of
welding. I asked to tour the shop floor. I was taught if you don’t have a picture in mind of what good looks
like it is very difficult to know what you should see. My picture was welders should weld…the torch turned
on and welding (creating blue light). Once on the shop floor, this is what I saw: A welder finished welding a
bumper, turned off his torch, took off his gloves and face shield. The welder then tapped another welder
on the shoulder who turned off his torch, took off his gloves and face shield and helped the first welder lift
his finished bumper off the workbench and then lift a new bumper for him to weld onto the workbench. The
second welder returned to welding while the first welder picked plastic off the new bumper.(the plastic was
in place to prevents scratches during the manufacturing process). Once the plastic was removed, the first
welder put his gloves and face shield back on, picked up and lit his torch, and began welding.
A moment later the second welder finished welding his bumper, turned off his torch, took off his gloves and face shield and got help from
another welder (who stopped welding in order to help) to lift the welded bumper off the workbench and then lift a new bumper on the
workbench. The second welder then disappeared and returned 5 minutes later with a pallet jack which he used to haul away the welded
bumpers. Once he returned he consulted his production schedule to find the next bumper that needed to be welded. The required bumper
was behind three other pallets, so he moved pallet one, two and three in order to get his project. He then moved pallets one, two and three
back to their original position. He then referred to the schedule and realized he needed additional parts to weld so he left the welding area
and went to the parts warehouse…
The manager turned to me and said, “You see, they are busy all of the time!” Never have two people looked at the same thing and seen it so
differently. I saw all of the capacity in the world, he saw zero.
It took about three weeks for them to see what I saw because I walked them through the Socratic process to discover their blue light. They
then hired an intern to lift bumpers, peel plastic, pull parts, deliver welded bumpers downstream, etc…he did everything to keep the welders
welding. Capacity went off the charts and they were caught up in three weeks. The welders loved the helper because he did all of the nonwelding actions and got them back to doing what they were trained to do, weld.
Business Process Reengineering Using
Theory of Constraints (TOC)
Understanding what interferes
with the blue light provides
opportunity.
Delivering
Bumper
Downstream
Removing
Safety
Gear
Peeling
Plastic
Asking
Another
Welder For
Help
Moving
Bumper
Off
Bench
Moving
Bumper
On
Bench
Retrieving
Parts
Finding
Pallet
Jack
Solutions include:
• eliminate it
• bypass it
• reduce it
• off load it
• streamline it
Business Process Reengineering Using
Theory of Constraints (TOC)
Business Process Reengineering Using
Theory of Constraints (TOC)
So it’s just common sense right?
Just the fax…
The million dollar problem with an eight dollar solution…
Business Process Reengineering Using
Theory of Constraints (TOC)
Business Process Reengineering Using
Theory of Constraints
Mike Miller
Tax Chief, Unemployment Insurance
(801) 526-9206
[email protected]
Mike Miller, UI Tax Chief
[email protected] (801)-526-9410